UK retailers are upgrading their tech to offset a loss of a third of their customer base as the cost-of-living crisis bites.
New research from Ensono was based on a survey of 500 senior IT decision-makers working in UK retail, which revealed retailers feeling the strain of rising prices and the worsening cost-of-living crisis.
It found department store brands expect to lose an average of 32 per cent of customers – the most significant drop across the different areas of retail surveyed.
The report said that 2023 is set to be a challenging year as inconsistent demand and severe supply-chain disruption continue to impact industries of all shapes and sizes. The most pressure is on the smallest retailers, with tech decision-makers at retailers with just 1-9 employees expecting to lose 36 per cent of their customers. This compares to 27 per cent at retailers with more than 500 employees.
Customer connection is front of mind for UK retailers in navigating the difficult economic climate. Confidence, however, is muted across the industry. Only 34 per cent respondents are “very confident” that their organisation could keep in touch with customer concerns and anxieties during the cost-of-living crisis, with 48 per cent “somewhat confident” and 17 per cent ‘not very confident/not confident at all’.
Higher revenue is no guarantee of confidence in connecting with customers. Retailers with a revenue of £500 million – £999.99 million were in fact more confident (73 per cent) than retailers with revenue of £2 billion-£2.9 billion (69 per cent). Retailers in essential services like grocers (89 per cent) and fashion (88 per cent) are more confident about staying connected with customers than their counterparts in the luxury space like entertainment (71 per cent) or health & beauty (74 per cent).
Retailers are committed to finding new ways to innovate and modernise the services they offer to customers. Two thirds of IT decision-makers have increased tech investment as a result of rapidly changing consumer behaviour. Leaders are focused on several areas of technology to spur growth in 2023:
- Behavioural and product analytics (39 per cent)
- Monitoring and performance tools (36per cent)
- Cloud Infrastructure (36 per cent)
Retailers are prepared to move quickly on this investment. More than three-quarters (76 per cent) of retailers said they prioritise first-mover advantage on tech investment to avoid being left behind by competitors. This focus on first-mover advantage was particularly strong in Grocery (91per cent), Sports & Leisure (86 per cent), and Fashion (85 per cent).
This conviction is backed up by clear alignment with the rest of the business: 79 per cent of respondents agreed they have a voice in shaping the strategic direction of the business.
Ensono consulting director Steven Jones said: “Retailers are facing a challenging 2023. It’s clear that many in the industry are bracing for severe customer losses as the cost-of-living crisis continues to bite for UK retailers.
“Survival will require retailers to be agile, taking swift action to preserve and make the most of the customers they have. Technology investment by retailers needs to be strategic and targeted. High-impact tools like data analytics help retailers build a more comprehensive picture of customer behaviour, staying connected with customer needs and priorities, and enabling them to deliver a hyper-personalised, memorable experience every step of the way.”
