Technology gaps could cost average retailer $300,000 this holiday season

A new study from retail management provider Brightpearl indicates just 58% of retailers have invested in the right technology to help handle holiday sales spikes.

The study said the rest of the retail sector’s lack of investment could result in more than $300,000 of added costs to the average retailer this holiday season. Brightpearl surveyed 350 retailers from very large to small in size.

Brightpearl data indicated retail automation technology helps retailers save the equivalent of 57.5 days a year by eliminating time spent on repetitive administrative tasks. The likelihood of negative customer service because of human error has also been reduced by up to 65%.

One of the major reasons consumers say they don’t shop brick and mortar stores during the holiday season is because of crowds and poor customer service, according a recent survey by Field Agent. Brightpearl said retailers that have automated fulfillment and streamlined the front-end experience have an advantage over those who don’t.

Brightpearl said “technology ignorance” among mid-market retailers and wholesalers will put them at a disadvantage in meeting peak holiday demands compared to online and larger retail giants who have technology working in their favor. Some of the fallout from lack of technology investments will include poor customer experiences, the inability to fulfill orders or meet increased demands due to lack of process automation and other business inefficiencies, the study noted.

“These findings highlight how many retailers neglect to invest in technology that could save precious time and money during their busiest season,” said Derek O’Carroll, Brightpearl CEO. “This doesn’t bode well for mid-sized retailers who find it challenging to compete with the likes of Amazon Prime — especially if they continue to ignore the operational advantages of technology. Short-term, inefficient solutions like hiring more staff or increasing inventory levels often end up hurting their bottom line.”

O’Carroll said 53% of the retailers surveyed believe they can remain competitive by hiring additional staff for the holidays. On average retailers surveyed said they hire the equivalent of 98 full-time seasonal staff to manage busy shopping periods. The top 50% hire about 190 holiday workers. The costs associated with hiring holiday staff for a 10-week period averages an additional $313,000 in added wages and doesn’t include training costs and mistakes that occur by inexperienced workers.

Aside from the hiring of seasonal workers, 40% of retailers surveyed said they increase their inventory to cope with peak periods of demand. That said, just 35% said they are adopting technology to help them manage and effectively streamline their back-office process and inventory flow.

“Forward-thinking retailers need to make the most of this holiday season by using technology to refine back-office functions like processing, fulfillment, shipping and billing. Those who do will better manage increased demand and offer the level of service that customers expect,” O’Carroll said.

Brightpearl also asked retail suppliers about the gaps they see in the retailers they serve. Brian Wilkin, co-founder of Dude Products, said it’s important for retailers to examine missteps from previous holiday seasons and apply technology to address the issues.

“It’s important that retailers have flexibility built into their DNA. It’s the only effective way to manage holiday demand and provide the level of customer experience shoppers expect,” Wilkin said. “We see a quarter of our sales, across online and brick-and-mortar retail stores, over the holidays.”

He said Dude Products uses retail management software that allows it scale up and eliminate spreadsheet order processing. Smart cloud technology helps to ensure the supplier has adequate safety stock, produces faster order processing and automates Shopify downloads in real time updates. He said retailers that fail to invest in technology to meet peak holiday demands could land them on the naughty list with tech savvy consumers.