Dramatic growth, staffing shortages, and innovation in retail

Do successful retailers that prioritize innovation in the industry have a different technology strategy than retailers with slow or negative growth? What are the technology pain points that retailers face in the modern market? These were just a few questions we set out to answer when we commissioned the Retail Reinvented study from our research partner, IHL, surveying 206 major retail brands on their managed technology services.

The study indicates that from the beginning of 2020 to 2023, the retail sector experienced a remarkable expansion, injecting more than $2 trillion in revenue. This unprecedented growth occurred despite having over 3 million fewer employees. Technological innovation was a key driver of growth in the retail industry, but also a pain point for retailers of varying sizes.

Let’s examine the top-level findings and unravel their stories. But first, we’ll dive into the technology pain points retailers struggle with.

Retail pain points

IHL divided retailers into three groups according to size: 

• Tier 1 ­– Over $1 billion in revenue
• Tier 2 ­– $500 million to $1billion revenue
• Tier 3 ­– Less than $500 million in revenue

They found that pain points varied by retailer size. Tier 1 retailers were concerned primarily with integrating technology across solutions and supporting omnichannel initiatives. Tier 2 worried about AI implementation and innovation in the retail industry but still considered omnichannel technology urgent.

In Tier 3, we see a shift in the pain points derived from staffing shortages and less resource availability, with network speed and reliability topping the list of concerns.

Also read: 6 Essential Steps for a Successful Windows 11 Migration

How the winners stand out

IHL defined the study’s “winners” as retailers with above-average growth of over 10%. The study found that these high-growth retailers have different operational strategies and pain points than their competitors. Top of mind for winning retailers:

A remarkable 100% of surveyed winners felt pain in integration and omnichannel support, while 94% were concerned with network speed. What do these numbers suggest? It seems likely that these pain points stand out due to the winners’ focus on customer service and maintaining the availability of their services.

So, what sets our winners apart?

For one, winners spend up to 4x more on their IT budgets. Additionally, winning retailers are far more likely to utilize managed services than average and below-average competitors.

Notably, zero Tier 1 respondents admitted to using an OEM for Level 1-2 Help Desk support, and only 0.9% for Level 3-4. Companies preferred a third-party Help Desk, split evenly with internal support.

Key takeaways

Winning retailers with sales growth of 10% or more invest heavily in IT and are much more likely to rely on third-party managed services.

Winners were:

• 2.3x more likely to use third-party services for hardware refreshes.
• 7x more likely to engage third-party managed services than in-house support.
• 4.2x more likely to partner with external services for Level 1-2 help desks.
• 6x more likely to employ third-party assistance for Level 3-4 help desks.

Not only are winning retailers more likely to outspend their rivals on technology, but they are also much more likely to enlist the help of managed services experts.

The future of innovation in the retail industry

The retail sector is experiencing a significant transformation, primarily driven by three pivotal factors: the acceleration of retail sales growth, the rapid adoption and integration of advanced store technologies, and the noticeable shortage of skilled field service and maintenance personnel. This dynamic shift is compelling retailers to rethink and revamp their operational strategies to stay competitive and efficient in a rapidly evolving market.

Much like a high-caliber sports team relies on an exceptional training staff to ensure their top athletes remain in peak condition and on the field, leading retailers are now emphasizing the importance of Managed Services. Recognizing the critical role these services play in maintaining operational efficiency and customer satisfaction, these retailers are adopting a highly strategic approach to service management. They meticulously assess which services are best kept in-house, which can be directly managed through Original Equipment Manufacturers (OEMs), and which should be outsourced to third-party specialists.

By prioritizing Managed Services, the retail industry can ensure seamless innovation and adapt more swiftly to market changes and consumer demands. This strategic allocation of resources enables them to maintain a competitive edge by focusing on core business functions. At the same time, specialized third-party providers or OEMs handle the complexities of service and maintenance. Consequently, retailers can enhance their service quality, reduce downtimes, and ultimately improve the overall shopping experience for their customers.

Pomeroy’s retail services prioritize innovation

We offer over 40 years of IT support expertise for retailers, streamlining every phase of store technology procurement to disposal. Our managed services include modernized point-of-sale (POS) systems with secure, up-to-date payment technologies, including mobile and contactless options.

Pomeroy keeps your store’s software and applications running smoothly, reducing downtime and supporting seamless operation. Our services extend to mobile payment solutions and comprehensive security systems, integrating digital and physical security measures to safeguard your operations.

We facilitate self-service checkout technology and provide full lifecycle support for physical and online store technologies, from setup to maintenance. We aim to use innovation in the retail industry to address challenges like connectivity and cybersecurity, ensuring a holistic approach to store technology that drives sales and deepens customer connections.

To learn more about the technology habits of winning retailers, download our report: RETAIL REINVENTED: Navigating the New Era of Managed Services, or contact us to start a conversation about how we can help you innovate for the future.