Section 1 – Introduction
Horizon scanning refers to the timely and systemic detection of changes and developments that can affect an entity. In this regard, horizon scanning can encompass doing a single or periodic scan relying on the insights of top leaders in an entity. Horizon scanning can also be continuous, more common in the public sector, and generally involves a participatory approach. Depending on the type of horizon scanning, an entity could enlist a small team of full-time scanners or rely on part-time scanners. Horizon scanning could focus on particular priorities or involve scanning the entire external environment. Overall, the horizon scanning system should be guided by the organization’s context and the needs of the decision-makers (Bengston, 2013, 4). For the assignment, horizon scanning will aid in acquainting the student with the retail sector developments. In this case, the sector’s relevance to the different facets of society, the challenges marring the sector, and their implications to managers in the retail sector. Also, the horizon scan will assist in understanding the importance of the state of the retail sector on career development and prospects of professionals.
The retail sector involves the sale of goods and services to consumers. In addition, retail establishments are in vast forms, including bookstores, groceries, and restaurants. Retail products are sold either online or in physical stores. Globally, the in-store retail approach is the most popular, but online retail, popularly known as e-commerce, is gaining momentum, particularly after the COVID-19 pandemic. As a result, most retailers are adopting an Omnichannel distribution market. For 2021, global retail sales amounted to $ 26 trillion, projected to increase to $ 30 trillion and $31.7 trillion in 2024 and 2025, respectively (Sabanoglu, 2022). The positive projects suggest the likely growth of the sector over the coming decade. Globally, the leading retailers are Amazon and Walmart.
Regarding revenue, the top three retailers globally were from the United States: Walmart, Amazon, and Costco Wholesale Corporation, whose revenues were $ 572.75, 239.15 and 195.93 billion for 2021, respectively (Sabanoglu, 2023). The onset of the COVID-19 pandemic undermined the employment levels in the retail sector across the globe. The industry is, however, recuperating gradually. In this regard, by February last year retail sector in the United States had 15.7 million employees working an average of 30.4 hours weekly (Simionato, 2022).
Section 2 – Technology Enablers and Innovations
Embedment of shelves with sensors is a vital innovation in improving retailing. The invention enables the managers of retailers to get real-time data on the stocks on the shelves. In this case, the information sent through the sensors aids the managers in replenishing supplies that have been bought. Consumers can, therefore, find the stores they require on the shelves when shopping. The innovation is instrumental, particularly after the pandemic that disrupted the supply chain creating shortages that undermined retailing (American Express, 2020).
Also, recommendation engines are improving the consumer experience in retailing. In this case, retailers can access vast information about potential consumers through their technological gadgets. The retailers analyze the data that aids in comprehending the likely consumer behavior. Based on past behaviors, retailers can make appealing recommendations to potential consumers on what they should purchase. The tendency to recommend a product aligned with potential consumers’ past consumption patterns increases the consumers’ likelihood of buying a product. Recommendation engines are essential since consumers strive for a personalized shopping experience (American Express, 2020).
Also, virtual reality and robot assistance are revolutionizing the retail space. In this case, potential consumers can interact with products they want to purchase uniquely and interestingly through virtual reality. Virtual reality allows clients to try on clothes virtually if the product is out of stock. The robots sum up as assistants that respond to consumers’ concerns. Therefore, a retailer grappling with staffing challenges can alleviate the resulting inconveniences through robotics. In addition, during crises such as the COVID-19 pandemic, innovation is pivotal in enhancing a safe retailing experience (American Express, 2020).
Big data is also an innovation vital in the retail sector. In this case, due to big data, an entity collects voluminous information about the client, sorts out the information, and proceeds to analyze it. The analysis reveals patterns and trends that management deems actionable. Big data is particularly useful in streamlining the supply chain. In this context, streamlining the supply chain ensures just-in-time delivery. The tendency cuts costs such as those of storage and averts undesirable consequences of goods going bad. A robust supply chain has become a priority after the pandemic, which thwarted the movement of goods (American Express, 2020).
Augmented or virtual reality is another technology enabler transforming the retail industry. This is part of a new and vibrant shopping experience in e-commerce which facilitates users to play, socialize and shop as if they are in the real world. This technology allows customers to see themselves in new clothes or behind the wheel of a new car. It is estimated that more than 1 million customers have shopped with augmented or virtual reality technology (Roggeven & Suthuraman, 2020). The pre-purchase phase is the most promoted process by this technology. The pre-purchase process involves all customer interactions with the products before buying. With better prep-purchase technologies, customers can identify their needs better and search for appropriate product options, whether online or in-store. Augmented reality is a game changer in the retail sector, and it brings a new dimension to the consumers to experience new technologies and shopping experiences. According to a Deloitte survey, more than three-quarters of retailers expressed interest in adapting virtual reality in their businesses and everyday lives (Cole, 2022)
Section 3 – Analyse the industry through three lenses discussed in class
Future of Consumption
The near-term future of consumption seems bleak due to the high inflation rates persisting across the globe and the effect of the Russia-Ukraine War (Davey, 2022). Inflation implies that commodity prices keep increasing, undermining consumers’ purchasing power. Inflation for groceries in the United Kingdom was at 17.5% yearly, whereby the prices of basic commodities, milk, and eggs, are growing the fastest (Kollewe, 2023). Typically, with inflation, wages grow slowly compared to the cost of commodities; hence consumers have to cut their spending. In addition, the purchasing power financed savings becomes eroded. Retailers are stocking their stores to reflect the prevailing consumption patterns during the high inflation. In this case, the Ocado retail manager alludes that the consumers are opting for frozen foods compared than fresh to avoid wastage; as a result, the entity ensures ample availability of the preferred type and even ratios quantity of products utilized in salads to ensure that some consumers do not lack (Kollewe, 2023). The high inflation challenge will, however, improve over time as stakeholders in government strive to revert the state. In this case, central banks across the globe are enacting monetary policies by gradually increasing interest rates to reduce inflation (Cox, 2023).
The world has become incredibly convenient with the surge of innovation in e-commerce, that is, the world is everywhere, anytime, and however the consumer wants it. (Colgate-Palmolive, 2022). Consumer e-commerce nowadays is mostly motivated by price and convenience, with many products available for immediate delivery. Many customers are beginning to expect more from shops, such as the opportunity to get fantastic bargains on products not found in the major chain retail outlets. These core desires will continue to exist in the future, and customer expectations of e-commerce and the shopping experience will have evolved dramatically. The desire for instant access and quick turnaround will be the norm, driven by millennials and Generation Z consumers who are always connected and inhabit the online environment where events happen in real-time without waiting and where social media allows them to dictate the terms. As a result, buyers will demand the marketed goods fulfill all promises in all ways, with no disconnect between the ‘fit and feel’ of what is online and what is delivered. This consumption pattern will pressure retailers, and those who fail to match these expectations will be included. As a result, retailers will be pushed to engage in long-term customer service and support.
Future of Enterprise
The retail sector’s future looks bright for entities willing to invest more in technology and sustainability matters. In this regard, technological innovations are holistically shaping retail sector operations. Firms in the retail industry have to allocate significant funds to support technology innovations. In this respect, Target has partnered with leading firms in technology to help innovations by start-ups that are likely to improve or revolutionize the retail space. Equally, Sephora continues investing in technology to reduce the gap between physical and online shopping (Jawharkar, 2017). Most leaders in the retail sector have physical and online shopping, such as Sephora and Walmart Inc. It has been seen that these industries are constantly investing in research and development to bridge the gap between online and in-store shopping, and it impacts the organizational structure. The e-commerce organizational structure will be determined by the research and development level and the business strategy. For example, a firm can expand by establishing a commercial office, where operations are centralized, or if the firm acquires operations abroad and the functions become decentralized. Portfolio and level of diversification and technologies will determine the complexity of the organizational structure. Finally, the development of executives is one of the e-retail business concerns; developing leaders aligned with e-commerce technologies is a driving force determining the future of the growing retail market (Deitel, 2011).
Given the numerous disasters triggered by climate change, sustainability has become a concern across the globe. Sustainability further entails ensuring that raw materials for retail are produced while observing human dignity. In this regard, consumers are keen to establish whether their products have been sourced sustainably. Notably, any reports questioning the sustainability of a product attracts negative publicity for the entity, and a boycott of the product also ensues. The actions of the consumers are a means to implore organizations to implement positive change in their supply chain. At Tesco, the organization has set aside resources, for instance, finances, personnel, and time to support sustainability initiatives across the supply chain. Besides, to enhance accountability, Tesco reports on environmental, social, and governance issues annually (Tesco Plc, 2021).
Future of work
The traditional retail job will be lost due to the sector’s digital evolution. In this regard, there will be a decline in the number of workers needed to work in traditional retail stores, such as cashiers. New jobs will also emerge in the sector, whereby the jobs will primarily be technological. The technology jobs in retail will increase as more retailers strive to leverage e-commerce. In addition, demand for customer service and problem-solving professionals will continue rising as retailers seek to offer unparalleled consumer experience. Equally, competition for top-tier employees will continue to be fierce. The key players mainly focus on social hiring and automation, allowing them to bring speed, accuracy, and branding to the hiring process. The adoption of artificial intelligence in hiring demands that industries offer resources for skilling, upskilling, and reskilling to stay relevant (Ovum, 2021). The employees today are also millennials and Generation Z, who are highly ambitious, and on the lookout for a challenge; thus, some leading retailers have tapped into this talent by encouraging lateral movement of talent and promoting talent internally. This approach not only lowers the hiring cost but also prevents competition for skill and rapidly adapting to the evolving environments (Gepard, 2023).
The competition will be evident through retailers offering competitive wages for back offices and storefront workers and flexible working environments offering better work-life environments (Kapoor, 2019). Attracting top talent will be vital in enhancing consumer satisfaction in a space where many rivals and consumers are consistently looking for better retailing experiences. Also, the human resource in a retail firm has to be flexible to scale up or size down the workforce depending on organizational needs. Besides, human resources must devise creative ways to deal with emerging trends in labor markets, such as work-life balance and union demands (Jawharkar, 2017; Deloitte, 2023). At Tesco, employees have the privilege of having flexible working programs, subsequently aiding them to realize a work-life balance. The organization has also devised a program that allows employees to relay their concerns to the organization safely. The organization further strives to develop its employees through programs to fund some of their education (Tesco Plc,2022).
Section 4 – Your views
Technology is becoming embedded in the retail sector. As a result, as a professional, it is prudent to invest in acquiring some basic technology education and skills. Developing technology skills will ensure that I can work more effectively in the sector incorporating technology in its operation. Besides, the technology knowledge will reduce the likelihood of becoming redundant in the retail industry. Given the sector’s positive effect on society, I want to work in the retail sector. Notably, through the industry, people can purchase products they deem necessary for leading a quality life. In the retail sector, I would champion more sustainable innovations in the supply chain. Supporting sustainability in the supply chain would aid in alleviating climate change plights and cut on costs. Cutting costs would ensure that consumers can afford basic products, which would cost less. Besides, the funds saved through cutting costs could be spent on improving employees’ welfare. Contributing to improving the retail sector would yield immense satisfaction in my professional life.
References
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Bengston, D.N., 2013. Horizon scanning for environmental foresight: a review of issues and approaches. United States Department of Agriculture, Forest Service, Northern Research Station.
Cox. J. (2023). Retail sales jumped 3% in January, smashing expectations despite the inflation increase. CNBC, February 15. Available at: https://www.cnbc.com/2023/02/15/retail-sales-january-2023-.html
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