By Phillip Sewell, CEO at Predyktable
I recently conducted a series of interviews with senior executives working across both the retail and hospitality industries to gain a deeper understanding of the most pressing challenges and priorities they currently face.
As these industries continue to navigate an ever-changing landscape, it’s crucial to understand the perspectives of those at the forefront. From supply chain disruptions to shifting consumer preferences, the insights gleaned from these discussions shed light on the most critical issues facing these industries today.
Here are the why’s and how’s behind the tough decisions these senior executives face, with their fascinating insights distilled in a Q&A below.
1- Given the cost-of-living rise and increased costs throughout your supply chain, how will you remain profitable?
“Many CEOs are ex-CFOs, so unsurprisingly they’re dealing with the cost of living by finding ways to cut expenses and remove services – but without damaging sales or losing customers. In fact, across our outlets we’ve reluctantly increased prices by 10% to offset supply chain costs” CIO – Multi-channel Retailer
“As a direct-to-consumer business, we’ve also put-up prices due to a 500% increase in freight costs. We’re now hedging our bets with our supply chain: trying to lock in fixed prices for 5 years to offset the volatile market. We’re also exploring new territories to offset the challenges globally, and where to invest to reduce operational costs.” CEO – Retail
“Customers always want more for less, but prices are going up and promotions are being increased in what has traditionally been a high peak end of season and new season. This is an indicator of how pub and hotel operators are struggling.” MD – Hospitality
“As a multinational restaurant chain, we are changing fees to align more to market realities. We need to focus on new business, we’re extending reach beyond our current portfolio – while growing revenue from our existing customer base.” MD – Hospitality
“As a DIY retailer, we need a more agile, flexible supply chain. We’re focusing on what’s driving value, so we’re looking at things like optimising demand forecasting. We are raising prices and measuring the sensitivity of this, while finding ways to reduce supply chain costs. We are also either reducing advert spend or making it work better.” Marketing Director – Retail
“It’s all about price. We’re having to increase prices by 13-14% per annum across our restaurant brands. It’s difficult to get the second visit during the week, so our pricing is keener. It’s a perfect storm of costs and balancing acts.” Marketing Director – Hospitality
“We have raised prices, but not too much as we’re a price-sensitive confectionery brand. We’re taking a hit on margin and hope it comes back. In the short term, we’re managing costs to mitigate this. It’s survival of the fittest, you try to hoover up market share and hope you retain it in the longer term.” Chief Growth Officer – Hospitality
2- What other issues are you facing today and what are the long-term impacts?
“We must be price sensitive to consumer’s expectations. We’re asking things like what people are willing to accept? How do you quantify the impact service quality has on price points? Managing costs will be critical, and staffing impact in the long-term is a concern. We need to better predict what the labour market will be like in 5 years-time and what changes in our recruitment model can mitigate against this.” CIO – Multi-channel Retailer
‘Volumes are not where they were, and we’ve been hiking prices. There’s still a role for pubs for informal occasions versus restaurants, but it’s all about getting people through the door.” Marketing Director – Hospitality
“It’s all about where to find new business. Customers are no longer loyal, basically businesses are just “swapping” customers and not stimulating new growth. We need new revenue and new customers.” Digital Transformation Director – Retailer
“Online will not hold the dominance it once did as the cost of online is becoming less feasible and concerns on the environment increase. We may see a shift back to bricks and mortar to deliver a greater experience.” Global VP of E-Commerce – Retailer
“There is a danger of oversupply in the market for restaurants. After many closures during covid, there’s been some aggressive new openings with new operators mostly in city centres. I think there will be an implosion. Pubs have really got their act together and are well placed to challenge restaurants, they also suit people when they’re working from home.” Chief Marketing Officer – Hospitality
Recessionary impact and labour availability are big issues. Everyone in the industry is suffering, with chefs being the most difficult to recruit. We’re using some central kitchens to produce food consistently and reduce the impact at restaurant level.” Chief Growth Officer – Hospitality
3- What are your key priorities and investments over the next 3 years?
“Technology investment is key. We’re examining which technologies can return ROI – while solving the biggest problems we have. We do need to better understand which areas require investments to plug the leaks in costs.” CIO – Multi-channel Retailer
“Digital tools and online is one area of investment for us, coupled with systems to help labour scheduling. It’s all about making the central and pub teams become more efficient. Capex is being maintained, but it’s now focused on maintenance and improvement or conversion to new offers – rather than new builds.” Marketing Director – Hospitality
“We’re focusing on improving the supply chain. It’s the biggest cost centre and has the biggest negative impact on customer experience. Over 45% of customer care calls cover where is my product? So, having a fantastic supply chain would help address this.” Digital Transformation Director – Retailer
“We’ll be investing in systems including ERP, PIM and re-platforming, to reduce the friction of doing business and enable scale and agility. Improving staff wellbeing is also key, especially as the fight to retain staff becomes increasingly critical. We are improving performance marketing that better connects with customers. Acquisition will also prove key, as the competition becomes increasingly fierce.” Global VP of E-Commerce – Retailer
“We’ll be driving like for like sales, including investing in the fabric of the building or in-restaurant technology that hits our sweet spot. Potential acquisitions are a consideration, with a focus on small operators with decent brands and locations. We’re also trying to find the sweet spot of recruitment and we’ll invest when we’ve got it right.” Chief Marketing Officer – Hospitality
Staying relevant and interesting is core to our strategy. We need a competitive edge versus competitors, so we’ve got to work out what that is and then make it relevant.” Chief Growth Officer – Hospitality
Final thoughts
The COVID hangover means that everyone still has a short-term mentality. That is the sentiment from all those I spoke with. Profitability is now the short-term goal, rather than longer-term strategic planning that existed pre-COVID.
So, with key decisions on spend, labour optimisation, demand forecasting and more, how about the efficacy of current solutions that support decision-making?
All agree that business intelligence and data analytics have helped retail and hospitality executives understand and influence their customers’ buying habits – but only up to a point.
Despite billions of pounds spent globally on data platforms, data repositories and a whole stack of tools, most still lack the help they need to turn data into forward actions that maximise profits. Everyone agreed that more ‘prescriptive’ data insights are urgently required by brands: providing forward recommendations that support more profitable business-critical decisions.