Only 58% of retailers invest in tech to handle holiday sales spikes

Dive Brief:

Mid-market retailers and wholesalers may be focusing too much on hiring more staff and adding more inventory to help them cope with peak holiday demand, when they should be investing more in technology to help them better manage their operations, according to a survey conducted by Brightpearl, a provider of retail management systems.
The survey, involving more than 350 senior retail decision makers, found that 53% believe they can remain competitive by simply hiring extra staff, while 40% said they would increase inventory significantly to cope with peak periods.
About 58% of retailer and wholesale decision makers currently invest in technology to manage sales spikes, although barely more than a third of those surveyed (35%) said they are 'very likely' to adopt a new technology solution that would help to effectively streamline their back-office and inventory processes, according to the survey.

Dive Insight:

The entire retail sector seems to be looking forward to a particularly bountiful holiday season, with more shoppers starting their shopping earlier in the season. We have also heard via a Salesforce study that Black Friday (and not Cyber Monday) is expected to be the biggest online shopping day in the U.S., although some studies have shown the opposite.

The first thought in a retailer's mind for handling this abundance of activity is to hire more people and add more inventory. That's what they've always done — hence the notion of the seasonal employee in retail. However, Birghtpearl's study finds that both of these solutions can be costly in their own ways: Retailers hire an average of 98 full-time seasonal staff to manage busy shopping periods, while the top 50% hire approximately 190 holiday staff members.

Brightpearl researchers calculated the business costs of hiring 98 employees based on an average minimum wage of $7.98 at 40 hours per week and found that, for the 10-week holiday season, they would end up spending an average total of $312,816 in wages alone for seasonal staff. That doesn't include taxes, the burden of training new staff, costs incurred from mistakes by inexperienced employees and extended work hours for existing staff. Adding inventory can be similarly costly, especially if it goes unsold and continues to occupy storage space.

Retailers are starting to embrace automation and related technologies in their operations in a number of ways, from in-store robots to Internet of Things concepts to inventory management solutions, leaving current holiday strategies (throwing more people and inventory at the challenge) in need of a revamp. Investing in management technology could be the next way retailers try to make the holidays a bigger profit center — without incurring the costs.

This story is part of our ongoing coverage of the 2017 holiday shopping season. You can browse our holiday page and sign up for our holiday newsletter for more stories.