As the holidays wrap up and NRF — the largest retail event of the year — kicks off this week, retailers small and large are taking what they’ve learned in 2022 into the new year. Many are dealing with record high energy prices, inflation, and lingering effects from the pandemic — all wreaking havoc on their budgets. Specifically, small retailers (50 employees or fewer) are feeling that impact much more profoundly than their larger counterparts.
Considering this, whether brick-and-mortar or born-in-the cloud eCommerce, small retailers are faced with a challenging duality: the growing complexity of their business versus the technology expansion aimed at addressing that very complexity. In many cases there is a “chicken-and-egg” type of relationship between the two. “Do we need inventory management tools because our inventory has become more complex, or does our inventory seem more complex because we can now see it through the lens of sophisticated technology?”
Get Scrappy with Spending
Either way, owners, entrepreneurs, and other business leaders at small retailers have a rich set of technology solutions to select from but understandably limited resources at their disposal. In fact, a recent Aberdeen survey revealed that two thirds of small retailers have a total annual technology budget under $50k and a quarter of them are working with less than $10k per year.
Moreover, when it comes to the perception of technology investment, the research also shows a frustrating (if unsurprising) relationship between small retailers hopes and dreams for technology, and their concerns for pulling the trigger on technology investment (Figure 1).
Figure 1: Small Retailers – Two Sides of Technology Investment
Put simply, small retailers are most enticed to buy technology for the potential for cost reductions in their business, but most concerned about the cost of achieving those savings.
As it happens, Aberdeen’s research model is entirely geared toward understanding this connection between the investment in (and effective use of) technology, and the business outcomes attainable through it’s use. This research explored five main categories of technology from data security to operational systems. Below is a glimpse at these five categories and some high-level examples of their potential to drive cost and/or time savings:
Granted, with $50k or less to invest on an annual basis, small retailers will have to be very judicious with how they allocate budget for technology, but many of these areas are addressable with low cost or even no cost, process-based solutions.
Consider the “Cost” of Doing Nothing
Investing in a new technology solution can seem daunting to some small retailers. However, it’s crucial to consider the cost of operation without the above-mentioned tools. As these small businesses examine their cost infrastructure and identify the areas most in need of reduction, some might be surprised to know that a technology-based investment could be the best long-term answer, not just for their cost concerns but to their ability to drive top line revenue growth and customer growth as well.
For a free technology readiness report and a window into how peer organizations are thinking about technology, check out Aberdeen’s online technology readiness assessment.
