Exclusive Q&A: EY Shares Insights on Personalization, Uncertainty, Sustainability and the Last Mile
RL: The reality is there’s a lot of excitement at NRF this year, but also a lot of caution around uncertainty. We’re hearing repeated concerns about things like economic uncertainty and supply chain issues. Where do you see these issues going the rest of the year and beyond?
Ward: There's still a tremendous amount of economic uncertainty, but people are spending money across all the different categories. Not only high-value goods, but with fashion, retail, discount goods, groceries — they're still spending money. But you have to get your fair share. In order to get your fair share, you have to differentiate yourself from your competitors.
Instead of just trying to spend more and more money to go blow it out there on every kind of market in the world, it all comes back to data. Using that data to segment your buyers, try to figure out what channels they're buying through, what kind of media they want to see and what offers they want to see — more creative, targeted marketing. And all that comes back to using that data to create segmentation, create a more personalized experience in order to create a better marketing plan and then go use that in a more directed fashion. It saves money. It's more directed and gets to the consumers in a more experience-led fashion. It’s using an agile marketing approach.
RL: And what about supply chain concerns?
Ward: The supply chain is not getting fixed anytime soon. There are still issues with companies dealing with China, China labor laws and all the things that are going on overseas. Prices are going to continue to go up. Labor in the U.S. is continuing to rise — it's finally starting to steady. It’s still more than companies are used to paying for, so you've got to be more efficient and optimized than ever. Companies are taking a little bit more of a spin around, “Okay, if I've got to optimize my supply chain, I really should optimize my inventory, my working capital.”
In order to do that, you’ve got to know where it's all at. So they look at putting in end-to-end visibility tools across the enterprise so that way they can understand where their inventory is.
RL: We’re also seeing an increased focus on sustainability, which has been a trend for several years now. A lot of brands and retailers are talking about it as a differentiating factor, especially targeted toward the purpose-driven consumer. There’s also a feeling that sustainable practices ultimately could cut costs in the long term as well. How important is sustainability right now and looking forward?
Ward: It’s on their mind. They're trying to figure out how to do it without costing more. That's the challenge that they have. What companies are starting to do is use end-to-end visibility in order to create more optimal supply chains to take costs out and then using those funds to tie back into ESG (environmental, social and governance).
I know some clients are saying, “If you order your product today, we can have it delivered tomorrow.” That's what we've always done. But if you don't need it tomorrow, then I can optimize better at getting it to you in two days, three days or four and it's more ESG-mindful. That's because you're not forcing a driver to go from the store to your house and back to the store.
RL: We’re also seeing a lot of discussion and solutions around the last mile of delivery this year.
Ward: I think the biggest trend that we're seeing is that people are less worried about last mile in speed and more about efficiency and cost. Because retailers and companies can't afford to just focus on speed anymore, they have to look at the bottom line. They have to look at what it means. They also have to look at the reverse part of it and make sure that it’s cost-effective as well.
It was free returns for everybody. A lot of your retail and brands are now saying, “we'll do returns, but you're going to have to pay for it.”
Questions and responses have been lightly edited by Retail Leader for clarity purposes.