With Black Friday firmly in the rearview mirror and all planning and processes in place for the run-up to Christmas, retailers are focusing on what might be in store in 2023. This year’s Peak season was predicted to be a disappointment by some industry commentators, but so far sales are up as consumers seek out a bargain, and this has given retailers a necessary boost. Does it bode well for the year ahead?
Looking at the macroeconomic factors affecting not just the UK, but the whole of Europe currently, it’s highly likely that the retail sector is in for a bumpy ride. Retailers have seen a slowdown in the second half of 2022, and this will likely continue into next year. Rising costs are forcing retailers into an invidious position to try and protect profit margins – squeeze suppliers or put prices up for customers. Just like everyone else, they are also feeling the pinch from exorbitant energy costs. Physical retailers too are in the process of automating their in-store technology, while online, the pressure is on to build integrated, engaging, and more streamlined eCommerce offerings if they hope to remain competitive. The only exception is high-end luxury, catering to wealthy shoppers who are less affected by recession.
While retail wages have been increasing by comparison with other sectors, this is unlikely to continue, and they are also unlikely to be hiring at the rate they have been since lockdowns lifted. The most recent figures from the Office of National Statistics (ONS) indicate that between August and October 2022, vacancies in retail were down by 5.7 percent. The ONS Labour Market Overview backs this up, revealing in June that jobs in retail had dropped by 83,000 compared with the year before. An element of this, of course, is those people who have chosen to leave the sector.
The mood, therefore, is cautious and there are some hard decisions to make that are less to do with performance, and more focused on what should be put in place to survive. The McKinsey State of Fashion 2023 report says that fashion companies that can adapt to the increasing complexity by updating their operating models and adjusting their strategies for supply chain, sales channels and digital marketing will be best placed to weather the upcoming storm. This is a good indicator for other parts of the retail sector. Do they press ahead with automation knowing that ultimately this will reduce their reliance on staff? How do they prepare themselves for the drop in discretionary spending as consumers tighten their belts? If redundancies are necessary, how can they ensure their growth strategies are fulfilled? In a sector known for its ability to pivot, it looks like in the New Year it might be necessary again.
Help where it’s needed
What does seem certain is that retailers will hold back on recruitment, even to the point where they will seek to save money by not replacing senior full-time execs when they depart. Reducing headcount without compromising on output will be difficult, but one way to achieve this is by shifting their business models to allow for interim professionals to provide short-term capacity and expertise.
The requirement for interim support typically stems from sudden corporate openings, turnaround operations or to meet the demands of specific projects. On our platform, which is a marketplace for independent consultants and industry experts across many different sectors, including retail, we have seen a 45% increase in the number of ‘interim projects’ over the past year. What we read into this is a growing realisation that, regardless of whether a company needs a CEO, a CTO, an eCommerce Director or a Senior Director of Marketing they can find a suitable, highly experienced candidate within 48 hours. What is more, they control the length of the project and the budget knowing that the interim appointment will make an impact from the moment they start.
Interim managers always come with experience, and while they may have deep capabilities in retail, they are also likely to have worked across other industries too and will have absorbed expertise along the way. Their goal is to bring their whole expertise to the fore and support clients in what are going to be uncertain times. This has the effect of injecting much-needed energy and focus, particularly for retailers who are facing major challenges. They are also flexible and independent enough to be able to provide an objective viewpoint.
Cost-effective, not costly
One of the main concerns that retailers may have about interim managers is the cost. In fact, they are very cost-effective. Instead of the additional expenditure associated with senior employees such as pension schemes, bonuses, holiday pay, private health and a company car, an interim is paid only for the days they work.
These experienced professionals not only provide strategy, but can implement too, and are focused entirely on the profitability of the companies they help, for as long as they are helping them. If a retailer decides to go ahead with a complete eCommerce platform rebuild but doesn’t want to employ someone permanently this is where an interim manager can help. If the financial year end is looming but the CFO left three months ago, an interim management accountant can step in. Uncertainty looms over all of us right now, but for retailers trying to make tough decisions about how they plan for the coming months, it’s important to know that experienced managers are available for as long as needed from dedicated marketplaces that can tap into a wide network of experts.
Contributor: Will Jones, Managing Director UK & North America at COMATCH
