How finance talent is driving success in the retail sector
Finance professionals have played a critical role in mitigating the havoc wreaked by the pandemic on the retail sector. They played an essential role in ensuring the industry adapted, recovered, and thrived since March 2020 right up until the present day.
However, across the sector, different businesses faced different challenges.
On one end of the scale, you have the high street. Several high street chains were facing impending financial ruin long before the pandemic, with the crisis accelerating the inevitable. The implosion of former high street heavy weights, Debenhams, Arcadia and Laura Ashley, at the height of the emergency confirmed this.
However, other retailers faced a completely different set of challenges and were forced to transform their business models overnight. For example, supermarkets saw demand for their services grow to unprecedented levels. Although, they proved to be extremely adaptable, especially when the number of people looking to have their groceries delivered doubled. This led to increased investment in their delivery infrastructure and staff distribution. But this dynamism and investment translated to sustained increase in profits, as Aldi, M&S and Tesco saw an 8% rise in year-on-year sales for Q4 2021.
Moreover, ecommerce retailers thrived during the pandemic. Namely, online retailers like ASOS saw profits triple during the six months to February 2021. Retail industry experts have attributed this to the rise of remote working, and the fact that people spent more time online.
Despite broad subsections of the retail sector adapting astonishingly well to the turbulence of the pandemic, the sector is still faced with considerable challenges in 2022, namely:
- Labour shortages
- Supply chain issues due to Brexit
- Dwindling consumer confidence in the midst of record inflation and increased cost of living
- The shift online
However, finance and accountancy talent is at the core of the solution as further planning and responsible fiscal management is needed to combat these potential problems.
Finance teams must continue to be dynamic and show they can quickly respond to the changes in business".
How can finance professionals mitigate some of the challenges in the retail sector?
Labour shortages
Businesses have been facing a labour shortage years before the pandemic. However, lockdowns, transition to remote working, and furlough have only exacerbated the problem.
Following the pandemic, labour shortages jumped to 54%, up from 38%, and turnover rates are up 15% compared to last year. To mitigate this problem, business and finance leaders should look to technology for solutions. In areas where labour shortages are due to workers being reluctant to perform menial or dangerous tasks, tools like AI and robotics can improve efficiency, deliver quality, enhance supply chain management, and reduce risk.
Supply chain issues due to Brexit
The supply chain issues which have arisen from Brexit are complex and have been developing over several years. Since the summer of 2021, the issue has become much more prevalent, with sensationalist stories hitting the headlines, both in the UK and globally. Supply problems have led to delayed deliveries, higher prices, and gaps on supermarket shelves.
Finance teams must continue to be dynamic and show they can quickly respond to the changes in business. In conjunction with supply chain challenges, there’s the possibility of changes to tariffs or quotas that could be introduced under new trade deals. Moreover, finance teams must continue to assess the impact of exchange rate movements on the cost of overseas labour, and changes in raw material costs and product pricing decisions.
Consumer confidence in the midst of record inflation and increased cost of living
Most finance teams are feeling the impact of inflation on their business. The labour shortage and supply chain issues have created the perfect storm for a rise in costs, which are inevitably passed down to the consumer.
But figures for the Golden Quarter (October-December) 2021 are slowly trickling in, and it’s clear that many retailers have had a resurgence during this period, despite record cases of COVID, soaring costs and supply chain issues. Thus suggesting consumers are still keen to spend money in the face of uncertainty.
From a recruitment perspective, retailers and other consumer businesses are some of the most active hirers in the market".
The shift online
The Financial Times described the pandemic as ‘the moment Europe discovered digital shopping’, and indeed, countries across Europe have seen rises in online shopping that will outlive the pandemic.
Throughout 2020 and 2021, there was unprecedented growth in online sales as the pandemic and lockdowns accelerated the shift online. In 2021, data from the Deloitte State of the Global Consumer Survey shows that despite the vaccine roll-out, consumer confidence to engage with person-to-person services and shop in-store remains cautious.
Furthermore, footfall remained down on 2019 levels, and while it is steadily increasing, online sales are robust in light of the opening up of non-essential retail. Analysts are anticipating that online sales will continue to grow at above market rates for the foreseeable future. Finance teams must support this shift in consumer demand and support investments in increasing capacity and capability as the digital transformation of retail consolidates.
What does this mean for finance professionals in retail looking to move roles?
From a recruitment perspective, retailers and other consumer businesses are some of the most active hirers in the market. As businesses rebound, they will be looking to add even more talented finance professionals to help guide them post-pandemic. This is partly down to the need to add to the headcount they lost over the last couple of years. This will be a challenge in itself, due to the number of talented candidates being at an all-time low, further increasing pressures on business.
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