Retail Tech: The Biggest Retail Problems Remain The Biggest Retail Problems

Retail Tech: The Biggest Retail Problems Remain The Biggest Retail Problems

Easy Capital Hid Retail Problems

Readily available capital over the past decade + (with a few hiccups) has made it easy for brands and retailers to hide (or ignore) their weaknesses, and more importantly, created an environment that dampens the drive to evaluate and innovate on the cost side of the P&L when a brand can just keep growing, knowing that growth would be endlessly funded.

Exceptions exist, but many retailers followed a familiar pattern: create a brand, raise money from investors, and give it all to Meta and Google to drive demand.  Growth was easy–raise money, spend on acquisition, repeat.  

Beyond that, so many further resources are optimizing for conversion and retention with too little impact and a false hope that 20 projects that each promise a 1% lift will equal a 20%; spoiler–those projects are never additive. I hit on some of this in my previous post on the Lost Art of Marketing Alpha.

Newly-Realized (but Rarely Prioritized) Pains for Brands

With easy demand (and growth-focused investors), there has been little motivation to innovate and achieve discipline elsewhere in the business.  $9-figure opportunities live here, meaning $Billion companies will be created in these spaces.  

• Inventory Planning: The ever-important function of deciding what to buy is still too often run off “spreadsheets and intuition,” as one top 5 retailer described it.  Despite an abundance of data, simple seasonal adjustment formulas in Excel still rule the day.

• Logistics: Despite years of innovation, brands are still largely price-takers, not optimizing for carriers by weight, region, DIM, and other factors.  Emerging players in the logistics space create ample opportunity to save on cost here.  Think factory to consumer, not just last mile or new shipping lane innovations.

• Returns: The $800 billion problem and the bane of brands’ existence, the costs of returns extend well beyond logistics and warehousing and into margin degradation, customer experience, and retention.

Each of these are getting some attention as brands and retailers find themselves forced to rationalize their P&L.  Yet too few founders are building here; we see 10 personalization decks for every idea to combat returns, but returns is the single biggest pain for retailers; and it’s so hard to solve that many don’t even try (I think there will be a “returns stack,” and not a silver bullet).

I’d love to see more founders tackling these spaces, and brands and retailers have a role too in being more open to innovation and the talent that can solve these problems.