Jack Kleinhenz, Chief Economist at the National Retail Federation, indicates that the robust economic growth in the American economy through Q3 is forecast to cool in Q4 2023. “As of December 1, the Federal Reserve Bank of Atlanta’s “GDPNow” model estimated growth at 1.2% for the fourth quarter.” This throws a wrench in the mix as retailers look to optimize margins. Retailers look to the four weeks post-Thanksgiving as a time to get right financially. With rising prices and other factors affecting the US economy, retailers should look to 2024 as a period where cutting mid-line expenses is critical.
Where Does Technology Fit?
Technology solutions are an absolute requirement for retail businesses today. E-commerce, networking, secure bank transactions, and so much more are the lifeblood of retail today. The sheer number of options can be daunting. Many solutions are added “ad hoc” without researching the long-term costs. Once a problem has been solved, the solution may be left in place, sucking money with no return.
End of Year Audit
Savvy businesses conduct periodic technology audits. These audits should encompass the full range of IT products, subscriptions, services, and more. If you’re concerned about your retail business having to cut costs in an economy that isn’t rebounding as quickly as you had anticipated, include these in your end-of-year audit:
- Hardware. Are you supporting aged or even archaic hardware? Do you need a full on-premises storage solution? Would a hybrid approach be more appropriate? Who is servicing your hardware? Does your IT provider have the know-how and certifications to keep up?
- Software. Does your overall software solution meet your needs (growth, expansion to new markets, new SKUs, etc.)? Are you paying for software you no longer use? Is your ability to add/remove licenses easy or complicated? Does the software you have in place appropriately address your current business reality?
- Services. Has your IT solutions provider spoken with you recently? (Hint: If it was in Q1, are they really a trusted advisor?) What suggestions for business process improvement has your services provider offered you? Do you even have a services provider? If not, do you need one now?
- Personnel. Do you need more internal resources to best service your technology? If headcount isn’t in the budget, does your IT solutions provider offer PAYGO or “as-a-service” options where you pay a fixed cost and can take advantage of their expertise to handle your situation? A serious look into this option can save your company upwards of hundreds of thousands of dollars or more.
Optimize for Next Year
If 2023 has been a year of growth, but you’re just patching your existing technology, you need to rethink that strategy. Taking the time to conduct a comprehensive IT audit could be the difference between weathering the economic winds or finding yourself blown onto a sandbar stuck in the muck. If you’re not sure when the right time is for an audit, here’s the answer: Now. It’s never too late to do what’s right for your business. The ability to understand that the status quo will only lead to more of the same can be a powerful motivator. This is especially so if your status quo has you headed toward the rocks and not the safety and flexibility of open waters.
As you and other retailers look to optimize margins, PKA can help. Our solution advisors are skilled at looking at your IT solutions and providing expert recommendations on where you can cut costs, better allocate components, and create the solution that is right for your growth, your people, and your budget.
Reach out today to start the conversation. We’re always listening.