According to forecasts from The Center for Retail Research, between 2023-2024, retailers will face several challenges as they try to keep their businesses afloat. These challenges include the post-Covid-19 recession, reduced retail spending due to rising inflation, and more.
While some traditional retailers have closed stores or moved to ecommerce entirely, others have embraced new technologies that have helped them reduce costs and remain competitive.
In this article, we’ll highlight different methods innovative retail businesses are using in 2023 and beyond to keep operating and utility costs.
More and more retailers are adopting IoT technologies
The Internet of Things (IoT) describes a networked series of physical devices that use various types of sensors and technologies to communicate and exchange data with each other and with other intranet or web-connected devices.
2022 Allied Market Research data shows that the Covid-19 pandemic accelerated IoT adoption in the retail market, triggering industry growth at an average CAGR rate of 20.3% between 2022-2031 as more and more retailers adopt it.
IoT technologies commonly used to reduce utility and operational costs in retail include smart thermostats that detect and automatically adjust the temperature up or down based on preset conditions.
There are also smart plugs that monitor devices and turn them on and off when in and not in use, smart bulbs, and many other smart devices that can communicate and share data to optimize operations, thus significantly lowering costs.
Customer facing technologies
Many retailers now understand that longer sale cycles are costly to a business; they lead to lower revenues and higher/costlier operating costs.
This fact has motivated many retailers to adopt customer facing technologies that shorten the sale cycle by helping customers find and buy what they need faster, thus reducing costs.
Some customer-facing technologies commonly used to reduce operational and utility costs in retail include:
● IoT connected in-store navigation devices: IoT devices that use augmented reality, magnetic positioning, and other technologies can significantly reduce how much time customers take to find what they need.
When customers find what they need faster, they take less time to shop, which reduces the sales cycle, increases revenue, and lowers cost–especially if you have IoT devices like smart thermostats, lights, and air conditioning.
● Data analytics: According to a 2015 study by BARC, businesses that use big data as an integral part of their strategic decision-making process experience as much as a 47% reduction in operational costs.
For example, more and more retail businesses are now using big data to track, streamline, and reduce the costs involved in shipping products from suppliers and onward to the customer.
More retailers are switching to energy saving smart devices
Switching to energy saving smart devices is one of the key things retailers are doing in 2023 and beyond to drive down utilities and operational costs.
For example, many retailers are now using technologies like:
● Energy-efficient appliances: Common appliances used to cut down utility costs in retail include energy-efficient smart refrigerators, cookers, and other appliances that use less electricity than conventional ones and also have in-built energy saving features. Intelligent appliances also help save on operating costs because they require less maintenance than their standard counterparts.
● Energy-saving lighting: When you walk into several retail stores, you’ll notice them using energy-saving lighting fixtures like low-wattage bulbs or even fluorescent lights that reduce power consumption. Many others also have motion sensor lights that automatically turn on and off, thus reducing power wastage.
As you can see, retail businesses currently use different ways to reduce their utility and operational costs.
While all these strategies work and can significantly help lower operational and utility costs, the most impactful thing retail businesses are now doing to reduce overall costs is switching to more eco-friendly power sources like solar.
Many retail businesses are also using tools like electricity calculators to ensure they use the most cost-efficient energy provider. For example, you can check iSelect electricity plans to see what different providers offer.
The key thing to remember is that as a retail business owner, there’s no shortage of things you can do and 2023 technologies you can take advantage of to lower your operational and utility cost. You only need to think strategically about it, then implement the ideas that will work best for your business.