In 2020, the UK retail sector saw the biggest drop off in sales on record, which saw clothing and fuel volume sales taking some of the biggest hits and falling by 21.5% and 22.2% respectively.
But, while in-store shoppers found themselves penned in by multiple lockdowns, retailers with online shopping platforms experienced a boom, with online sales achieving a 33.9% share of all retail spending.
Fast forward to January 2022, total retail sales were up 3.6% compared with pre-pandemic levels (February 2020), while the share of retail spending for online sales reduced slightly to 25.3%.
So, it’s pretty fair to say that it’s been quite the rollercoaster for retailers over the past two years, and it seems the turbulent times are far from over.
Retailers now find themselves faced with new challenges which have arisen because of other market influences, such as Brexit, supply chain issues, and the sharply rising energy costs.
One challenge in particular that seems to be a hot topic is inflation which is currently at its highest rate in 30 years. And, with the cost of living outstripping any increase in wages in the UK, and the advice of market experts creating further uncertainty, are retailers set to experience another dip in the sales ride?
With so much uncertainty within the retail industry, the wider market, and the global economy, what can retailers do to bring stability to their organisations while looking to the future?
Spending vs saving
We’re all familiar with the spending vs saving dilemma. It’s a constant struggle for many organisations, but it has never been greater for the retail industry than it is now.
Retailers are looking to save every penny they can to bounce back from what has been one of (if not the) most trying times of this century, while also affording themselves more of a buffer for any future events.
But, at the same time, a great many retailers are trying to forge new ways to improve the consumer shopping experience and retain sales volumes. Creating efficient online shopping platforms, developing augmented reality technologies for shoppers to see items up close, and investing in ways to make shopping in store an exciting experience again are all crucial ventures that retailers are looking to explore to safeguard their future.
According to the Office for National Statistics (ONS), online retail sales rose slightly in December 2021 to 26.6%, which is substantially higher than the pre-pandemic figure of 19.7% in February 2020.
This last statistic from the ONS really highlights how important development in new technologies is to the retail industry.
This is a notion that Oracle has long been using to its advantage, and is the logic that the vendor has embedded into its continuous database release model. Freuqent innovation releases – typically pushed between major, long-term support releases – serve to highlight Oracle’s constant modernisation of its databases.
That being said, the vendor’s innovation releases will see organisations forced to upgrade much more regularly. This is because Oracle’s customers will only receive two years of Premier Support before they find themselves sliding down the slippery slope of Sustaining Support (and for those who are keen to keep ahead of the curve, this is not the place to be).
But, with each innovation comes a need for capital to invest in advancing and implementing these technologies. So how can you save for the newest technologies – the releases that will actually make a difference – when your organisation finds itself regularly jumping through the upgrade hoops for minor, immaterial modernisations?
And while a great many organisations in the retail industry are trying to plot a route to stability and success, mega-vendors (the likes of Oracle and SAP) have continued to report periods of growth.
Oracle reported in December 2021 that it had experienced a 6% increase in its total revenue ($10.4 billion) by the end of its second quarter of 2022, which was largely driven by an uptake (grown by 22%) in its Cloud offering.
Similarly, SAP reported a 22% jump in its Cloud revenue and a 6% increase in its overall Cloud and software revenue in its preliminary year end results for 2021.
It’s no surprise that these vendors are continuing to experience growth trends, with both SAP and Oracle raking in a 90% profit margin on their support and maintenance services. In the case of Oracle, this vendor also draws on its costly upgrade cycle to subsidise the development and advancement of its Cloud offering.
Faced with such uncertainty as a result of market influences, the stability that retail organisations are seeking won’t likely be found in the support of the mega-vendors. Continually rising support costs, the possibility of a surprise audit, looming desupport dates, and unwanted upgrades have many organisations on edge.
So, how can retailers bring back the steadiness they need to focus on keeping ahead of market trends, consumer demand, and competitors?
Saving the shops
One way the CIOs of huge retailers, such as Sainsbury’s, have reclaimed millions on their IT budget is with Support Revolution.
Our third-party support service has allowed them to move away from Oracle or SAP Support, where they were being charged (at the very least) 22% of their licence fees each year. For retailers in Extended or Sustaining Support, this figure will be much higher.
Instead, our service provides retailers with comprehensive third line support for at least 50% less than what the vendors charge. On average, we have reduced our customers’ annual Oracle or SAP support and maintenance bill by 64%.
Not only do we reduce our customers’ bills, but we help them to make additional savings by alleviating the strain of undertaking a costly upgrade.
Support Revolution supports a complete range of vendor products, including those no longer supported by the vendors themselves. Retailers could choose to stick with their current system – customisations and all – while they consider their next steps. This means that an organisation can, instead, opt to upgrade on a timeline that suits their goals, needs, and budget.
In addition, because we hold ourselves to an exceptional standard, underpinned by our unrivalled SLAs, organisations can count on our team of experts to deliver the right fixes efficiently.
Our proactive approach to support means that retailers won’t have to stretch their internal resources and will, instead, be able to focus on what matters most to them; whether that’s driving forward with digital transformation, rejigging infrastructure, or launching an innovation project that had previously been placed on hold.
Through our steadfast approach to support services, Support Revolution helps customers to redeploy funds from maintenance to innovation so they can invest in their own future.
To find out more about how we’ve helped our customers take back control of their IT roadmap and futureproof their operations, follow the link below to check out our customers page.