Convergence has the privilege of working with a host of retailers across New Zealand, and as such we are all too aware of the challenges facing retailers. In particular, recent reports have shown that almost half of Kiwi retailers did not achieve their sales targets in the first quarter of 2023. Word is that many are actively looking to cut costs by reducing staff numbers—that, in my opinion, is a mistake. Here’s why.

Cost-cutting through layoffs is 20th Century. Instead, I urge you to explore the multitude of new and emerging options available to us in 2023.

For example, by embracing online retailing technology, we can significantly reduce the need for staff to engage in repetitive, low-return tasks. By making these positions redundant (not the people, the positions), we can empower our workforce to take up roles that create tangible value for our businesses.

Allow me to illustrate the potential benefits with a real-life example.

A brick-and-mortar store in Invercargill integrated its eCommerce website with its business software, resulting in a remarkable transformation. Full-time employees who were previously responsible for updating products and pricing on the website were freed up to assume more valuable roles. Today, this company sells more shoes online than through its physical store.

Let’s take advantage of the staff who are freed up or made redundant due to automation and allocate them to areas that truly enhance the customer experience. For instance, they can be employed in customer service, providing personalised follow-ups via phone calls, and reinstating the human touch in retail.

To thrive in challenging times, there are several activities we should focus on to add value to our businesses. These include quick and efficient issue resolution, a seamless returns process, and improved personalisation based on tracking customer preferences and purchase history. By adopting these strategies, retailers can offer personalised recommendations and targeted promotions to their customers.

Integration of the eCommerce website with business software is pivotal in achieving these goals.

Surprisingly, less than half of New Zealand retailers have taken this step. Those that due find that they reduce the need for manual, low-value labour in tasks such as inventory management and order processing. With real-time inventory management and synchronisation, we can optimise stock levels and minimise inventory costs.

Automation in order fulfilment, elimination of duplication, and enhanced real-time analytics can lead to cost reductions of up to 30%. According to global management consulting firm McKinsey & Company, fulfilment costs alone account for 11 to 20% of eCommerce revenues.

With such substantial savings, there is simply no need to resort to staff cuts. Instead, let’s channel our workforce towards productive initiatives that drive business growth. Let’s turn adversity into opportunity.

As a parting note, I would like to offer three practical tips for retailers to cut costs, free up staff, and add value:

1. Streamline Workflow Processes: Integrate your eCommerce site with business software to automate workflows, order management, inventory tracking, and fulfilment. This reduces errors and eliminates manual intervention, enabling existing staff to focus on strategic tasks.

2. Create Clear Process Definitions: Clearly define and refine your processes. Once a process has proven successful, consider automating it to enhance efficiency further.

3. Improve Customer Service: Integration empowers you to enhance customer service without increasing staff numbers or resorting to cuts. Comprehensive customer data enables personalised interactions and tailored recommendations, fostering customer satisfaction and loyalty.

In 2023, we have no excuse to employ outdated staff-cutting tactics from the last century. Instead, let us leverage technology to add value and drive growth during these challenging times. Together, we can navigate the retail landscape with resilience and innovation.


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