Exclusive: The pandemic sped up the pace of change in retail, says Manhattan’s CEO
Ever since Covid became a household name and the pandemic creeped into businesses’ operations, global supply chains have been under more pressure than ever.
It is one of the reasons urgent supply chain commerce transformation has been at the top of the agenda of retail giants, industry leaders, product experts and agents of change.
One company that is working to power this change is Manhattan Associates.
This week the US-based retail software giant brought together key industry players in Berlin as the company’s CEO – Eddie Capel – plays a vital role in the global discussion about where retail should head next.
City A.M. sat down with Capel to get his take on how retail, wholesale and manufacturing companies in the UK and around the world are impacted by the current challenges, and what the next big transformation in unified commerce may be, powered by more advanced technological models.
Heavyweights from retail, wholesale and manufacturing are gathering here in Berlin this week to share insights and experiences. Post-pandemic, why is it so important to meet in person, why now?
They are no strangers to change, but the pandemic has significantly ratcheted up pace of change these last two years. While the pandemic seems to be thankfully subsiding, it sparked changes in the retail industry that are not going away anytime soon.
“Bringing players together in person right now is important so that they can validate the changes they have had to make to their business strategies during the pandemic.”Eddie Capel
For example, a number of our customers have expanded their technology strategies to leverage the latest automation and robotics to overcome labour supply challenges, and RFID technology has seen an increased usage to improve inventory accuracy. They are also evaluating new technologies like artificial intelligence and machine learning to see what kind of efficiencies and performance gains they can add.
The US, UK and EU are bracing themselves for a proper recession. How is the wider retail space holding up?
The retail industry is remarkably resilient. Everyone loves a strong economy and high consumer confidence, but it’s par for the course to have some market pullbacks from time to time. When the economy slows down and retailers find themselves competing harder for the remaining business, agility and customer experience become increasingly important. We’ve seen some incredible innovations that enabled our retailers to keep pace with shifting shopping habits while balancing operations between online and in-store functions.
Many of our clients moved to our cloud-native, microservices-based omnichannel order management system which enabled them to quickly move from a DC-centric fulfilment model to a ship-from-anywhere model, including ship-from-store, buy online pickup in store, ship-with-Amazon-Prime, etc. Many of them quickly turned their stores into fulfilment centres, saved jobs, and handled huge spikes in e-commerce orders, while delivering products faster and more efficiently. This is a HUGE competitive advantage that bolstered both their profitability and sustainability.
Having just had multiple years of pandemic misery with multiple lockdowns, how much more can the different retail sectors take?
As I mentioned above, the pandemic certainly sped up the pace of change in retail. These changes provide an opportunity for innovation and enhanced consumer experiences. Retailers are adopting a number of technology solutions to improve their market resiliency and streamline supply chain processes. For example, they are combining their store replenishment and ecommerce fulfilment warehouses, eliminating redundancies in inventory, storage space and labour.
“Retailers are also using machine learning technology to dynamically optimize order routing to select the lowest cost shipping option while ensuring customer promises are kept.”
They are introducing automation and robotics into the warehouse to reduce labour costs and solve labour constraints. Retailers are also being more mindful of their inventory and technology investments. They are implementing new tools to analyse promotions and better identify the true drivers of demand. These businesses are also moving their systems to the cloud, freeing them up from the cost of servers and hardware upgrades and maintenance.
And to zoom in on your business, are you preparing for a difficult time ahead?
We are optimistic about the future. Financially, Manhattan is very well-positioned. We are debt-free and have recently posted five consecutive record-breaking quarters. Those record-breaking results were largely because our solutions provide a great balance of productivity enhancements, cost savings, greater consumer experiences and topline revenue generation for the markets we serve. Regardless of the economic cycle, businesses are always looking for the kind of agility, flexibility and value we offer.
What are some of the main challenges your business currently faces?
Our biggest challenge is building awareness for our world-class Point of Sale and Store solutions. Manhattan is a so identified with our market-leading supply chain execution solutions – our Warehouse Management, Transportation Management and Order Management solutions are used by some of the largest brands in the world – that our next-generation Point of Sale can get lost in the mix.
“The role of the store associate is changing rapidly.”
Manhattan’s Store solutions are built to support modern sales associates by facilitating personalized, best-in-class service, while simultaneously enabling efficient fulfillment of online orders. Our cloud-native Point of Sale solution provides a single, intuitive experience across all of these functions, empowering store associates with its unified omnicart technology, 360-degree view of the customer, real-time clienteling tools and endless aisle capabilities.
Looking ahead, despite the economic downturn, where do you see opportunities for growth?
The current market conditions have already generated strong demand for our core solutions and our business momentum is good. Our products are recognized for their robust functionality, and we are innovating into white space.
In 2017, we released Manhattan Active Solutions, accelerating our business transition to cloud subscriptions. Demand for our cloud solutions has been strong from both new and existing customers, especially within the retail, wholesale, grocery, and medical & pharma industries. Cloud solutions are our fastest growing revenue line and represented 77 per cent of our total software revenue in 2021. We expect this number will continue to grow this year.
With 16 offices in 13 countries and partner relationships on nearly every continent, we see many opportunities to grow our business internationally. Last year, our Total Revenue from our EMEA segment grew by 18%, surpassing $100 million for the first time in the company’s history.
Anything else you would like to say or share with our readers?
Environmental initiatives were finally coming into their own before the pandemic. After a brief pause, we are seeing these issues return to the forefront. Specifically, the increasing number of environmentally conscious consumers is leading to more environmentally conscious retailers.
“Environmental sustainability is extremely important, but businesses must balance this with their financial sustainability.”
Fortunately, these two goals can be symbiotic… a more efficient and effective supply chain is both more sustainable and more profitable. Manhattan Associates helps our customers build more efficient and effective supply chains. We recently outlined our Environmental, Social and Governance initiatives on our new ESG page and are working with our customers to give consumers greener buying options.
Finally, what do you, personally, hope to get out of this week’s event?
I am looking forward to reconnecting with our European customers, getting updates on their businesses first-hand, and making sure that our product development and service strategies are in-line with their needs. We’ve ratcheted up our innovation to keep up with the rapidly evolving market as well. For example, Manhattan is proud to be the first vendor to build a warehouse execution system into a warehouse management system to speed up the adoption of automation. We also partnered with many of the industry-leading robotics and automation providers to create the Manhattan Automation Network to help get automation initiatives up and running faster.
Manhattan is also leveraging the latest in RFID technology to help stores improve inventory accuracy, enhance operations and fulfill orders much more efficiently. And we also pioneered the use of machine learning to improve the accuracy of delivery date calculations when fulfilling online orders from stores.
To innovate and solve these real-world problems, it is imperative that we maintain a very close connection with our customers, and this annual get-together is a wonderful opportunity to re-establish those bonds.