Retail CFOs have a positive outlook for the year ahead, according to a study by business services provider BDO, but are cautious as revenue expectations decrease while profitability expectations increase.
Despite a consumer focus on costs and getting as much as they can for each dollar spent, 70% of CFOs plan to raise prices this year, though the majority of the 100 CFOs BDO surveyed said those increases would be slight as opposed to significant. Regarding the workforce, 52% of CFOs plan to pursue more employee upskilling or reskilling opportunities with part of the motivation to create data-driven models around customers, products, and experiences. At the same time, 45% said they are building a proprietary generative AI platform. To improve inventory forecasting, 55% plan to deploy scenario modeling and predictive software this year.
CFO thinking about 2024 comes after some disappointment with 2023, as 61% said their revenue increased 1% to 25% in the year versus 71% who said the same a year earlier. As such, retail CFOs seem to be taking a more conservative approach to revenue projections, with 65% forecasting increases, down from 86% in the year prior.
When looking at cost optimization initiatives in 2024, 48% of CFOs mean to leverage automation and AI, 45% plan to reevaluate sourcing strategies, 40% intend to outsource or co-source work, 37% are contemplating layoffs and 37% figure to reduce their real estate footprints.
CFOs do see an investment value in specific technologies, BDO indicated. In the survey, 55% of respondents said they planned to deploy scenario modeling software to enhance supply chains, and 35% have already done so. Meanwhile, 44% intend to deploy AI and/or machine learning to improve the supply chain, while 38% already have done so.
BDO recommends that CFOs update promotional strategies using AI tools to improve the timing of discounts in concert with planned price hikes to maximize sales and compete more effectively. Further, retailers might consider certain relocations, such as moving out of major malls to neighborhood storefronts, as a real estate tactic that will get stores closer to target consumers who still work from home, reducing their commuting-related occasions of proximity to dense retail concentrations. In addition, BDO advocates, where possible, investing to increase warehouse operation efficiencies and improve inventory management, as well as leveraging predictive analytics that can help retailers focus on SKUs that sell.
