By: Jim Roddy, President & CEO at the RSPA
I’ve been spending hours gazing deep into the retail IT channel’s AI-powered crystal ball so I can tell you what the next 12 months will bring. Today I can say without a scintilla of doubt and with 100% certainty, here’s what will happen in 2024:
I’m not sure.
Let me expand on that by borrowing a phrase from late BlueStar CEO Steve Cuntz: “I may not know what to do but I know what not to do.”
None of us know for certain what the future holds – this Dec. 2022 CNBC article titled “Why Everyone Thinks a Recession is Coming in 2023” proves my point – but that doesn’t mean we should freeze in place until others shape the path for us. That’s what not to do.
In short, in 2024:
- VARs and ISVs should try, test, measure, and adapt
- Vendors and distributors should double down on business development
VARs & ISVs: Try, Test, Measure, Adapt
Through two late-2023 exercises, the RSPA’s annual review of member company profiles and a Focus Group discussion among RSPA members, we learned that leading solution providers are fully engaged in trying, testing, measuring, and adapting. The days of selling the same solution the same way to the same customers are in the rear view mirror for most VARs.
The most notable trend is the solution provider shift away from hospitality towards retail. A year ago, 80% of RSPA members played in the hospitality market; that has dropped to 67% today. They are focusing now more on retail which jumped from 66% a year ago to 78% today. One of our Focus Group VARs who has been serving restaurants almost exclusively for 30 years said in 2024 they will expand into grocery stores in hopes of becoming “grocerant” solution providers. A smaller VAR said while they have limited resources, their energy this year will be focused on the more stable retail vertical and less on rocky restaurants.
We think there are two factors behind the hospitality-to-retail shift. First, most of the VARs who have been acquired over the past 12 months focused on restaurants. Second, some VARs are trying to avoid the large, well-funded, marketing-savvy, direct POS providers that have grabbed mindshare and market share in the restaurant space.
These moves (among others) appear to be working. About three-quarters of the VARs in our Focus Group grew in 2023 and are anticipating growth again in 2024. All the ISVs grew in 2023 and expect more growth in 2024. And while a quarter of the VARs predicted their sales to be flat again in 2024, all the VARs and ISVs in our Focus Group are exploring new verticals and new solutions.
Vendors & Distys: Double Down on Business Development
All the vendors in our Focus Group had flat years and expect more of the same in early 2024; that’s the sentiment throughout the retail IT channel vendor world. Because of that, many vendors are inclined to pull back on marketing and business development spend.
I understand that logic, but the Goddess of Commerce does not smile upon those who ration portions to the demand side of their business. As a channel executive told me years ago, his formula for success was to “keep your head on a swivel for opportunities, then respond.”
Here’s opportunity knocking on your front door with a jackhammer and demanding a response: If VARs and ISVs say they’ll be aggressively looking for new partners, shouldn’t 2024 be the year vendors double down on marketing and business development to meet those needs? The vendors who choose to invest more in 2024 will be investing in their future. The vendors who choose not to are risking giving away market share to their competition while VARs and ISVs are in partner-acquisition mode.
I’m very interested to see who will be exhibiting at the RSPA’s RetailNOW show in Las Vegas July 28-30. Over 110 companies have already reserved a booth. Who will be the others? Who will be aggressive leading up to RetailNOW? Who will cede market share to them?
I referenced Steve Cuntz at the outset and will quote him again to close. I recall breaking bread with him at the RSPA Inspire leadership conference in 2009 when dire economic predictions cast dark clouds over the sun-drenched event. Cuntz said, “I’m going to choose to not participate in the recession,” meaning he was going to leave the handwringing and inaction to others and focus instead on expanding his business.
What’s your choice for 2024? Will you try, test, measure, and adapt? Will you double down on business development?
Will your next 12 months be a “grow” year or a “no” year?
