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Vertical Markets: Tax Reform Windfall Creates Technology Upgrade Opportunities for Retail

Posted by Norman Korn on Aug 21, 2018 12:00:00 PM

The Tax Cut and Jobs Act of 2017, which took effect on Jan. 1, 2018, cut corporate tax rates 30 percent or more. Retailers, in particular, were among those most beneficial as businesses like Nordstrom and Dicks Sporting Goods are expected to see their tax rates drop from the high 30s to the low 20s1. Now, with the end of the third quarter closing in, most businesses have had time to realize the effects of the Act and incorporate the added revenue into the coming year’s budget planning process. By paying less in taxes, companies have more discretionary income and many options on how to use it.

Accelerate Retailers’ Digital Transformation

According to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model, from 2018 through 2027, tax savings for the retail industry is projected at just over $170 billion2. As mentioned above, the options for using the additional revenue are numerous: stock repurchases, dividends, employee wages, and benefits, to name a few. With the rapid changes in technology, many retailers are planning for the future by reinvesting in their businesses and upgrading their IT infrastructures. Windfall revenues are accelerating capital expenditure planning for data analytics, IoT, cloud and cybersecurity initiatives, providing tremendous opportunities for Value Added Resellers (VARs) looking to position their customers for long-term growth.

VARs can work with retailers on point initiatives and be successful, but transactional selling ignores the far more significant opportunity presented before them. The long-term nature of this windfall and retailers’ strategic need to define themselves in the digital era demands that they think and plan long term. The acceleration of digital to the 3rd Platform makes transformation not only strategic but 100 percent essential for survival. A VAR’s background to understand the retail customer’s brand, vision, and strategy, and build a technology roadmap to support it, will pay significant dividends for years to come.

A solutions-based, line of business approach is the key to success for both the retailer and the VAR. Line of business problems requires a systems orientation, involving the engagement and deployment of multiple technologies collectively: cloud for line of business solutions, storage and computing; security for guarding against hacking and theft; analytics for understanding the customer and process optimization; and, IoT as a new source of customer and process information.

VARs Help Customers, Tech Data Helps VARs

Retailers need guidance on how to become more operationally efficient or solve technology-related business problems using next-generation technologies like cloud, security, IOT, analytics, mobility, etc. This is where VARs can help. The uncertainty of how to proceed and the best technology to fulfill the retailer’s strategy is not his or her core competency. They know their customers, VARs know the tools to help them get –and keep– those customers.

At number 83 on the Fortune 500, Tech Data is among the largest technology distributors globally, representing all of the top technology vendors. The breadth of this representation provides us with end-to-end solutions knowledge using a broad base of vendor options and technological expertise, as well as custom configuration capabilities, inventory and distribution advantages. As the digital transformation gains momentum, Tech Data has the capabilities and resources to help resellers leverage their value as ‘trusted advisor’ by enabling their retail customers’ success through next-generation technology solutions. For more information on how Tech Data can help, contact us at solutionspathinfo@techdata.com

Sources:

  1. Retail Dive (https://www.retaildive.com/news/how-the-gop-tax-overhaul-could-affect-retail/513318/) Corinne Ruff, Dec. 18, 2017
  2. AP News (apnews.com/a1ce98550d0c4f3ebeae8406055b8c39), Paul Wiseman, Dec. 26, 2017

About the Author
Norman Korn is a retail solutions specialist for Tech Data, where he works with clients and business partners to assist in the identification, development, marketing and sales of 3rd Platform solutions and offerings within the Retail, Consumer Products and Hospitality industries. Prior to joining Tech Data in 2013, Norm worked 18 years at a Fortune 100 computer services firm as a data analyst, business consultant, marketing and operations manager, and partner development manager. He holds a BA degree in Political Science and an MBA, both from the University of Minnesota.

Tags: VAR, digital transformation, VARs, Value added solutions, trusted advisor, business insights, Retail IT Transformation, Retail Tax Cuts, Vertical Sales, 3rd platform retail, third platform retail

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