Retail Today: Lots Of Challenges, But Keep Looking For Improvements
25 October 2014 Leave a comment
When I’m strolling through a shopping mall, there are three things that stand out: a number of shops are closed because of bankruptcy, a growing number of shops are selling with 50-70% discount and the remaining shops do reasonably well. ‘OK’, I tell myself, ‘this is because e-Commerce shops are growing faster than the market’. Altogether, though, the Retail industry is on fire. But let’s not focus on the negative side, let’s see if and what we can do about it.
World Retail Congress asked attendees to describe the main challenges facing their company and the retail industry as a whole and what they were doing to overcome them.
What are the challenges for retailers?
The global retail industry is drastically changing, especially the saturated markets in Europe, North America and East Asia will experience reduction in sales areas. The number of stores is going to decline. Retailers with a long-standing tradition, who missed adapting to the changing market conditions over the past few years will disappear from the market. Here are the main challenges for retailers today:
- Manufacturers are turning into retailers – Selling direct to the customer is not something manufacturers usually consider as a viable option. Selling has always been regarded as a job for the wholesaler or retailer not the manufacturer – but this dynamic is starting to blur as manufacturers look to sell direct. This approach intensifies competition
- Online Retail, threat or opportunity – The traditional retail industry estimates that online retail sales will more than double over the next 10 years and thus pose a substantial threat to the industry. If this trend continues, many offline retailers will be left facing enormous challenges. Growth may stop and some retailers may also see a drop in sales. ‘Dead malls’ could become a more common sight. Offline retailers who are unprepared and not already taking action to confront this competition may well be squeezed out. For those that recognize the challenges ahead and meet customers’ demands, there are more opportunities on the horizon than threats
- Showrooming: research in- store and then buy online – Brick-and-mortar retailers can proactively eliminate showrooming by attempting to make their in-store experiences more unique, improving customer service and offering product giveaways to attract shoppers. But more importantly, traditional retailers will do a better job of integrating their online and in-store offerings
- Reverse showrooming, research online and buy in-store – Showrooming was once seen as a big threat to traditional retailers, but it turns out the reverse dynamic is more popular. Reverse showrooming is actually more common than showrooming. And showrooming isn’t the territory of the young, as you might assume. In fact young people too prefer to reverse showroom
These challenges are just a quick overview of all the problems retailers are facing today. Some solutions that I would like to address, are improving your customer relationship and improving your online presence.
Optimize your customer relationship
Improving your customer relationship is important for every retailer, both traditional and online. Customers are becoming more demanding
- Value for money, price, cost and competitiveness – This is the financial aspect of a customer’s relationship with you. Many see ‘value for money’ as being something more significant than just cost or price. Consumers want tofeel that the whole experience has been of value. Whether price is high or low is not as relevant as the consumer perception of value
- Customer Service – Customer service is vital to your customers – from pre sale, to post sale. Your ability to help consumers at every stage of the journey is critical here, including the ability and willingness to sort out issues as they arise
- Keeping promises and reliability – Customers want and need to be able to trust your organization to do the things you say you will. Where promises are broken, it will have a fundamental effect on your relationships with customers. Do organizations know how reliable they are? Understanding your own internal capability and aligning it to customer perception can seriously aid your understanding of the elements of your customer journey that need to be improved
- Quality – Essentially, customers need the things they are buying to be of the quality they expect. The link to price and value is vital. Customers still expect quality, even in a world where they expect competitive prices
- Ease of doing business – Customers want websites to be easy to navigate, products to be easy to access and retailers to be easy to contact. In our increasingly automated and mobile enabled world, customers crave simplicity – retailers who make it difficult to interact, will ultimately lose out
Improve your online presence
If you want to better engage with online customers and improve your online presence, try these tips:
- Create content that potentially creates buzz – In order to bring more potential customers to your site, produce high-quality content that can be shared in a variety of customer segments. Think of white papers, a free downloadable e-Book, posts on your company blog, guest posts on high-traffic websites, and links to interesting articles shared through social media. Focus on sharing information that benefits your readers in some way and encourages them to comment or share that material through their own social media profiles. Creating shareable content is the best way to put your brand in front of a larger audience
- Use social media for efficient customer service – Social media channels like Facebook and Twitter have made it easy for retailers to offer quick customer service solutions online and consumers expect that every business will do this. Social media is a great customer service for retailers because it makes it easier to find out about and resolve potential problems quickly. However, since it’s more public than a phone call, if a customer tweets a complaint at you, everyone can see it. That’s why you’ll need to regularly monitor your social media profiles and respond both promptly and professionally when you get a complaint or question
- Check your analytics about your online presence – Feedback from customers is very valuable, but not every customer is going to give you feedback, so you should also use analytics to track website behavior, such as bounce rate, navigation path, heat maps, time spent on each page, and more. Although looking at online analytics isn’t a means of directly communicating with customers, it’s a means of determining how to better communicate with them in the future
- Monitor your online reputation – Most surveys indicate that a vast majority of shoppers say they’re influenced by positive online reviews, and that their purchasing decisions have been swayed by negative reviews. Connect with sites like Yelp to see what people are saying. If a past customer posts a negative review, don’t get defensive. Just like with tweets, anyone can see an online review as well as the response, and you don’t want to come across as combative and unprofessional. Respond to the negative review with an apology and, if possible, outline what you will do to make the customer’s service better in the future
Many traditional retailers are experiencing challenges eroding their margins because of severe competition and a very cautious consumer. This situation is already lasting for nearly six years and some retailers have disappeared. Consumers have become more demanding and have limited budgets. There are two areas I described in which retailers can improve their current situation: improve your customer relationship and optimize your online presence. Since tough competition is likely to stay, your focus on customers will be the best thing to do.
Now it’s your turn
What has been your experience with challenges in retail and how have you overcome these problems? Share your experience in the comments.
About the author
I’m a seasoned Business Consultant specialized in Business Development, Business Modelling and Pipeline Management, including Digital Marketing, Lead Management, Marketing Technology and Marketing & Sales Alignment. I’m owner of a company called Bizzmaxx. Download Bizzmaxx Company Profile here.