What are the trends in retail?
Shorter selling seasons and other technical and cultural changes are impacting on the way retailers do business as there has been reductions in customer visits.
Reductions in customer visits as a result of greater levels of online purchasing; shorter selling seasons making inventory management harder, and countless other technical and cultural changes are having an impact on the way retailers do business.
To say it’s been hard to keep up with the pace of retail business change over the last decade is an understatement. Technology has changed the way people now shop, how retailers sell, and the role of many working in the industry. Fragmented IT infrastructure, ageing and siloed systems, stores and distribution networks have also made the challenge to efficiently brand, market, merchandise, service and sell across multiple retail channels extremely difficult.
We explore some of the trends and problems keeping key decision makers up at night in part one of the challenges retailers face today. Head over to part two to learn about solutions that just might have the potential to help businesses and people in retail compete more effectively.
Trends impacting the retail industry reshuffle
“Always open” availability. People’s expectations are higher and they want their purchases now. They want the transaction to run smoothly and they want good service. Unfortunately, not everyone has an effective plan for dealing with costly outages that can disrupt the customer experience, impact sales and reflect negatively on the business.
New and emerging technologies. Newer technologies, such as digital signage, kiosks and mobility, are challenging retailers’ infrastructures. Emerging technologies, such as near-field communications (NFC), are close behind.
Growing data. As with other industries, retailers now collect and store massive amounts of customer, product and transactional data, which can be meaningless unless it can be analysed for actionable intelligence.
Performance bottlenecks. Managing many simultaneous customer transactions can slow applications to a crawl, and has the potential to impact sales - not to mention the frustration it causes for customers. Frustration customers fast become lost customers.
Increasing costs. Management within an omnichannel environment has meant that instead of directing scarce resources to improving the customer experience, resources are often diverted to maintaining inefficient infrastructures. Productivity levels are driven down, costs up, having an altogether negative impact on the customer shopping experience.
New skills. There are enhanced expectations that people can be digitally savvy at all levels, be that in the board room or on the shop floor. With the continued rise of online sales, a customer’s expectation is that the experience transcends online into the stores. Retail assistants are now using the latest technology to offer in-store personalisation, and are expected to make recommendations and suggestions.
Security. One of the bigger challenges in retail today is securing the Point of Sale and all customer data from breach. Data security is high on everyone’s list of concerns, including the biggest chains. Regardless of the level of compliance with PCI, this is one issue that can keep not only CIOs, but also CFOs and CEOs up at night.
New customers. Another tough challenge facing retailers today is how to drive traffic to stores. At a macro level, store-based growth appears largely stagnant with most growth in consumer spending coming from e-commerce. Once customers arrive, encouraging purchases without discounting or delivering exceptional value has become harder. And with fewer shoppers travelling, the key focus is on how browsers are converted into buyers.
Change in focus. A few years ago, retailers were laser focused on cost-cutting to improve margins, but now the focus is on flexibility and speed to market. We’re seeing this specifically with inventory management. We may see retailers responding with solutions that are already out-of-date and uncompetitive.
Maintaining staff efficiency. Finding and keeping good staff has always been a challenge in retail. Having a more effective frontline sales staff brings real opportunities for growth. But with on-site traffic falling, retailers must be able to convert more customers and increase the average sale. Click-and-collect has become an essential offering and must be executed flawlessly.
There are some age-old retail practises that haven’t been impacted to the same extent by technology advancements – but this doesn’t mean they shouldn’t be overlooked.
High staff turnover. Retail is well-known for having a high rate of employee turnover. This means people routinely come and go, which poses several challenges. Training and developing are difficult, time consuming and constant if you must continually recruit and hire new people. It's also more difficult to build customer loyalty if customers keep seeing a new face every time they enter your store. People generally no longer join a business looking to make a difference, they join to earn a living.
Diversity. A diverse workforce is typically regarded as a good thing. It helps a retailer better connect with its marketplace and usually leads to more and better ideas and results. However, a staff of people from widely varying demographic backgrounds might have trouble developing cohesiveness.
Seasonal demand. Retailers often experience seasonal demand fluctuations. The holiday buying season, from "Black Friday" through Christmas, is well-known as the busiest shopping season of the year. Retailers often try to add temporary staff during these times and can end up with fewer skilled and trained workers who might not have the tools to best serve customers. In a worst-case scenario, these new team members can also alienate regular staff who must pick up the slack.
Recruitment complexity. High staff turnover means significant time and financial investment in recruitment is a constant in the retail industry. There are more channels than ever for recruiting, be that via agency, job board or a sign in the window. Applications can outnumber the jobs available by a factor, and as well as the cost and the time required, there’s the danger of missing out on the best workers because they’re lost in a pile. With such volumes to manage, it’s also important to not fall foul of employment law, which is focused on protecting employees when interviewing and hiring.
Now that we’ve explored the spectrum of trends and challenges threatening the futures of retailers, what can be done to make sure your business is in a strong position? Read part two, Get Closer to your Customer to see Retail Success, to find out…