Keeping retail stores running smoothly is a challenge any day of the week. Post-pandemically, faced with a tidal wave of supply chain slowdowns, inflationary issues, and labor shortages, retailers are struggling to steady the ship. And eMarketer reports that the global retail industry growth rate will slow to 4.8% in 2023. It behooves retail executives and managers to take a fresh look at what they can do to navigate the storm and chart a course to a stable, successful future.
Develop a Cross-functional Response to Inflation
Rising costs of everything from raw materials to manufacturing to fuel to freight has prompted retailers to increase prices and consumers to pull back on spending, in certain categories more than others. Brand-switching, especially to less pricey, private-label brands, is becoming more common. A June, 2022 McKinsey survey found that 90% of consumers noticed prices going up.
There is no single, simple solution for retailers to combat inflation, but McKinsey recommends several strategies, such as:
- Coordinate a response inclusive of multiple functions across your organization that speeds decisions and ensures a systematic approach to tracking execution, diagnosing wins and losses, and applying lessons learned.
- Re-evaluate in-store processes and deploy technology and analytics to reset the store operating model, labor allocation and scheduling, and taking an end-to-end view of costs.
- Resist the temptation to lower prices broadscale. Instead, tailor pricing and promotion based on customer willingness to pay in certain category segments and considering margin performance. As consumers lean toward more affordable private brands, rethink your category strategies. Apply the brand-building approaches of consumer packaged-good companies to build loyalty and awareness of specific brands.
Recruit and Hire Based on Attitude and Aspirations
An April, 2022 McKinsey survey found that half of U.S. frontline retail employees were considering leaving their jobs in the next three to six months. The top five reasons were related to workplace flexibility, career development, health and wellbeing, compensation, and meaningful work. Retailers can take an important step toward reducing costly labor turnover by looking beyond experience and education and hiring based on candidates’ behavioral traits and attitude. Find out what different talent pools really want in terms of their work life. McKinsey suggests identifying what matters to different worker segments and developing an “employee value proposition” tailored to each segment.
As a foundation for plugging the people drain , recognize the value of social and emotional skills. A total newbie with an upbeat manner and a cheerful disposition could turn out to be a star on the sales floor. In addition, someone who is totally aligned with your brand’s selling proposition could make an ideal cultural fit.
Make Frontline Jobs More Meaningful
McKinsey’s research finds that frontline retail workers loathe boring, repetitive work and seek greater connection with the company’s purpose. Fight back by creating opportunities for greater employee involvement in store activity and decisions. If as a manager or supervisor you can answer “yes” to these questions, you’re heading in the right directions:
- Do employees feel safe communicating and sharing ideas with you?
- Do you arrange one-on-one conversations to listen to employee concerns?
- Do you delegate employee tasks based on their feedback, demonstrated strengths, and career aspirations?
- Do you allow employees to freely make improvements in how they carry out their tasks while also holding them accountable for the outcome?
- Do you make employees aware of how their contributions benefit the whole team and fulfill your brand’s purpose, and reward employees for exceptional performance?
In a report entitled Consumers Want It All, the National Retail Federation recommends that retailers elevate store associates in response to changing times. Don’t just relegate them to stocking shelves and ringing up sales; consider them as trusted fountains of information who readily engage with consumers as they browse, compare, and make purchase decision.
If you are a reliable and respectful coach, cheerleader, and mentor, employees will be more willing to stay aboard and also sing your store’s praises. In turn, allowing employees to take ownership of their jobs can transform a reticence to assist customers into enthusiasm for steering customers toward retail happiness.
Choose Technology Wisely
Investing in technology can reduce associates’ time spent on routine activities and increase overall efficiency. The right software can streamline data collection and analysis and provide visibility into the entire customer journey, providing insights that are vital to improving the customer experience and for planning purposes.
You may be able to get away with an upgrade to existing systems here or there, but technology and, in particular, artificial intelligence, have advanced so fast that piecemeal solutions may not be able to keep pace with customer expectations and marketplace needs. You may end up with patches to technology that is already obsolete.
According to McKinsey, “… a robust tech foundation can extend retail business models beyond the traditional core business to generate additional revenues, diversify customer touchpoints, and increase customer data.”
Consider partnering with a company that has the knowledge and experience to recommend tools that will help drive revenue, strengthen your competitive stance, and retain customers. Explore digital technologies that enhance in-store interactions, such as video screens, in-store kiosks, and QR-coded tags that connect shoppers real-time to a live, knowledgeable brand expert.
Improve the Customer Experience with Greater Personalization
Now, more than ever, consumers expect a personalized shopping experience. Personalization leads to greater satisfaction with your brand. And, when it’s lacking, customers get frustrated and are more likely to switch to a competitor’s store or product.
Seventy-two percent of shoppers in a McKinsey survey say they expect the businesses they buy from to recognize them as individuals and to know their interests. To accomplish this, retailers must access the right tools and methodologies to continuously gather data about customers and their buying and browsing habits. Some experts suggest taking these three actions to improve the customer experience:
- Exceed customer service expectations and meet customers them where and how they want to be met at critical touchpoints.
- Maintain consistent, relatable communications with customers throughout their buying journey, including keeping them in the loop during product delivery and post-purchase.
- Be prepared to give customers expert advice and insights that show you understand product nuances and care about their satisfaction.
Consider asking customers to fill out a survey about their buying experience, request they post a product review, offer exclusive discounts on related product purchases, and more. Every interaction provides retailers with an opportunity to strengthen a positive relationship with the customer and enhance customer loyalty.
Remember how, as a child, you were always admonished to be polite and say “please” and “thank you?” Extend these fundamental courtesies to customers. Thank them for shopping with you. Ask how you could do better. Even small changes in how you communicate with customers can make a difference that shows up in sales and revenue.
Get Active on the Social Scene
One of the conveniences of smartphone usage is the ability to research in depth and to buy anything, anytime and anywhere. And with more consumers staying constantly connected on social networks, it’s logical for retailers to take advantage of this be selling on social sites.
In Square’s The Future of Retail Report: 2022 Edition 75% of retailers surveyed say they now sell on social media, and 43% of retailers that sell on social platforms say half or more of their revenue comes from social media sales on sites such as Facebook, Instagram, Twitter, and TikTok.
As social site sales climb, the use of QR codes is rising, too—a practical way of letting online consumers “window-shop.” Square found that 20% of customers are interested in window-shopping with QR codes for purchases; the figure jumps to 27% among millennials.
QR codes can also be used on shelf and product tags, whereby in-store shoppers can connect with a live brand expert in real time to get detailed product information. AskMe™ is one winning example of this technology. Besides the increase in sales and revenue that retailers can realize with AskMe, it has huge implications for relieving store staffing woes, as brand experts are accessed remotely and can assist customers on the spot.
Be Transparent About Your Business
We are living through an era of unprecedented change. Buying behavior, employee sentiment, supply chains, inventories, pricing, and more are all in a state of flux. Even if retailers are having a difficult time keeping pace with change, managers owe it to employees, customers, partners, and vendors to instill confidence that they are being transparent about current and fluctuating operations.
Make good on your promises. Remain open and honest. Don’t be caught short by a social post that reveals a product or service glitch that you should have revealed in advance. Are you changing a policy or procedure in response to a mistake? Admit it and move forward. It will build respect and trust and make you a stronger, more effective brand.
Does your brand support a particular social cause, community activity, or charitable organization? Be forthcoming about it and display your support in the way you treat people every day. Today’s purpose-driven consumers will readily engage with brands that share their values. During 2022, according to the NRF report, Consumers Want It All, roughly 4 in 5 consumers say sustainability and health and wellness benefits are important to them when choosing a brand.
Stay Agile and Resilient
Constantly look ahead for retail trends, opportunities, and threats. Keep up to date on consumer preferences and buying patterns, and make changes accordingly, or your stores and/or brand will be left behind.
Mainly, be ready to pivot in the face of shifting market conditions. This could require refreshing a store’s physical spaces, upskilling your store associates, adopting new technical solutions, modifying your marketing message, and more. Forge ahead based on expectations for the future, and assure you have an agile operating model so you can be flexible in the face of change. Rather than sticking to traditional tactics, be open to creative solutions that require out-of-the-box thinking.
Ready to talk?
A stable strategy guaranteed to gain customers, build customer loyalty and grow your brand can be yours with MarketSource.