The Top 7 Challenges Facing Today's Retailers
Today's retail landscape continues to evolve apace. Just some of the challenges include:
- Growing competition and more savvy competitors.
- New consumer demographics demand new attitudes and approaches.
- Today's customer is ultra-connected and wields extraordinary buying power.
In addition, more sophisticated technology is being used for competitive intelligence such as price tracking and product assortment management, while Big Data is being tamed and put to use to make timely, educated choices and decisions about the buyer. Equally important, business and competitive moves are being done more and more in real-time. Here are some of the ways retailers can meet these challenges and prevail.
Challenge #1: The New Science of Retail.
Technology is making it possible for retailers to learn more about the market, their competition, about their customers, about pricing, and assortment than ever before. Retailers are also starting to put this valuable information to use to make the wisest, most profitable decisions -- much of it in real-time.
The advent of a variety of special technologies is probably the most important -- and most helpful -- development for retailers. Data analytics are helping retailers plan and make decisions based on past buyer history and behavior, and not on guesswork.
Data analysis, price and assortment intelligence, predictions about customer behavior based on past and present behavior are all on the table; plus the ability to respond to these challenges quickly -- and intelligently.
It's important to learn about the tools and technologies available to help retailers and harness them for your use.
Challenge #2: The consumer is more instrumented, more inter-connected, and more impatient than ever.
Consumers are pre-armed with information regarding competitors' products, prices, promotions, and what-have-you; they go online or into stores wielding these tools. Simultaneously, retailers have to have what the customer wants, when they want it, at a price they are willing to pay, plus convenience of accessing the product -- or else.
Join the crowd. Lead the crowd. Communicate with consumers on their terms in their language. Give customers the following:
- Direct lines to you
- Excellent web information
- Quick and satisfactory reactions for getting information, for ordering, for service, for pricing, for complaints, and more.
In addition, develop smartphone apps and give the customer as many ways, and make it as easy as possible to deal with YOU; then deal with the customer efficiently, effectively, and sensitively. That could be your one chance to have the customer's exclusive attention, and you must capitalize on this contact best to win and keep them.
Challenge #3: Demographics are changing.
Millennials (those born between 1977 and 1997) are coming on as your next major customer group -- and they will also be a large part of your work pool.
Cater to the capabilities and inclinations of “The Millennials.” This group boasts the highest percentage ownership of personal technology of any generation, spend five times more than their parents did at the same age, and will have used electronic media since they were born.
In a few years, the millennials described above will also make up the largest retail employee demographic. You need staff that can “speak” the same language as the customer. These staff members will be very valuable in knowing what customers want and need because it's what they want for themselves.
They, like your customers of this age group, will be impatient, and with short attention span. They will be valuable at all levels of the company -- strategy, sales, education, fulfillment, customer service, planning, information gathering. Keep them involved. They will be in demand -- and there will be competition to find and hire the best among them. This group also will have a tendency to move from job to job in fairly short time periods.
Speaking of demographics, don't forget other groups, like seniors that represent a large percent of the population, they have money to pay for things, and special needs that can be identified and served.
Challenge #4: People are looking for a more personalized experience.
Why get lost in the crowd when you are an individual, your needs are very specific, and retailers have ways of addressing them directly? Retailers are starting to use data analytics more and more -- to predict, personalize, segment, coupon, make custom-made real-time offers, etc.
Identify with, personalize, customize and interact with the consumer. Meet their specific needs and requests. Retail analytics are making it possible to identify customers, groups, and needs. Gather customer email addresses and other contact info to use for ongoing, personal communication.
In addition, share information, socialize, tell about promotions, specials, and just plain show the customer that you care about your valued customer relationship. But show it in how you act, not what you say.
For instance, take a lesson from Zappos’ company “personality of fun”, surprising the customer, and non-pareil customer service and communication. Ditto for Nordstrom’s unparalleled customer service; and Trader Joe’s employees’ knowledge and enthusiasm are just a few examples. It's not always about price.
Challenge #5: Web and social media are still key elements of the online experience.
Technical touch points continue to grow. Some say as many as 57 touch points for information gathering, sharing information, checking out products and offers, etc. before the final purchase.
You have to see and be seen, communicate and comment -- you have to be one of them. Social media is a place to be interactive and empathetic. This medium is meant to share thoughts and empathize -- not for hard-sell advertising.
Be more subtle; show the desire to really help others with their problems. Hire someone special to look after your social media activity that knows how to work social media.
Challenge #6: Engage the customer.
Customers, especially the younger ones, play a lot of games; they're always interested in something new; their attention span is short.
Add value. Be creative. Provide additional tools and information that are fun and complementary.
Bundling wine, corkscrews, cheese, glassware, and aprons are obvious and being done. Small appliances and recipes; dogwood and a present for the pet's master or mistress. Creative ideas of how to use a product. Let the consumer build a clothes ensemble online and see how they would look; study an appliance online in 3D, "mix" their own hair color.
Sampling, promotions, reviews, product ratings and suggestions engage customers. Beware, if you try to lure them by price or by specials, be sure you have the right target in mind or you'll draw the wrong people for the wrong reasons -- those who shop and run away and go somewhere else another day.
Challenge #7: Customer service and communication is still paramount.
The way you treat your customer is the most important key to your retail success.
Your challenge is not only to secure customers, but to keep them happy and make them loyal. Data analysis shows that a small percent of your customers are the ones to whom you make the most sales. Find out who these people are, and cater to them. They're your most valuable commodities in addition to your products.
Most customer service solutions are remarkably easy, yet the most overlooked. Communicate with the customer. Explain why a price or policy is thus and such. When they have the information, explained nicely, they understand and accept the reasons.
In order to meet the challenges laid out by retail competition, new demographics, empowered consumers, available technical data, tools for competitive intelligence, good assortment management, and much more, retailers must prepare for tomorrow today. The retailers' challenge is to use the right technology and savvy to make the right choices -- to make the right decisions -- leading to secure, happy, loyal customers; increased sales and profits based on data analytics -- and successful profit margin will follow.