Part 5 of the “Digitally Transforming Industries” series
Consumers are currently shaking up the retail world. Wasting time wandering endless aisles or scrolling through a long list of products is no longer an acceptable shopping experience. Instead, they want curated selections, accessibility, convenience, and personalized service that small and midsize retailers often excel at delivering.
Clearly, small and midsize retailers have a tremendous opportunity in front of them if they remember to compete on experience. They simply cannot win on price alone and expect to survive. Rather, it is the shopping experience that will make the difference between increasing their revenue and shutting their doors forever. Retailers need to consider the experience both at their physical stores and also online channels.
According to the recent IDC industry brief, “Retail: Small and Midsize Retailers Can Drive Revenue, Efficiency, and Loyalty with Smart Adoption of Advanced Technology,” small and midsize retailers are more focused on improving cash flow (60%), revenue growth (57.5%), and reducing and managing costs (55.6%). However, the things that matter most to their consumers – loyalty, efficiency, and productivity – were much lower priorities.
Employees are the glue between the consumer experience and retail sales performance
A small and midsize retailer’s workforce is one of its greatest competitive assets. Whenever I visit our customers in this market space, I see a direct correlation between business growth and workforce-related initiatives that develop talent and retain employees. Focusing on these two aspects leads to top-notch digital and physical consumer experiences that drive sustainable cash flow, revenue growth, and cost improvement.
The best employees understand what patrons want. This level of insight can help optimize inventory levels and limit the risk of losing money on a stock item. And more importantly, consumer loyalty is inextricably linked to a particular sales associate that consumers can depend on – leading to strong, personalized relationships and properly curated stock.
However, it’s sometimes difficult to see trends and opportunities when you are involved in day-to-day operations. To improve the trade-off dilemma between maintaining a high level of service and business performance, IDC recommends that small and midsize retailers should consider “smart and targeted investments in store technology.”
The right technology helps seize market opportunity and maintain a small-business feel
Internet presence for retailers is expected to continue growing in 2017 and possibly peak in 2020. As consumers abandon traditional preferences for big-name stores, small and midsize businesses have an extraordinary opportunity to grab consumer mindshare and compete toe-to-toe with much larger and established rivals by demonstrating value and expertise.
Opening up new channels to reach existing and new consumers is an exciting proposition, but it can also erode the consumer base if stock outs or back orders become the norm. Managers must be keenly aware of demand at the store level and e-commerce side when ordering inventory. Plus, promotions and merchandise planning must be aligned to keep turn rates and service levels healthy.
Although technology adoption is a long, winding road for small and midsize retailers, it is definitely a necessary path to manage such changes. Making the connection between demand and inventory to determine sales trends and identify opportunities for new offerings requires a level of insight that is only possible through specific analytics and applications.
To learn how your business can better prepare for the digital economy, check out IDC’s Industry Brief, “Retail: Small and Midsize Retailers Can Drive Revenue, Efficiency, and Loyalty with Smart Adoption of Advanced Technology.” Be sure to check every Tuesday for new installments to our blog series “Digitally Transforming Industries” to explore the various leadership roles in today’s growing small and midsize companies.