Top 5 Challenges Retail Industry is Currently Facing and Ways to Overcome them
The pandemic overpowered the world so that the future predictions went for a toss. The same event transformed consumer buying behavior for good. Even after two years, the retail industry isn’t looking much better. Empty store shelves, surging inflation, customers changing preferences are creating more roadblocks.
The bankruptcies continue, and somehow it feels something is spelling doom for retail stores. While retail businesses deal with challenges, these unforeseen changes have accelerated the impact with staggering speed. Did you know around 12,200 brick and mortar stores fell in the US alone?
However, as they say, you can’t find success by shying away from the challenges. This is why you must think about reinventing your physical store before in today’s ever-evolving digital landscape. Your future begins today. And for that, you need to address near-term retail industry challenges and how to overcome them.
Let’s begin!
Saturated Market
Retail has always been a crowded market. And with the changes, it’s getting even more competitive. Whether you have been there for years or are just entering the market, fighting for dominance almost makes you get lost in white noise. Even if you don’t have any direct competition, there’s always a threat from online marketplaces like Amazon. In fact, there was a 3% decline in worldwide retail sales after the pandemic hit the world by surprise. Further, more than 45% of respondents confirmed that masks were the most significant deterrent for in-store shopping.
The retail industry saw predominantly two types of market saturation. Microeconomic market saturation happens when the demand for a particular service or business disappears. For instance, customers stopped going too far places and instead started looking for “near-me” areas because of convenience. Another saturation was macroeconomic, where the entire industry saw a drop in demand. For instance, technological innovations transformed the market entirely and led to a change in consumer demands.
Solution
There are only three ways to dominate your market in this oversaturated industry. The idea must be to come up with an idea, step in, and fill the gap. Ideally, your personality, niche, and offerings will help you stay competitive. The ideal way to utilize the market is by accelerating your digital transformation efforts. Of course, you are a brick-and-mortar store. But if you have no presence on the internet, you can never make your business sales-driven or customer friendly.
Source : wipro.com
In fact, as per a study by AT Kearney, customers are spending the majority of their time in stores (61%), followed by online (39%). The physical store is still a preferred choice across all ages. However, if you don’t have a presence online, it can impact your end goals. Remember the customers walk into the store, research for options using a smartphone while being in the store, place an order in the store. That’s why the infusion is the best way to lure your customers into this saturated market space.
Clearly, digital transformation is what you need to design and develop custom processes that can help you embrace innovation, stay ahead of competitors by deploying agility, and deliver personalized experiences.
Moreover, with the retail market getting competitive every passing day, along with digital transformation, data analytics has become invaluable in this industry. Implementing and integrating it with your operations will help you with customer heat mapping and handle customer acquisition through targeted retail marketing campaigns.
Source: capgemini.com
Digital Disruption
The internet helped the customers switch to other means, giving birth to eCommerce. It meant that people no longer had to get out of their homes to buy anything. However, the retail stores were still garnering attention because of the traditional consumer mindset.
But the pandemic propelled the customers to change their ways. Hence, making choices through their fingertips became quite appealing to those who weren’t okay with using digital stores for shopping. This is why despite the drop in the retail sector, there was a growth in global online retail eCommerce at around 27%. While retailers had the success of drawing customers to their physical stores through events. But that wasn’t possible after the pandemic came into existence.
Source: centricdigital.com
Solution
Rather than feeling frustrated and finding it a barrier to your growth, it is high time you start looking at it as an opportunity. With the right upgrades, you can complement your services according to online and physical locations. You can set up systems and leverage multiple channels to reach a larger audience and not limit yourself geographically. Retail is changing. But that should never stop you from navigating to the new normal. It will help you put yourself in a better position in the post-pandemic landscape.
If you think you are alone, here’s the status of what’s happening across the retail industry.
If you fall in the 15% bracket, it’s time you must upgrade your digital growth and retail marketing strategy. It will help you craft some purpose-driven strategy to increase your sales and ROI.
You must shift to online platforms to maximize your utility and make it easy for your visitors to decide when placing an order. But it’s not only about retooling your website. It’s also about being at the right places for improving your visibility. For instance, you must optimize your website for “near me” searches. Here is the complete guide on Local SEO to grow your business.
Source: bdo.com
Managing the vast amount of data available
Many retailers still use traditional ways to consolidate data-related activities. However, with such a large volume of data available, spreadsheet processes often result in corrupted and invaluable insights.
Also, manual data gathering results in less or no room for verification of the authenticity of data. So, if you plan to capitalize using that data, the chances are minimal or none. Also, such workflows became a target of data manipulation.
Further, leveraging data for desired results becomes quite challenging if you have already started the union of offline and online data. Many don’t understand that there should be systematic capturing of data so that it will allow you to make actionable decisions.
Source : springer.com
With 85% of all transactions expected to be AI, the retailers must get through the data challenges to deliver data-driven omnichannel experiences.
Solution
The first and foremost way to stay competitive today is by analyzing data. That’s how data analytics comes into the picture. It allows business owners to develop predictive models and provide a better CX by optimizing the operations using actionable insights.
Further, retailers can take proactive decisions and reduce business risks by having a solid BI and analytics strategy. Hence, it will improve profitability in the long run.
Source: businesswire.com
By leveraging data solutions, you can devise retail marketing and pricing strategies that will be more beneficial and accurate than those based on gut feeling. If you think we are just saying it for its sake, look at the image below.
Source : valuates.com
Capturing leads
Finding new customers through traditional methods is a “no-no.” After all, who reads advertisements or checks out hoardings? Even though you can lure your customers into giving you information, not all the time are willing to provide the information you are looking for. Hence, capturing more leads becomes quite impossible.
Plus, the inability to engage with customers because of the pandemic left retailers in a tough spot. This is why drawing good traffic became essential and crucial to avoid closing down. However, reports suggest that only 2.57% of eCommerce website visitors turn to the store for actual purchases even if you have a website.
Unfortunately, the reason is that the retailers cannot understand what the customer is looking for. Hence, they end up losing customers and eventually ROI.
Solution
If you want to improve your end goals, you need to double down on digital, improve your omnichannel presence, transform your in-store operations, and embrace agile operational models.
If you wish to grow your business, you need to tap into digital growth strategies using actionable insights captured from data analytics. Furthermore, customers often look for stores near their places. This is local analytics, and optimizing your website or online portals for “near me” searches is necessary. Besides that, you need to ensure you are providing the correct data. This is why the use of location data cleansing is also a must.
Clearly, when you have all the above things in place, you can easily craft a sales strategy to achieve your targets.
Source: freshworks.com
Maintaining Customer Loyalty
Did you know that loyal customers often spend around 67% more than new customers? And it is pretty easy to sell someone again after they did it the first time.
However, many retailers fail on one or more steps mentioned below. Sometimes, the quality of their products or services isn’t up to the mark, and a few other times, retailers fail to address the issues of their customers. But around 60% of the brands could not provide a convenient and consistent customer experience.
Solution
If you want to succeed in gaining the trust of your customers, you need to follow the steps below.
Source: exponea.com
However, you need to work on your marketing aspects to achieve that. This is why local SEO strategies are becoming so important for digital growth strategies. However, if you aren’t taking care of your online reputation, every retail marketing strategy will turn out to be a failure.
This is why having a 360-degree transformation in terms of actionable insights, marketing tactics, and online reviews management is a must to earn customer loyalty and for better customer experience.
Conclusion
The retail industry is growing despite the saturation. If you aren’t prepared for the future, your chances of scaling or increasing your ROI will always remain a challenge. This is why opting for futuristic options that help you stay ahead of the curve will allow you to dominate your market and avoid retailing problems and challenges.