Survival to success: retail’s challenges and opportunities
Following a pandemic that has left clear scars on the industry, retail faces yet more challenges as the economic landscape continues to deteriorate. As e-commerce continues to evolve, the industry is becoming increasingly overcrowded. Unprecedented inflation rates and softening demand in an already over-supplied market are putting pressure on retail’s need to optimize inventory management. The challenges ahead will be tough but the opportunities beyond those hurdles open the door to an exciting new world of possibilities.
The challenges ahead
Combatting unprecedented inflation
Unprecedented inflation rates are threatening both retailers’ bottom lines and consumers’ bank accounts. With inflation at a 40-year high of 9.4%, production costs for retail are sharply increasing. Whilst prices continue to rise, wages are not increasing at the same rate which means consumer spending is falling as their purchasing power is reduced. Retailers must look to reduce their fixed and variable costs, whilst maximizing sales, to maintain their consumer base.
Merging physical with digital
The rapid evolution of e-commerce and digital channels continues to shape the retail world. True omnichannel retailing marries physical and digital channels together to create a consistent, seamless customer experience. However, maintaining a sense of brand identity across these different platforms isn’t easy since digital vs brick and mortar customers demand different retail experiences. This struggle is felt the most by legacy retailers who have struggled to adapt to advancements in technology. Falling short of that curated experience your customers desire could lose you sales and negatively impact that all-important business-consumer relationship.
A new era of opportunity
Optimized inventory management
With online retail becoming ever-more popular, consumers want faster delivery options. To meet this demand, some retailers have started to open mini distribution centers in the hope of delivering items within three hours of purchase. The distribution centers also assist physical stores in matching demand and supply with high accuracy. This allows them to have more agility with their stock management, so they can maximize sales and meet customer demand and expectations. Maximizing sales through improved demand forecasting will also reduce the risk of excess stock sitting in warehouses.
The power of social media
Social media is becoming the greatest way to engage with customers, whereby posting a picture with a link to a product can reach thousands of customers at the click of a button. Social media provides a platform on which retailers can promote their products in a more informal setting which allows consumers to see the product styled or in action without having to move from their sofa. This more customer-centric approach helps build a better relationship between brand and consumer. Retailers can also collect vast amounts of data through their online platforms that unlock key insights for providing a tailored customer experience that also allows brands to interact with their audience on a more personal level.
In such unpredictable times, the retail industry must make some clear choices. With the threat of inflation looming over the industry, businesses must find new ways to maintain their consumer base, such as the use of social media. The pathways of digital and physical will become ever more intertwined and retail must adapt to keep both streamlined, with inventory management becoming essential to maximize sales. The road ahead seems rocky but if the opportunities available are capitalized on, the industry should continue to grow.