Find a point of difference. That's the overarching message all retailers are hearing as they try to adjust to an industry in constant transformation. Changing customer expectations, new technology and alternative sales channels are all leaving their mark on the sector, and in many cases are having a negative impact on sales. The retail businesses that survive will be the ones that are able to differentiate from their competitors and create the customer experience that consumers are increasingly demanding.
So, how do you find that point of difference?
Video provided by SmarterCX, presented by Oracle.
1) If you go online, do it well
Online spending in New Zealand now stands at $4.2 billion annually. This is up 11 per cent on last year, and now accounts for 7.6 per cent of total retail sales, according to a BNZ survey. Nearly half (44 per cent) of this e-commerce is conducted with offshore sellers.
As a result, many businesses are considering a move to e-commerce, or risk losing out to both domestic and international retailers that do have an online offering. However, if you're going to go online, you need to do it well. All too often, businesses are only taking a limited amount of stock on to the internet. They're also not committing enough resources into creating an enjoyable and streamlined online shopping experience. This can cause much more damage to your brand than if you had never gone online at all.
An increased online presence also means you're at greater risk of a cyberattack, which will likewise have a negative impact on brand perception as well as incur significant direct expenses in fixing the breach.
You need to consider whether e-commerce really is for you and if it will help create a genuine point of difference for your business. If you still believe it's the right thing to do, make sure you take the time to properly think out your online shopping strategy and ensure you have the cash flow and time to commit to it.
If your retail business is going to branch into e-commerce, ensure you've properly thought it through. A poor online shopping experience will not endear people to your brand.
2) Consider using digital retail technology
In the past five years retail technology has boomed. The smart retail market (which encapsulates, among other things, online shopping, the Internet of Things, data analytics and mobile payment) will be worth $58.23 billion by 2025, Grand View Research predicts.
In addition to more commonplace areas like mobile pay and online shopping, retail technologies on offer include:
- Augmented/Virtual Reality - allows consumers to try before buying. For example, many furniture retailers now offer apps that utilise AR so that consumers can see what a particular piece of furniture would look like in their own home.
- Customer tracking - enables retailers to use the bluetooth track and analyse a customer's journey through their stores. They can then adjust where they place high value items and other store layout options accordingly.
- Beacon technology - uses bluetooth to reach customers who have certain retail apps installed on their phone with targeted in-app adverts, coupons and other recommendations.
- Artificial intelligence - to use data and create personalised recommendations and experiences for consumers.
The above are just three of many technologies available to retailers. However, according to Tristan Will, Advisory Partner at BDO New Zealand, businesses are encountering similar issues as with e-commerce.
"The problem is that many businesses simply dip their toes into the waters, instead of a planned fully committed approach," explains Tristan. "They either don't sufficiently understand what the technology can do for them, or simply don't have the cash flow to fund it." But just like with e-commerce, adopting technology half heartedly will only increase risk. It's up to retailers to find the technologies that will genuinely work with them, instead of adopting technology because they feel they have to.
Brick and mortar stores offer a human experience that e-commerce can't replicate. But only if businesses invest sufficiently in their staff.
3) Invest in your staff
Brick and mortar retailers can offer a much more unique, personal experience than their online counterparts - this is a very important competitive edge that shouldn't be forgotten. Yet with so many retail businesses trying to cut costs, often employee expenses are the first to go. We come to a question of assets vs. costs - retailers should consider viewing staff as an asset to be deployed at the right time for the right reasons to complement the physical experience, rather than a cost.
If retailers reconsider their approach to staffing, brick and mortar stores may have the edge by being able to offer a human experience. However they need to make sure they're investing in that human offering. So working out ways to train staff and create an exciting culture in-store is essential.
Strategic support from BDO's retail team
Yes, sales figures are improving, but not fast enough. New Zealand's retailers need to reconsider their approach to strategy - and BDO New Zealand's specialist retail advisers can help. We offer a broad range of strategic advisory and traditional accounting services. We can advise you on essential questions such as:
- Whether e-commerce is right for you and how best to take your store online.
- What technologies and systems are best suited to your retail business.
- How to use retail technologies to achieve your business's aims.
- How best to invest in and deploy your staff.
In addition, our emphasis on data analytics means we can offer you comparisons with similar businesses to ensure you're getting as many useful insights as possible. Reach out to the team today for more information.