Thriving in the new decade means adapting to new conditions, says Newmarket Business Association chief executive Mark Knoff-Thomas.
While we’re only into the second month of 2020, recent news from Australia suggests that the retail environment across the ditch is off to a bad start. With more than 160 bricks-and-mortar stores set to close down within the next couple of months, the sector is in turmoil.
The New Zealand retail environment has also been impacted, with business confidence within the retail sector at its lowest since 2009. Smaller retailers are often hit hard – from the growth in international brands coming to the country and the ongoing surge in online stores, many are struggling to adapt to the modern retail environment.
On a positive note, local businesses optimising ecommerce are being rewarded, as local online spending is gaining on overseas online spending. This is set to continue with the recently introduced GST for overseas online purchases, eliminating the long-standing advantage multinational retailers had over small Kiwi businesses. In fact according to a recent BNZ report, online sales to international retailers dropped 9 percent in the December 2019 quarter, while sales online to NZ retailers grew 13 percent.
For any retailer to be thriving in 2020, they need to adapt to the modern retail conditions and find a point of difference.
How to adapt to the modern retail market
The good news is that modern consumer behaviour is levelling the playing field between small and large retail businesses.
Consumers are seeking more experiential retail and deeper connectivity. Small retail businesses naturally have a unique sales proposition due to their niche, local and personalised nature, so to remain competitive, small businesses must focus on further differentiating themselves, including product differentiation.
Optimising this unique disposition will enable those smaller retailers to develop a more nuanced relationships with its customers, compelling them to return.
Build relationships across your platforms
To achieve this, small retailers should operate on all channels of retail environments available such as, online, social media and experiential in-store activations. The days of relying on foot traffic alone are numbered. Plus relying on in-person transactions to create that connection is no longer enough, as you’re essentially starting from scratch at every transaction.
Utilising these platforms provide ongoing opportunities to build seamless communication and experiences, without being generic, creating a personalised touch.
Invest in technology
The initial investment in the technologies and tools to do this successfully can put off some small retailers, but the reality is that it’s undeniably beneficial. This can range from expanding your static offering to become a 24/7 global online trader, making in-store transactions more efficient or offering personal discount codes on a customer’s birthday.
Even small steps can achieve more buy-in from your existing customers and help attract new ones.
Recently, I had to rewrite my personal details in a manual card system at a shop I’ve been returning to for six years. Simple technologies that streamline such processes would create an easier and more enjoyable retail experience.
When used correctly, the initial investment will pay off long term and help improve productivity – saving time, so staff can focus on other areas of the business to enhance the shopping experience.
Understand modern consumer behaviour
If this kind of investment isn’t feasible, you can still strengthen your point of difference by understanding and responding to modern retail consumption habits. A recent Market View Report shows a growing integration of shopping, recreation and entertainment – particularly noting that combining retail and hospitality experiences is important for customers.
Retail consumers are looking for an experience – whether that be grabbing a cup of coffee between shops, watching a movie, having a manicure or skin treatment, or even going bowling. This means that being located around hospitality or recreational foot traffic or integrating this kind of offering in-store could drive sales.
This is just one example, but as the modern retail environment continues to change, retailers must be in a constant state of evolution to meet the rolling expectations of their target consumers. Understanding what today’s retail customers want, will help you invest in the right practices to differentiate your business.
If the product offering is there, it’s the seamless, personal experience that builds those nuanced relationships. Smaller retailers are usually more agile and can offer a level of personalisation that can be more difficult for larger retailers and international brands to achieve.