In the fast changing world of retail and social behaviour, hoping that things will get better in the future is just not going to be enough for your business to improve or even maintain recent results.
The current trading environment is not cyclical, it has fundamentally changed, and will keep changing. So if change is certain – taxes and death are no longer the only two certainties – then why do so many retailers stay the same?
We all know that old adage, ‘if it is not broken, don’t fix it’. Well how about ‘if it is broken, why not fix it?
In talking to retailers, I often hear things such as ‘I have had this business for 20 years, it will come good again’. And therein lies the first obstacle to the recovery of underperforming businesses.
Let’s think about some of the bigger issues affecting retail today that have occurred over the last 5 years:
- Online sales were less than 20 per cent of the volume they are today and will continue to grow at faster than brick and mortar sales.
- International retailers have more than doubled their presence in Australia, with more to come.
- Shopping centre rents have increased by circa 30 per cent on average. (five per cent pa compounded over five years).
- Many non-retail household expenses have increased 25 per cent to 40 per cent (medical, education, petrol, power etc) severely reducing disposable and discretionary spending.
- Wage growth on the other hand has lagged behind cost of living increases and has only grown at about 2 per cent per annum.
- Internet connectivity is much greater now than just five years ago resulting in consumers being far more informed, seeking better experiences, lower prices and better service as they have more options, and often less time.
- So what to do? How do bricks and mortar retailers cope with this scenario. The first thing, across the board is know that if you keep doing the same thing, your results will not be the same – they will most likely be worse and continue to decline.
Thereafter, a strategy is needed to differentiate your offer. It is better to specialise than it is to generalise. You need to be better, much better, at what you do!
If a retailer chooses its point of differentiation to be the product offer, the questions that need to be asked include: Is it going to be a more localised offering, with greater variety? Is it unique to the market? Better than the competition? Best value for money?
It needs to be different in some compelling way.
If a retailer’s point of difference is to be service, what are they going to do to make the service so good that people are WOWED and it becomes a talking point by customers?
That is not as hard as it might at first seem, working out what you want to be noticed for. There are only really five or six choices on which to differentiate your business: Location (accessibility), Price (value), Customer care (more than service), Range (breadth or depth), Connectivity (being connected to your customer) or Experience (providing a good memory).
In addition to being great in at least one of these disciplines, you need to be at least par on the others.
Once you know that, implementing your point of difference with relentless, application and implementation, ongoing focussed improvement becomes the exciting, result bearing daily task.
Ask yourself, why are some retailers growing in a tough market, while others are struggling or even failing?
In summary, every retailer that is thriving today is doing at least one major discipline better that the competition and are growing market share as a result.
Your offer today cannot be boring and expect to be successful in this informed retail world.
Is your offer exciting enough for customers to be talking about your business? If not. Chances are you need to add some va-va-voom to it!
First published InsideRetail on April 11 2018