The current retail landscape has been redefined. Among the changes are a shift toward a consumer-centric environment driven by technologies that meet a growing demand for shopping online, in stores or on a smartphone — whenever and wherever consumers want. But tried-and-true strategies don’t always work, so retailers and brands need a new a toolbox of solutions to help better navigate the market.
What’s Broken: Declining Traffic
Brian Field, senior director of advisory services at ShopperTrak, said “traffic has been on a declining trend for a while now, although conversion rates are up. The reason is that customers are prequalifying themselves with online research with an intent to purchase.”
How to Fix It: Nurture Conversions Instead
One solution is to use data to see exactly when and where conversions are occurring, and look for ways to improve it. Traffic will likely continue to decline, but conversions are clearly in the retailer’s control. Just make sure the inventory is in the store, and the online experience is top-notch.
What’s Broken: Low Average Basket Size
Field also noted that many retailers are suffering from low average basket size — meaning lower sales and gross margins. And if online sales are just 20 percent of total sales, this can hurt the bottom line of a retailer big time.
How to Fix It: Leverage Data
Using data metrics benchmarked against industry peers and/or other stores in a chain can help inform merchandising decisions. When coupled with better customer engagement, Field said the result will bolster sales. Consider giving the chief information officer plenty of runway to tackle data analysis.
What’s Broken: Unknowledgeable Sales Associates
Tony D’Onofrio, vice president of Tyco Retail Solutions, said in the current environment, “empowered consumers” have a created a “knowledge gap” between them and sales associates. So, when a shopper enters a store and knows more about a product or brand than the front-line sales associate, the shopping experience can sour. This can hurt sales and reduce loyalty.
How to Fix It: Better Training
D’Onofrio said making investments in inventory control and e-commerce is clearly needed, but he noted that investing in sales associates is critical — which results not only in better sales and margins, but keeping shoppers loyal. Consider positioning sales associates as retail or fashion brand ambassadors.
What’s Broken: Finicky Consumers
Jim Prewitt, vice president of retail industry strategy for North America at JDA Software, said the current, so-called consumer-centric environment is extremely difficult to manage as a retailer or fashion brand. Consumers — especially Millennials — are not brand loyal, and appear finicky.
How to Fix It: Tap Into Consumer Data
Prewitt suggested that using “direct and applied” data about consumers to create personas has strategic value. Knowing how and where they spend, and “not just on a store level,” can greatly inform merchandise assortments and pricing.
What’s Broken: Lack of Inventory Clarity
As the growth of omnichannel retailing continues to grow, operational efficiency is critical. As a result, vertical retailers and fashion apparel suppliers need a clear picture of where sku’s are across the supply chain. But that’s not always easy to manage. Although omnichannel means “channel-less” shopping for the consumer, the supply chain itself is channel-specific.
How to Fix It: Channel Management Software
Companies such as Zyme and 42 Technologies can help suppliers get a clear view of sku-level and store-level inventories. Zyme’s “channel data management” software is a cloud-based solution that leverages “operational-grade data,” which can help companies create a “channel strategy.” With 42 Technologies, companies can develop product strategies based on point-of-sale data, which improves the efficiency of the overall supply-chain process.
What’s Broken: Unhappy Shoppers
The researchers at First Insight Inc. note that there’s a huge disconnect between how retailers and brands use data. Marketers and merchandising teams diverge on the use of customer data, and as a result, First Insight said “the customer experience is frequently [and] adversely impacted by this lack of coordination.”
How to Fix It: Online Feedback
Use solutions that “inform the creation of consumer-driven assortments through feedback collected from online consumer engagement.” Knowing shoppers’ style and color preferences prior to product rollout can guide merchandise assortments and better align them with the needs of consumers.