No one can pretend these are not tough times. The one certainty is that consumers will alter buying habits, delay decisions and switch loyalties. But some retailers are fairing better than others, even turning a weak economy to their advantage. By improving performance, increasing efficiencies and re-engaging customers to maximise loyalty, it's possible for all retailers, irrespective of size, to trade their way out, or even expand.
It's about getting the basics right. Retail specialist John James, explains how.
Target shrinkage
A small reduction here can make all the difference. Ensure you have full visibility and audit-ability to achieve tight control of stock movements and regularly verify your stock positions by rolling stock checks, monitoring supplier returns, branch transfers and reporting discrepancies, to best protect your assets. Highlighting your vigilance so that employees are properly aware of your focus can also have a positive impact.
Reduce stockholding to free up capital
Inventory control is critical. Automatic stock replenishments simply increase your exposure. Look to impose systems which first suggest inter-branch transfers from stores most unlikely to sell that inventory, then intelligent stock replenishment, even allocations from store to web. Optimising stock in this way will help reduce overall inventory and the number of markdowns required at the end of the season.
Balance stock to avoid lost sales
Stock outs and lost sales are unacceptable at the best of times; in a recession they're a disaster. Maximize your sales potential with product availability at all times. Use product management techniques and strategies to balance your stock. Providing real time stock information across all branches will help staff minimize lost sales.
Colchester based department store Williams & Griffin, for example, is successfully keeping stock levels balanced to avoid stock outs and customer disappointment, while minimising capital investment. According to stock control and IT Support Manager Paul Kearse: "Recommended Reordering is 'fantastic,' because you can put in different permutations with regards to different periods for sales very quickly - last year v this year."
Develop the single customer view
Successful retailers know their customers. Ensure your systems allow you to capture customer information enquiries, purchases and campaign responses and develop a single customer profile to improve targeting for promotions, event planning, loyalty building programmes and communications. Use this to drive consumer behaviour to new stores, special offers, and other promotions.
Luxury Lingerie retailer Rigby and Peller uses Futura to capture customer information at every interaction and flexible analysis of transaction data enables buying teams to make more informed decisions. For Managing Director David Kenton it all equates to "better margins and fewer markdowns".
Build loyalty
Never forget - your most precious commodity is customer loyalty. It's hard won but easily lost and a majority of customers, as high as high as 81% according to some surveys, will stop buying from you if they suffer a negative experience. Optimising the customer experience at each touch point of your operation, in-store, online or over the phone, can help ensure you stay in line with customer expectations. Ensure that staff understand the knock on effect of bad service, and develop strategies to turn around negative experiences. Think creatively. What will drive loyalty and make your experience stand out from the crowd?
Rewarding loyalty is crucial. It's far easier to generate sales from existing customers who value your brand, than finding new customers. Don't just offer discounts on a second purchase, or give incentives to purchase via till receipts or bespoke sales material. Offer early access to products on sale or exclusives, give preferential treatment, find out what your customers value and develop loyalty programmes accordingly.
Add Value
Now the sales are over, it's best to avoid the panic of discounting recommended retail prices because if your competitors are also cutting prices, you have no points of differentiation. Instead endeavor to add value to the customer experience. Also from a price positioning perspective, promoting value instead of discounting will make it easier for you to reposition yourself in the sector when growth returns.
Increase efficiency to reduce overheads
Look at how best to exploit all your channels to decide which will most enhance your business. While deciding where to recoup costs, do not make the cardinal mistake of cutting investment in your transactional website. All reports indicate that online transactions are the one channel delivering solid growth. It can be easily tweaked to run offers and drive sales to stores, concessions etc. Instead focus on reducing waste in cross-channel inventory management, proposition and positioning.
It's all about improving service and understanding customer requirements, while keeping stock and capital costs to a minimum. Above all it's about flexible systems that support your business with accurate real time information, so that you can make timely confident decisions and get on with running your business. Get these basics right and you'll be far stronger when the economy turns.