There are great challenges retailers face in 2016, which include the realization that they can no longer operate their business using a single channel. All consumers, including the Millennials, the largest, most diverse generation in the U.S., have access to instantaneous information and they are able to buy whatever they want, wherever they want and from whomever they want. Bottom line is, consumers expect more including more personalized products and experiences. Forward-thinking businesses need a system that unifies all retail channels known as Omni-channel retailing. The majority of consumers still prefer to buy jewelry from a brick and mortar but they want that shopping experience to be as seamless as their online shopping experiences. Retailers need to think about the customer journey and optimize it for maximum value.
Retailers also need to understand that they no longer just compete with other jewelry stores in their marketplace, but they are competing with electronics, other luxury goods, experiential vacations, etc. They need to focus their efforts on establishing their point of differentiation, building a strong online brand, and how to stay relevant to the various demographics in their marketplace. In a national study, 70% of consumers were more likely to buy on brand, not dollar.
Marketing in the traditional sense has long since evolved and independent retailers need to keep up with social media, ad words, targeted ads, and search engines. Gone are the days where your ad was all about you. Instead, Millennials prefer interactive advertising and they would rather hear about your business from family and friends. Clienteling has also changed and should no longer just include phone calls, which was very successful with the baby boomers, but include text message campaigns as well as email blasts, which are still highly successful and affordable. Basically, customers are in the driver’s seat and retailers need to understand their motivations and psychologies.
Another area to address when preparing for 2016 is your sales team. Make sure you have top performers in your mix. All too often, we see retailers invest hundreds of thousands, if not millions in their inventory and into their marketing budget only to have the wrong frontline in place. To achieve great success, all three of these—people, position and product—must align. Retailers need to do their homework on hiring, to understand how to manage millennials, another new challenge and to make sure they have the right people in the right positions in both the front and the back of house.
To further help combat the challenges that retailers will face in 2016, they should do a full financial assessment. This process should include assessing their operating costs to determine where, when & what to cut operationally to improve the profitability of their business. They should be prepared to solicit annual quotes for credit card rates, insurance rates, etc. This exercise should inform them of their gross profit and gross margin needs. Additionally, they should assess their annual cash flow needs to allow them to strategically plan and control their buying, manage their aged inventory and utilize best practices on their fast sellers.
Independent retailers face lots of changes and challenges in today’s sales environment. They should keep the customer’s journey in mind, focus on Omni-channel retailing, establish a point of differentiation, and staying relevant. This will require preparation, research and an open mind to the evolving business model, ever-changing marketplace as well as the shift in shopping behavior.
By Sherry Smith