Retailers must plan their way out of recession
Nothing flags retail desperation like constant sales. Gone are the days when discounts marked the end of one season’s stock before the arrival of the next with many retailers, on and offline, feeling the need to do deals all year round. Even bargain shopping events like Black Friday are losing their shine as the ‘big day’ drags on for weeks.
By constantly bombarding customers with discounted offers, retailers not only undermine trust in what constitutes a real deal but also the value of their stock and brand. It’s a self-defeating strategy as poor sales on both sides of the last holiday season highlighted, when pre and post-Christmas discounting had little impact on the bottom line.
Retailers have to rehabilitate customers on what a sale is and when it happens, but more importantly, they need to move on and rethink retail models to meet changing customer expectations. A number of trends are emerging in 2020 that they would be well advised to watch.
Reselling, fixing and renting
Some big high-street names are testing the water reselling pre-owned, ‘pre-loved’, luxury items – handbags and clothing that are still high value. Others have introduced garment fixing and repair services, making adjustments and repurposing clothing with enough style to attract the attention of social media influencers. Both strategies feed into the sustainable fashion movement and a growing counterculture that would rather repurpose quality clothing than buy new throwaway items.
The rise of fashion delivery services also plays to new age consumers. A growing number of subscription services rent out clothes and jewellery on a monthly basis, effectively curating a style for their customers, allowing them to keep up with trends and always have something new to wear without spending a fortune.
Not just confined to fashion, people are kicking back against electronic waste too, fed up with built-in obsolescence that means they have to buy new washing machines and TVs every few years. It’s pushing back up the supply chain to brands who are adjusting their product offerings, focusing on more robust build quality and extended warranties.
Augmenting human intelligence
Another approach for troubled retailers is to try and spend their way out of recession with new technology. Right now there is buzz around AI and machine learning as part of leading-edge analytics tools that will put a business on the front foot, making them proactive rather than reactive. It’s a way to get signals out across the organisation more quickly, spotting trends early that could prompt informed decisions – if something’s not selling you can act fast and change the range.
Don’t trust it all to algorithms, however, you have to layer in common sense. AI and machine should be the bells and whistles that augment skilled and experienced people, not replace them. Human talent and instincts have a huge role to play in getting back to knowing who your customers are and creating a relationship with them.
Back in the day, retail management used to spend time on the shop floor serving customers, getting up close and personal with the people buying the products. Product Managers and Buyers who can be over-reliant on data points and technology might be surprised at what they find by doing something similar and getting out in front of real customers.
Optimise every engagement
The hard truth is that a global recession is imminent that will land further blows on a retail sector already punch-drunk from internet-driven disruption. A lot of retailers will struggle; some will go out of business.
Offline or online, the survivors will the ones who are best prepared, either because they have transitioned to more cost-conscious business models that better serve environmentally-aware consumers, or they will have access to data that will make them more nimble and adept at riding out a recession.
What both strategies depend on is a new found skill for doing more with less and making the most of what you have. That’s something we know about at ChannelSight, connecting retailers to target customers and ensuring every engagement is optimised. All retail market indicators suggest it’s a skills that’s going to become even more important in the months ahead.
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