WHERE TO SHIFT YOUR FOCUS THIS YEAR…
Published: October 24th, 2016
RETAIL IN 2016 HAS SHOWN RECORD CASUALTIES.
The Retail industry has just turned the page on Year 2016. Retail chains have realized that their brick & mortar sales have conceded an appreciable number of transactions to eCommerce, thereby either participating, thriving or abandoning their respective market shares.
Unfortunately the retail chain casualties for the year were just too many. Without listing each one of these retail chains, it is clear that each and everyone had seen their sales volume and profitability decrease over the last couple of years. Information coming from their POS, if any, has been ignored. No corrective measures have been applied.
For those who intend to stay in the retail landscape, get ready and look into the areas that require attention. Make this your priority!
For those chains that have not yet taken the leap into eCommerce, your competition has and you are already late in building up your true working capital - your client base and their purchase history data. The entire world is heading in the direction of eCommerce. It is never too late, however, as every passing month will set you back even further.
Going forward, all signs are pointing to exponential eCommerce sales growth. This sales volume shift calls for a comprehensive review on how retail budgeting is planned, with a priority on product review and occupancy costs in brick & mortar locations.
Making the move to eCommerce is not an inexpensive endeavor. eCommerce is an entire new business model and requires marketing and operations strategies. For those who have tried cutting corners, they have ended up with very disappointing results not to mention serious deficits. The only efficient and guaranteed method for retail chains, is a fully integrated, real time solution for CRM and product fulfillment purposes. This should be considered equal or greater than the cost of building a brick & mortar. The difference is that with your integrated solution, you will not need to keep an inventory, as fulfillment can be done from select regional locations.
In the total retail chain picture, it is increasingly common to see deficits stemming from flagship locations for multiple reasons. Retail is becoming increasingly a science and a challenge for the best in this industry. Traffic is down in mall locations. Landlords are no longer managing retailers. They are managing portfolios for investors. Except for very few, they have lost touch with the consumer needs and habits.
Retailers are dealing with very limited demographics and in some cases, too many locations. We live in a country that has a 3.2 people per square kilometre, as opposed to the USA, where they have 35 people per square kilometre, and European countries where it is common to have anywhere between 170 to 400 people per square kilometre.
Negotiate your occupancy costs regularly and wherever possible. Especially with the prime location malls and do not concede to the fact that they mirror a waiting list. Use your head count data and show landlords the fluctuations in traffic.
In the ideal world, malls should have a rule that would only allow retailers to go on sale and post sale signs for specified, allowed periods. This would add more credibility to the promotions and better shape sales and product flow. European retail already has laws to support this, we should follow suit.
Retailers should not hesitate to form a committee to represent and offer leverage versus landlords and especially AAA mall monopolies.
4| INCREASE YOUR IMU.
5| MONITOR YOUR KPI'S.
Make your inventory plans and monitor them weekly. Modify them on a regular basis. Retail is a living and breathing thing. You need to adjust regularly. Take the emotion out of the purchase decisions and make hard decisions based on actuals.
7| CREATE INCENTIVE PLANS.
Motivate your employees and make them part of the incentive plans if not already in place. Include incentives for buyers to keep them committed to keeping your inventory fresh and remove the emotion from purchasing decisions. Don’t neglect eCommerce either, include your eCommerce shop in your incentive plans company-wide. Your entire organization needs to be aligned at all levels and motivated to achieve the objectives you have set out for the upcoming year.
Applying the above-recommended measures in monitoring productivity and managing inventory requires rigorous efforts and the tool box to thrive in this evolving retail landscape.
The above-related comments and recommendations are a result of extensive weekly reviews with a number of retail chains along with officially declared chapter eleven publicly published data.
Easy Retail Inc.