Perspectives

From The Co-Founders

rss

Strategic insights and commentary from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

We hear it over and over. "Good business citizenship" matters to shoppers. Might Labor Day weekend be a good time to start getting the word out about your citizenship contributions?

Customers vote with their feet, their wallets, and their hearts, and increasingly choose those retailers who "do the right thing", whether it's how they source product, hire and pay employees, reduce environmental impacts, etc.

There are things that independent retailers do day in and day out, without perhaps even realizing how special they are! 

Most retailers we know are "aw shucks" type people. It's charming, but, especially in today's world, your leadership can be a competitive edge! So, why keep it a secret? 

 

Throughout the pandemics, many independent retailers successfully shed their "technology laggards" label, as they pivoted to embrace an array of digital tools.

Yet going forward, it is well to keep in mind what really matters to the customers. And it may not be more technology.

A recent survey* of more than 2,000 customers provides some interesting insights as towho shops where, why, when and how. It especially highlighted the differences between "large stores" and "smaller stores" (or as we view them, "specialty stores.")

  • “The data revealed that 75 percent of consumers shopping at a larger store knew what they wanted before crossing the premises." 
  • Those who shop in larger retailers say 'We just want to get in and get out.'”

Hmm. This suggests to us that shoppers essentially are treating large stores the same way they treat the internet:

MasterChart3v2.png

As we follow economic indicators that particularly affect retailers, our primary focus always is consumer confidence. And the reports coming out this week give us pause. 

  • "The Consumer Sentiment Index fell by 13.5% from July, to a level that was just below the April 2020 low of 71.8," notes Richard Curtin, chief economist for the University of Michigan's Surveys of Consumers.*
     
  • "The extraordinary surge in negative economic assessments reflects an emotional response, mainly from dashed hopes that the pandemic would soon end."

The highly transmissible Delta variant and the vaccine hesitancy of many have changed the momentum. Covid fatigue is back. This affects consumers. 

And with it, more challenges for retailers. Decisions and policies may be needed regarding vaccinations, both for your staff and your shoppers. Meanwhile, consumers are likely taking another pause. Will schools reopen? Will offices reopen? 

So, what's a retailer to do? What you always do: deal with it! 

You likely are aware of buy-now, pay-later (BNPL) programs, from Afterpay, Affirm, and Klarna, among others. It gained a foothold in online retail – "the hottest trend in e-commerce"– and has been especially popular in the UK and Australia. Now it's availability to many more retailers may be acceleratedwith the proposed acquisition by Square of Afterpay. It is a trend we all need to watch carefully.

Here's the deal. Once again, the retailer is the pickle in the middle. The benefits of increasing sales (and average transaction value) which are very attractive, must be weighed against the potential increases in hassle factors, particularly for your most valuable asset: your front line staff

Ahh yes. Retail IS detail! 

Time to move on from Covid, and get our minds back on retail. Focus on the merchandise. And the customers. And the results. In other words, it's time to put the fun back into retailing!

So, here are a few of The ROI's "attention to detail" reminders that you may want to have at the ready for your next staff meeting. A refreshing change of pace for everybody!

 

grfx-Lib4Owners/closed.png

We know that retail startups are up, but alas, so too are retail failures; even higher than historical norms. 

Why is this happening?

  • Is it Amazon? Or, the pandemic? Or tight money?
  • Or supply chain problems? Or not enough good employees? Or Covid fatigue?
  • Unable to keep up with competitors? Overly-demanding landlords?
  • Downtowns or malls being slow to bring customers back? 
  • Or, some combination of factors? Or...? Or...?

Yes, the headwinds for retailers right now are real, and plenty difficult.

However, it turns out that the underlying causes of failures do not change; like cockroaches, they just endure!

You managed the "Pandemic Pivot." So, now what?

A little chaotic, isn't it?

  • Have you shopped in a grocery store lately? Noticed the priority parking spaces reserved for the "professional shoppers?" Or observed those folks darting about the store, staring at their phones, often filling two grocery carts? 
     
  • Or, maybe you've attended (or plan to attend) a trade show this year. Did you find a "hybrid experience?" That is, a combination of the remote experience – Zoom sessions, special apps, etc – with some live, more traditional elements? Did exhibitors tout their online ordering capabilities? Did you keep having the feeling that something was missing? (Or wondering why you had shown up in person?)
     
  • Have you gone into a store, and encountered rows of racks of packages awaiting pickup by customers, or more likely, a delivery driver?
     
  • Or, alternatively, gone into a store to pickup an online order for yourself, and been dispatched to the far reaches of the store?

You likely have experienced some of these dilemmas from the customer side. So you know how annoying or unsatisfactory it can be. 

But you also are living that dilemma from the retailer's side. 

"Buy low. Sell high. Collect early. Pay late."

That's the essence of retailing, right? But now, in the early summer of 2021, retailing more than ever demands a strong dose of good judgment.

It's shouted everywhere: "Look out! The inflation tsunami is coming!"

Yikes! It's buying season for many retailers, and the pressures to buy more, now, at these-low-prices-that-won't-last are mounting. And this is only the beginning.