Com­pa­nies haven’t got a chance if they don’t lis­ten to the cus­tomer

Shares - - CONTENTS -

What will hap­pen to the re­tail sec­tor in 2019?

We’re now en­ter­ing that time of the year when ex­perts give their pre­dic­tions for the year ahead cov­er­ing a wide range of top­ics, from eco­nom­ics to pol­i­tics and mar­kets to cur­ren­cies. We’ll dis­cuss all the hot top­ics in the 13 De­cem­ber is­sue of Shares so you’re bet­ter in­formed go­ing into 2019.

Ahead of that edi­tion it is worth look­ing at how US mar­ket re­search group For­rester ex­pects the re­tail sec­tor to be­have next year.

It says the sec­tor will di­verge into one of two strate­gies. One path is to de­pend on the mar­ket­place for di­rec­tion with re­tail­ers strug­gling to in­flu­ence ei­ther price or the cus­tomer. The other is to de­velop a dig­i­tal strat­egy where it is easy to test how dif­fer­ent touch­points work best for the re­tailer’s brand and cus­tomer re­la­tion­ship.

Be­ing strong dig­i­tally is seen as para­mount for re­tail­ers to suc­ceed in 2019. Also im­por­tant is the need to have greater lev­els of au­to­ma­tion to help com­bat cost pres­sures such as ris­ing wages and to also im­prove pro­duc­tiv­ity.

Ul­ti­mately these pre­dic­tions are all com­mon sense and one would hope are al­ready items on the board­room agenda. Sadly my im­pres­sion of For­rester’s re­port is that many re­tail­ers are late to the game with em­bed­ding tech­nol­ogy at the cen­tre of their busi­ness, and there may still be cul­tural is­sues which pre­vent full adop­tion.

For ex­am­ple, some re­tail­ers have very short­term goals to in­crease sales quar­ter af­ter quar­ter, what­ever the cost. Get­ting them to be more strate­gic in their think­ing, such as ap­ply­ing ar­ti­fi­cial in­tel­li­gence to cre­ate bet­ter cus­tomer ex­pe­ri­ences, may be be­yond their mind-set be­cause it in­volves tak­ing a longer-term view.

RE­TAIL CAN LOOK STRAIGHT­FOR­WARD Nu­mis an­a­lyst Si­mon Bowler says re­tail can look very straight­for­ward: buy stuff, sell it for more. How­ever, he notes that no other sec­tor has seen more in­sol­ven­cies in the past five years. One could sug­gest that’s par­tially down to old fash­ioned busi­ness prac­tices and also fi­nan­cial weak­ness which meant cer­tain com­pa­nies weren’t able to cope with com­pet­i­tive pres­sures.

It is im­pos­si­ble to sum­marise ex­actly how a per­fect re­tailer should look and act. To get any­where close to pro­vid­ing the an­swer you need to con­sider traits which de­fine a suc­cess­ful busi­ness. For ex­am­ple, be­ing a good brows­ing des­ti­na­tion, so that con­sumers can view, re­search and ul­ti­mately pur­chase, is as im­por­tant as hav­ing good prod­uct, ar­gues Bowler. Re­tail­ers ul­ti­mately need to un­der­stand how con­sumers look for prod­ucts and what would drive a pur­chase, plus have su­pe­rior lev­els of cus­tomer ser­vice.

Re­tail­ers must lis­ten to the cus­tomer and give them what they want and in the man­ner they de­sire, not sim­ply ‘pile them high, sell them cheap’ and in a process dic­tated by the board with no con­sid­er­a­tion for the peo­ple buy­ing the goods.

Get­ting the ba­sics right is fun­da­men­tal to a re­tailer’s sur­vival as this is an in­dus­try whose tur­moil could get worse in the years ahead.

For­rester warns that an eco­nomic slow­down will catch many re­tail­ers off-guard as cus­tomers rein in spend­ing af­ter pil­ing up credit and other debt. Sadly it says most re­tail­ers will ig­nore the warn­ing signs of the next fi­nan­cial slow­down.

Now is re­ally the time for re­tail­ers to sharpen their prac­tices, forge long-term emo­tional loy­alty with cus­tomers and stress test their busi­ness to see how it would sur­vive in tougher times.

By Daniel Coatsworth Ed­i­tor

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