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