A favorable economic climate alone won’t make those cash registers ring a merry tune. Retailers must play the role of inspired conductors.
“The key challenge for retailers in 2018 will be getting people into the stores,” says James E. Dion, president of Dionco Inc., a Chicago-based retail consulting firm (www.dionco.com). “It used to be that you ran a promotion and gave door crashers and dollars off, and with some luck customers would line up to get in. That isn’t the case anymore. Traffic is down pretty dramatically almost across the board at retail stores.”
The biggest reason for the downward pressure on store traffic is the rise in online shopping. “To thrive going forward a retailer has to create robust retail and online environments which reinforce each other,” says Dion. “Consumers are doing more online research, and not only about what products are available. They are also checking reviews on social media. Does a certain product work or not? And what are other people saying about the retailers?”
A store’s online presence, then, needs to reflect the greater attention people are paying to cyber-reputation. And more: “Retailers need to do whatever they can to save shoppers time,” says Dion. “One important thing is to have real time inventory available online. The consumer who can see that you have a particular item in stock will be much more likely to come into your store. Another important service is to provide in-store pick up of items ordered online.” The idea is to cater to the shopper’s changing needs.
Amazon is, of course, the most powerful online player, and retailers need to respond appropriately. “There are two avenues to competing with Amazon,” says Walter Simson, principal of Chatham, N.J., -based Ventor Consulting (ventorconsulting.com.com). “The first is to find and dominate a niche that no one else wants. Amazon is not trying to dominate niche markets but big parts of big markets. So think small: Is there a 10 percent part of your market for which you can create a protected position?
“Second, think about expanding by mergers and acquisitions—a tactic that traditionally has been pursued only by very large companies,” says Simson. Today even smaller operators can merge successfully, and even those in different regions, thanks to the growing uniformity of markets around the country.
Finally, retailers must serve the changing expectations of younger shoppers. “As a group Millennials value authenticity,” says Dion. “They have developed good bullshit detectors. They want companies that walk the talk and behave in a responsible manner. They are a green generation which values renewable energy, so they respond to social messaging and social issues. They also spend more of their discretionary income on experiential things such as dining out and vacations, rather than merchandise.”
“Millennials have also proven very resistant to traditional ploys used to attract shoppers, such as discount days,” says Dion. So how d you attract them to your store? “Talk to them and find out what they want. They are not all the same, but exist along a spectrum of desires. You need to identify which ones you can best provide.”