5 Main Challenges Facing Retail Today
Digital disruption is one of the factors that’s changing the way retailers all over the world operate. Even big retailers like Walmart are adapting their business to catch up with new technology and fierce competition from e-commerce. Then how about small local retailers? How will mom and pop stores survive? Let’s take a look at the five main challenges faced by small retailers.
1) Change in Consumer Behavior from offline to online
Now, consumers are spending more time at home and online. Therefore, it’s important that retailers find a way to reach these consumers such as utilizing social media like Facebook, Instagram, and Line. The benefit of going online is it adds another sales channel. Plus, retailers can communicate news about their store, promote products, and analyze consumer’s behavior. It also helps reach consumers who are far away, elderly who can’t leave their home easily, or busy people who don’t want to get stuck in traffic by offering the choice to order online via delivery or pickup.
2) Not using new technology like POS system
Small retailers have to make use of new technology. Often, they calculate cash transactions and count inventory stocks by hand. This takes time and is prone to error. By using a POS system, retailers can simply scan and pay, calculate daily cash flows, and check inventory at the end of the day. They can see which products are popular and order more, and also watch out for products that will expire soon. Retailers can more efficiently manage their store and finance by utilizing the right technology.
3) Lack of marketing to increase sales
Small retailers may need better marketing to increase sales. It’s also important that marketing across many channels work together to send a clear message. Here are some examples for small traditional retailers:
– Write the price clearly and indicate which products are being offered at a bargain
– Put inexpensive and interesting products on the counter for last minute purchase
– Offer discounts for buying at a large amount.
– Offer discount for one or several products. This encourages consumers to enter the store whether online or offline and buy other products
– Offer products in a bundle or set such as snack and drink at a good price to increase product turnover
– Let consumers collect points on a membership or loyalty system to encourage them to come back
4) Competition from big franchises and multinationals
Well-established retailers are expanding their businesses rapidly across large areas. They are air-conditioned, offer a long range of products, and can also function like a bakery, café, and restaurant.
Although small retailers may not be able to operate on a large scale, they can use the big franchises as a model. This includes organizing the products on shelves neatly by categories so consumers can navigate around the store easily, and making sure the store is clean and up to standard. Because a franchise operates on a large scale, small traditional retailers should use their strength of building local connections. They can also sell interesting products made by the community that’s different from big franchises.
5) Not offering enough services
Nowadays, modern retailers are not just selling products, but offering a wide variety of services. They may have an ATM nearby or offer bill payment, ticket reservation, and other services to encourage consumers to visit the shop. Some retailers also offer tables so consumers can come in to sit, eat, or invite friends over. However, a small traditional retailer may face the problem of low budget and limited space.
New Retail
Digital innovation and increased competition have greatly affected traditional retailers. Adapting to this change may be challenging, but also present an opportunity for growth.