Driven by continuous changes in technology and consumer behavior, retail’s survival is dependent on the industry’s ability to adapt to the customer journey and accommodate the blurred lines of shopping. However, with Amazon.com disrupting the industry, store closures being announced regularly, and the phrase "retail apocalypse" continuing to permeate the headlines, it's unlikely consumers will wait for retailers to “reinvent themselves” before moving on to a competitor.
While the environment is challenging, it’s not untenable. By understanding the current market and available opportunities to succeed, retailers can thrive. With the peak holiday season behind us, I’ve had the chance to reflect on some priorities and resolutions retailers should consider this year:
Resolution 1: Incentivize Buy Online, Pick Up In-Store
In the age of Amazon, customers expect limitless selection, next-day delivery and easy returns. While all this adds up to a seamless experience for the shopper, retailers are faced with mounting costs and complexities of doing business. In fact, a recent survey by Radial found that retailers are spending 70 percent of an average order value on fulfillment costs.
Retailers that are unable to meet shipping expectations should prioritize and incentivize buy online, pick up in-store options. To do this successfully, they should offer discounts or perks for customers who choose to take a multichannel purchase journey. As digital and physical shopping continue to blend together, retailers will find that these new business models will help to encourage foot traffic and ultimately save the brick-and-mortar store.
Resolution 2: Prioritize Making Global Delivery Attainable and Affordable
The proliferation of the on-demand economy has led to a “right now” consumer mind-set, but many retailers struggle to manage the associated costs of this model. In 2018, retailers should start focusing more on technology that can optimize their fulfillment and logistics efforts to improve cross-border delivery capabilities.
Affordability for consumers will remain a priority. Therefore, retailers should look for creative strategies to save in overhead while meeting expectations. One option is warehouse supply chain management systems that track the entire fulfillment process, from receiving to shipping, ensuring that the process stays on track and that adequate inventory and delivery capabilities are available. They should also look to mobile technology as an effective way to provide a real-time connection between the business and the consumer.
Resolution 3: Develop a Balanced, Optimized Marketplace Strategy
Marketplaces are often the first place online shoppers head today. Selling on Amazon or Jet.com can boost sales and serve as a great introductory channel, however, it requires retailers to forfeit a portion of their profit. What’s worse, it has potential to damage their IP and customer visibility. The entire sales process becomes marketplace branded.
Looking to the future, retailers should take a more strategic approach to marketplaces, leveraging the channel as a gateway to attain customers and strike a better balance with brand recognition and direct sales. Whether this is through branded packaging, personalized messages or superb customer service, retailers have the opportunity to leverage marketplaces in a strategic way and not get lost in the noise.
Resolution 4: Make Drop Ship Your ‘New Normal’
As the buying market changes, consumers are growing increasingly used to a drop-ship model of retail. In 2018, we will see more stores emulate the strategies of Nordstrom and Bonobos, prioritizing the buying experience over instant gratification of a purchase. In other words, stores will focus more on providing quality over quantity. Drop shipping will enable businesses to meet inventory needs without managing endless warehouses, thereby reducing inventory and risk management costs.
The current retail environment has proven that businesses that can’t keep pace with the expectations set by Amazon will fail. Whether it’s investments in digital tools, incentivizing delivery options, or transforming the storefront model, adapting to consumer behavior will translate to better customer service and financial performance.
Stefan Weitz is executive vice president, technology services, Radial, a provider of omnichannel technology and operations.