Sometimes it makes sense to draw a line in the sand, even when the sands are changing at an unprecedented rate. This is certainly the case in retail.
We are not surrounded completely by doom-and-gloom retail news, however there is undoubtedly a lot of it. This reached a focus this morning with the announcement from Next of its latest results.
Whilst not perfect and admitting some errors in assortment and availability, Next is a highly respected retail business with great expertise in buying, a consistent fashion position and brand, an Omni-channel structure with many years of mail order and online sales success. So when its store profits fall by 24 percent, its online sales move closer to physical store sales parity and its online profit approaches double its physical stores profit then we should all take note.
Next is Next but their current experiences are relevant to us all.
Whether this is the beginning of an end, or an end to the beginning, for every retailer it is clearly a watershed moment.
Which of the two scenarios is actually relevant to any retail business depends on their current situation but crucially what they intend to do about it.
Sitting still, currently doing OK, head in the sand, is simply not an option.
So what are the clear areas that need to be addressed, and what changes should be made?
1. The balance of physical stores and e-commerce
Much analysis shows that a combination of online and offline creates the most profitable retailers. However in many established retailers the balance is not correct and a reduction in store portfolio numbers is required, sometimes drastically.
2. Physical stores need to be experiences
The days of stores as fulfilment are over. Todays market demands that physical stores offer a brand and product experience that drives sales across all channels and platforms. Clearly knowing how to bring your brand alive and with what tools is still work in progress for many businesses.
3. Retail collaboration for experience and efficiency
Lifestyle experiences in stores can often be made more real and exciting through like-minded brands offering something different to the same customer across retail, leisure, food and services. Next is already driving in this direction as well as the likes of Sports Direct and Game to name but two.
4. Simply selling “other peoples stuff” is over
From independents to soul-less multiples simply being there selling generic products is over for most. The winners must have an additional USP based on either price, convenience, exclusivity, service or experience. Clearly Amazon rules in price and convenience. And whilst the likes of Selfridges show the way through experience and exclusivity for most generic retailers the only way which is through customer service best practice may still not be enough.
5. Your people are your brand, your inspiration and your differentiation
In physical stores your sales personnel are the key to a dynamic and unique experience for the customer as they sell the brand as much as the product. Reducing staff and alienating them from your brand through pay and work conditions will be the nails in your retail coffin.
6. Your assortment inventory live for retailer & customer
Whatever ultimately your balance of channels and store numbers is, the need to have accurate knowledge of where your product is, how it is selling, where it is needed is essential to making money in the omnichannel age.
Customers demand freedom across channels in browsing, selecting, paying, receiving and returning products which requires a new level of end-to-end data transparency with fulfilment support as retail has rarely seen before.
7. Marketing & Customer Insights at the head of your business
The shift from retailers selling to customers, to retailers marketing to customers, is as much a cultural as an organisational shift but will define the retail winners and losers. The customer dictates the terms now in an oversaturated, hyper-convenience market place. Any business that does not put customer insights above its merchandising, marketing and sales decisions in a coordinated way will swim against the customer tide.
And there you have it, those are my seven key areas that must be addressed in retail today. Many of the best-practice retailers both established and new, will be developing all of these on a daily basis, both as a matter of routine & urgency.
Firstly prioritising actions and then implementing them will as always be the key, and being retailers we must never forget the importance of creating, planning, buying and merchandising an assortment that offers good value to our customers, however that “value” translates in terms of quality, style, fashion, colour…More than ever we cannot forget our assortment.