Every day we hear about new advancements made in technology and how they’re revolutionizing the world. There’s also plenty of talk about the damage that can come as a side effect of the innovations which are designed to help society.
In more recent years, the discussion has focused on the potential demise of the retail industry (and there are valid reasons why). Trends in retail have been raising some pressing questions among observers. For example:
- Where does the retail industry stand?
- Where is the retail industry headed?
- What can small businesses do to stay in the race with the likes of Amazon?
We’ll touch on all this just below, and clear up a bit of the confusion while we’re at it.
Though the total number of retail stores closing in 2019 is estimated at over 4,000, there are still companies that are opening new branches. Target, Costco, Whole Foods, and even Apple are still in the process of growing their number of physical locations. That doesn’t mean that there isn’t a real concern in the physical retail market – there is.
When numbers come out that show retail trade sales have risen by more than 2% over the past year, it sounds like good news. In fact, the market value of retailing in the U.S. has risen by 10.6% over the past three years, and is projected to continue its upward trajectory through 2020. Appears promising, right?
Not exactly. So what’s the catch?
At the outset of 2019, retailers closed 23% more brick-and-mortar locations than they had at the beginning of 2018. Among the companies that plan on shutting down stores in 2019 are Sears, Gap, Macy’s, and J.C. Penney. And if that doesn’t strike you as problematic for retail store owners, then consider this: online retail sales have increased by more than 300 percent over the past 19 years.
These patterns mean that retail store owners will need to learn how to integrate with the changes that are yet to come.
Evolving technology has brought with it the ability to shop online, and the growing demand to have everything connected and available at the touch of a button. Since the ‘immediacy’ side-effect is more predominant in younger generations, it’s important not to lose sight of the fact that the future belongs to those younger groups of people.
Today more than 70 percent of Millennials have an Amazon Prime membership, and Bain & Co. estimates that by 2025, Millennials and Gen Z will make up 45 percent of the world’s “personal luxury goods market.” This points to a future where online shopping is going to be an even more dominant force than it is now.
These statistics shouldn’t worry small retail business owners too much though, since Bain & Co. also predicts that by 2025 roughly 75 percent of luxury goods purchases will still be made at a physical location. That simply means that consumers will want to see conveniences of advanced technology being incorporated into the ‘physical’ shopping experience.
When people enter physical retail stores in the coming years, they’ll encounter more examples of how technology is playing its role.
These innovations are already present in stores that let customers use online payment solutions to make their purchases. More intriguing uses of technology are steadily being developed, including facial recognition technology that lets store associates know when another checkout line needs to be opened, and smartphone apps that allow you to see how furniture will fit in your home in augmented reality (AR).
Although it’s impossible to know for sure what the future will bring, there are ways to prepare…
Strategies for Small Business Success in Retail
How can small retailers stay competitive with companies like Amazon and Alibaba? Here are 5 easy ways to take advantage of being the ‘underdog’:
1. Build personal relationships with customers
Discounts and rewards are nice, but nothing has quite the same impact as offering stellar customer service. Go the extra mile to offer a product or service that best fits a customer’s needs. Pay attention to what your customer says – use their name when corresponding to show that they truly matter. Corporations will often automate their customer service, so take advantage of your human-touch.
2. Find your niche
Having all of the products that one might need in a single location is a huge advantage for customers who are looking to purchase a lot of different things without having to bounce from store to store. However, when customers are looking for one specific product (let’s say a top-notch wetsuit, for example), chances are they’d rather take advice from an expert (like an experienced scuba diver) instead of someone working at Amazon or Walmart.
If you find a niche and make your expertise clear, you’ll command more authority within that niche. Specialize your business so that you can draw in customers by offering specific content and wisdom that they won’t get from corporations.
3. Reach out to other small businesses
When the marketplace gets more competitive, small business owners often times work harder against one another. Instead, by establishing partnerships with other small businesses, it can become easier to stake your claim in your industry. See what sort of promotions or special deals can be worked out for the benefit of all participants. It will also help with earning a good reputation in the local community.
4. Show your personality
Big corporations will try to make themselves relatable to their customers, but how many people will feel a connection with carefully weighed slogans and stock photo advertisements? When it comes to being personable, the advantage clearly goes to small businesses who have a much easier time telling their unique story.
Research has shown that customers who feel a connection with a business on a personal level are 7 times more likely to purchase from that company. Don’t underestimate the importance of showing your authentic self.
5. Move fast
Corporations put immense amounts of effort into perfecting their products and services, which is a big reason why those companies do so well. But, although every smart business owner should invest resources into optimizing their business plan, there’s a huge advantage to small businesses who will find it easier to make changes along the way.
If a corporation wants to change virtually any part of the business, there are tons of bureaucratic hoops that will need to be jumped through. When a small business wants to make a change, there are fewer people that need to be consulted, less paperwork, and so on. Use this benefit to find out what works for your business, and what doesn’t.
Summing it up
While big corporations have the benefit of expendable resources, what they tend to focus on is ramping up the volume of sales. That leaves a lot of room for small business owners to make the most of the blind spots left over.
Where corporations can feel like faceless logos, small businesses can actually put a face (and a personality) to the name.
Where corporate retailers can cover a very broad range of goods, small businesses can specialize in a specific audience to bring in more customers.
Lastly, while changes take loads of effort for corporations to put into effect, small businesses have the ability to make adjustments more easily.
When you hear about ‘technology’ you think of smartphones and self-driving cars, but technology has had many more subtle yet profound impacts on the world of retail. Recent trends in the retail industry have shown a serious shift towards online shopping, along with the closing of thousands of physical retail locations. These changes have left many business owners wondering how to compete and stand out.
Challenges for small retail business owners are on the horizon, but there are steps that can be taken for them to keep their doors open. After all, it’s not the size of the dog in the fight—it’s the size of the fight in the dog that matters. Only time will tell how the retail industry will persist in these times of change, so be sure to stay up-to-date with market trends on a regular basis.
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