How to improve sales in retail?
These days it seems that big retailers focus on marketing just because they do not know what else to do. It seems that they are afraid if they will stop advertising people will stop coming to their stores. Thus it is better to run any kind of promotion and advertise it without looking at the root problem. Nor it seems that any big thought is put in analytics to improve availability of products or decrease the inventories. Which allows to take steps in reducing waste and increasing cash flow.
It looks like retailers are stuck in their own little cycle. Without finding a way to innovate and solve their problems. Believing that promotions and discounts will solve majority of their problems and will attract more clients. However, marketing cannot solve all the problems at best it can gloss over the issues it faces.
To begin solving problems retailers have to understand their own:
- Customers – their needs, wants and complaints.
- Supply chain – how to increase products that they need and how to reduce inventory they do not need.
- Communication – Correct, customized communication using the channels that the customers prefer.
Therefor the first problem retailers should understand is customer’s needs. This will allow to see why there are more and more unhappy customers at the stores. “47% of American people consider shopping a chore”. Causing loyalty to a particular retail chain to strongly drop and a move towards internet shopping. At the same time giving direction to the solution.
Most common complaints that people have regarding big retailers are:
- Difficulty to navigate large stores. Not clear what is where.
- Lots of time spent wasted when going for few groceries.
- Can’t find the same product (from store perspective niche product) at the same location.
- Employees cannot give advice regarding product locations.
- Racks are uncomfortable.
- And quite often walking in large stores feels like walking in the woods looking for mushrooms.
Where these complaints rise from?
It rises from an outdated marketing idea: “The longer the buyer wanders the more impulsive he will be in his shopping” which leads to creating more and more obstacles for the customer. “57% of customers want a one-stop shopping experience and good discounts, deals and prices; and to make one trip with products that are easy to find.”
However, at the same time these same problems for the client are problems for the employees:
- Often changes in the store causes employees to stagnate they cannot develop their skills. Harder to notice the need and quickly replenish the goods.
- Rapid online assembly of goods is not possible
- Lack of knowledge where what product lays.
“Top 3 customer frustrations: failure to quickly resolve an issue, lengthy hold times, and interacting with representatives who cannot provide a solution”
Other reasons that lead to customer dissatisfaction - profit loss:
- Retail belief that substitutes fully replaces missing products.
- Products are only re-ordered when they hit 0 or a very low stock number
- One strategy/plan for the whole country. But forgetting that the users are different in different region.
- Miss communication between departments.
- Old communication channels still effective to some extent but not as it was before.
- Lack of a more personalized interaction with the clients
- Overflowed with data cannot make accurate orders
For this - few possible improvements are available to elevate customer complaints, increase their retention, brand loyalty and sales. Of course to do that a conscious revolution is a must.
For one a redesign of the store layouts should be done to a more shopper friendly design. A topic on it is own. And it’s more of a second step - once the supply chain is in order. However, my advice is to look in to organic designs.
Secondly process improvements in the Supply Chain. Any supply chain performance improvement immediately improves cash, cost, investment and sales. Supply chain performance answers a highly important need of the consumer goods for producer customers (retailers and distributors). Supply chain management has the target of ensuring that the right product is at the right place, at the right time, at the right quantity. All this could be achieved with automated supply chain. Only ensure that the software will provide reports and not just raw data that the user would have to explore and assemble based on its own experience. It should clearly show (to start with), bestselling products, stock outs and quantity to order based on demand. And the data should be provided daily, weekly, monthly, quarterly and yearly. To be able to react at the right time. All of this makes a life easier, for people who are not keen in simmering in a pile of numbers day in and day out or who have no training, to make correct orders.
Once the direction is clear and the process is fixed, then marketing can truly benefit retailers. With clear analytics, that show you what has been done right and wrong and steps that has to be taken marketing can have a more involved more personalized communication with the customer. To promote products or services the client needs, promote new products and services and so on. Using both traditional channels and more personalized channels like emails, chat apps, SMS marketing, journey planners and so on can curate messages and engage more on a personal level creating a stronger, better loyalty with the shopper.
“When we compare highly engaged athletic clothing customers to non-highly engaged customers, we see that highly engaged consumers spend 97% more on average and purchase 94% more frequently”
It is important to understand the customer complaints, fix the root problem that causes them, and deliver a fantastic customer service. It is also important to have data but not just a pool of data but consolidated and prepared in a simple to understand language so that decisions could be made right away. Because there are not that many people who can understand the data, where to look and what to look for. And finally use this data to provide the customer with service and products that he needs. If all the steps are done correctly you might reach or even have better results than “Zara” has. Below is a summary list of their achievements:
- Zara gets 85% of the full price on its clothes – industry average is around 60-70%.
- Unsold items account for less than 10% of its stock – industry average is around 17-20%.
- Product from concept to store in just 15 days - industry standard is 6 months.
- Zara commits six months in advance only 15 to 25 percent of a season’s line. Locks in 50 to 60 percent of its line by the start of the season, making it so that 50 percent of its clothes are designed and manufactured in the middle of the season. Meaning that if a certain style or design suddenly becomes popular, Zara can react quickly, and get the manufacturers focus on producing trending products and deliver them into stores while the trend is still peaking.