Unfortunately, 2023 has brought with it a variety of issues for industries across the globe, not least the retail industry. With changes in consumer behavior, buying habits, and more, the retail industry must now learn to sink or swim in a digital-first world. Below, we look at some of the challenges facing the retail industry.
1. Permanent changes to consumer behavior
One of the main effects of the global coronavirus pandemic is the shift in consumer behavior. While many countries were in lockdown for weeks, and in some cases months at a time, e-commerce markets boomed.
Now that most countries are out of lockdown, many retailers have suffered, with long-time UK high-street brands Monsoon, Debenhams and Oasis entering administration or reporting significant losses. Beyond any current guidelines on leaving the house, many consumers still don’t believe that it’s safe to shop in stores, and have found a much more convenient way to shop.
Similarly, with changes to working patterns and a work-from-home shift set to last, consumers are now spending more of their days at home, scouring the internet. Statistically speaking, UK retail footfall in August 2023 was 32% lower than the same period in 2019, although this had risen from July.
Another key shift is with panic buying – although temporary, many businesses weren’t prepared for a rapid increase in demand often coupled with a significant reduction in manufacturing and fulfilment.
Last of all, it’s important to consider the enormous impact that the UK furlough scheme, redundancies and job losses will have on the economy and buying habits both now and in the months to come –with Gen Z and millennials in particular cutting back on spending, stocking up on essentials and spending less on experiences.
2. Playing catch-up with customer expectations
If you’re a retail business that has neglected your digital marketing strategy, you may have some catching up to do. In the past few years alone, online customer expectations have rapidly increased and some of the leading e-commerce and online retailers have been truly innovative, setting the bar very high. Some of the more recent innovations that customers now expect include:
- Free shipping and returns
- Permanent discount codes
- 24/7 chatbots
- Self-service support
- Loyalty and referral schemes
- Payments with a multitude of options including ‘Pay Later’
- Omnichannel experiences
If you’re shifting to an online digital experience, make sure wherever possible that your offering is on par with other online retailers similar to you. You can also ask your customers for their insights on what their expectations are using survey tools like Feefo’s customer feedback platform.
This may take some significant time, money and resources to catch up with, but if you don’t innovate now, your business will get left behind. Remember that ease of use, aesthetic values and strong brand identity are all vital elements in your new digital marketing strategy.
3. A new world of competition
While brick-and-mortar stores tend to compete on a local or regional basis, e-commerce retailers tend to compete on a much larger scale. However, research shows that consumers generally do prefer to buy things in person at physical shops, so try to use this as a differentiator and USP when competing online. The good news is that 56% of in-store purchases are influenced by online research beforehand, so all is not entirely lost for retailers in the digital era, and an omnichannel approach is critical to make this successful and create a positive customer experience.
4. An influx of tech solutions
While this might, on the face of it, seem like a positive ‘problem’ to have, businesses are being bombarded with a slew of new technology solutions, all of which promise to improve their operation and simultaneously, customer experience. Companies are finding the increased choice difficult to navigate though, especially considering that trialling new platforms is costly, takes time and can have a negative impact on potential customers. The result? Increasingly disappointing conversion rates.
The adage goes that if it isn’t broken, don’t fix it and with online tech solutions for retail businesses, this rings especially true. In the wake of the COVID-19 retail industry shake-up, it would be more prudent for businesses to simply refine and hone existing tech solutions that have always worked.
5. Cultivating brand loyalty
Familiarity does not breed contempt in the world of retail business – it creates loyal customers who make certain outlets their first port of call during any shopping trip. Today, it is harder than ever to create a feeling of brand loyalty, thanks to brick-and-mortar stores having been closed for an extended period and even online services grinding to a halt, albeit temporarily.
New methodologies are essential, with out-of-season sales and membership initiatives all being put to effective use. It remains to be seen whether absence has made the heart grow fonder, with high-street visitor numbers certain to be interesting in the lead-up to the festive period.
6. Employee retention
High staff turnover rates are nothing new for the retail industry, but they have worsened in recent months. The struggle to find, train and keep reliable staff, long-term, is more difficult than ever, resulting in exponentially higher recruitment costs putting extra strain on already struggling retailers.
The solution is a delicate balancing act whereby employees feel supported, secure in their positions and appreciated, while also understanding necessary changes to their contracts during unprecedented times.
Retailers are looking to tackle high turnover rates by initiating new training schemes, maximizing promotion potential and improving internal communication systems. While some operations are still falling prey to the age-old mistake of only focusing on customer experience, those that look set to pull through are taking a more modern approach, with staff-centric policies being put into place.
To conclude, while the retail industry certainly is facing many challenges in 2023, by adopting and innovating with digital-first strategies and making employee retention a priority, retail businesses can adapt and overcome.