Market analysts tend to proselytize about the state of retail and how Amazon is killing our business as we know it. And while there is some truth to that, that’s not the headline most insiders would use. The industry is full of highs and lows right now—yes, some traditional box stores are going out of business, but there are also exciting partnerships developing and innovative new companies popping up. As with any business, competition, evolving customer habits, and new technology can be a challenge. After talking with our clients here’s what they told us the biggest issues in retail are right now.
1. Declining store traffic.
Mall vacancies just hit a six-year high, The Wall Street Journal reports. The reason? Mall visits are declining. Between 2010 and 2013, mall foot traffic fell 50 percent, according to data from the real-estate firm Cushman and Wakefield. A big contributor to this decline is changing pre-purchase habits . Even if a consumer plans to make an in-store purchase, many are doing their pre-browsing and price research online rather than walking around the mall. The fallout: shoppers are much less likely to make extra purchases at nearby stores. Retailers believe that technology—like digital images in store windows to catch customers’ eyes— can temper this and play a big role in bringing more people into the store. Another insider tip: Customers need to experience something exclusive that they cannot get online to increase store visits. Incentives like customer events or fun parties in partnerships with other brands can help drive more foot traffic.
2. Retaining and motivating employees.
High turnover and employee disengagement are two issues that continue to plague the retail industry. A survey from the Hay Group division of Korn Ferry showed the turnover rate for hourly store employees climbed to 65 percent, with the rate for employees in distribution positions at 23% percent, and corporate positions at 18 percent. Barber explains that retaining employees, particularly in the mall setting, is challenging because other stores in the mall frequently poach employees by promising a higher hourly wage. Whether better pay or better opportunities is the turning point, it’s important to help employees envision what their future may look like at the company, provide regular feedback and create a culture of transparency.
Quantum Workplace’s Employee Engagement Trends Report found nearly 35 percent of retail employees feel disengaged with their work. Retailers admits that it’s easy to lose good people, but shift your thinking to see employee engagement as a big opportunity to “create unrivaled envy for your brand.” One client told us: “If your staff is passionate, that’s what the customer sees. Employees are our best consumers, our best marketers and our best advocates.”
3. Internal silos.
Many retailers struggle to align their physical stores with their digital ones. Often there are two different teams running each retail strategy and wind up with conflicting decisions rather than complementary ones. The most forward-thinking retailers view e-commerce as an extension of the brick and mortar store. One client said: “Our entire business is about having an ultra-sensory experience. We’re doing our best to mimic the in-store experience online. It will never be the same experience, but we’re trying to enhance that relationship when they’re no longer in one of our cities.” The right retail technology can help encourage more collaboration among online and in-store teams, too.
If retailers recognize the need for this omnichannel approach, so why aren’t more people doing it? Insiders stress the need to create a “culture of permission,” allowing themselves to remove barriers to really put the customer experience first. It’s a tough task, but the more collaboration (e.g., face-to-face conversations versus emails) and idea exchange, the more likely that teams will work together instead of against each other.
4. Customer loyalty.
Building loyalty for your brand means making the customer the first priority. More companies are adopting loyalty programs that connect customers to a brand across all touch points. Research found that 79 percent of customers indicated that they are very satisfied with loyalty programs with high personalization and that loyalty programs that make customers feel special and recognized had 2.7 times more satisfied members. One client says, “We show customers that we understand their need to feel unique by offering CRM, loyalty and personalization.”
In-store promotions are another popular way to build customer loyalty. Although these promotions are often hard to implement well unless you have a robust retail technology system, they do help attract more shoppers into the physical stores.
While there are definite challenges facing retail, this industry is alive and kicking. Retailers are figuring out how to embrace technology, customers, employees, and better blend offline with online to create a more cohesive retail ecosystem. The ones who succeed will help lead this industry into its next phase.
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