I recently facilitated a meeting of a group of more than 100 retailers. Seventy per cent of them were either fearful or concerned about the future of their stores. And so they should be. Retailing is changing – you would have to be blind not to see that.
When I started in retailing in the 1980s, it was quite simple. Find products you wanted to sell, put them into your space and advertise in your market via newspaper, TV or radio.
If you got your marketing right, people would come and buy things.
The selection of available products was much smaller. Competition, what competition? Often, if you were lucky, there might not be much competition for a retailer selling specialty products. Of course, you might have to educate customers on the proper use of the product, but that was expected.
But in the last couple of decades, there are so many more products to buy and everyone is selling them. From big box stores to Amazon, from an individual in the basement of their house to the manufacturer in China, everyone has access to the same customers you do.
The customers you once educated on how to use the products you sell now come into your stores and tell you and your staff what those products are used for, how to use them and how much they should cost! And online margins average around nine per cent.
If that isn’t stressful enough, these elusive customers don’t read the newspapers or watch TV as much. They’re on their computers or tablets, looking at ads from around the globe for the same product you sell in your store.
So how can retailers compete?
If you want to survive in retail in the next couple of decades, you’ll need to do things differently:
Retailers must have their own brands – brands that aren’t available everywhere. The future lies with private label products with sufficient margins for a small business to survive.
To have access to this, small retailers will need to be part of a buying group or have a supplier who’s giving them product brands that aren’t available in the mass market.
Retailers will have to have specialty niches where they can identify potential customers and offer them specific products to satisfy their needs.
This may mean retailers will have to use strategies that weren’t necessary in the past, such as offering services that are difficult to access or products that are hard to acquire.
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So how much is a business worth?
Retailing will be more difficult, but the creative will thrive.
Millennials, Generation Xers and upcoming generations will want the human aspect of retailing that baby boomers had but now can only dream of.
While we all might be on the computer more, we also have a great longing to be touched, conversed with and humoured. Physical touch and real human presence are hard to experience over the computer. Brick and mortar stores will be around as long as they can offer this.
Small business owners will have to encourage their staff to develop the art of communicating in meaningful ways because that’s what customers want.
It’s true that three-dimensional presentation is coming to retailing online. But you can’t taste food, feel fabric or smell scents online.
Retailing is going to need to give customers even more experiences that fill these needs.
In the past, you could open a retail store based on a passionate idea and have a chance of success. That chance of success has been significantly reduced.
Previously, small businesses would spend money on advertising without measuring the results; set margins and price products on a whim; and look at financials once a year and rely on their accountant to interpret them.
Future retailers will need to be strategic, cunning and knowledgeable to thrive. Those who understand how business works and how they can create value for their customers will be successful.
Retailing is changing but those who can adapt will be able to feed their families, continue to employ staff and contribute to their communities for years to come.
© Troy Media
Troy Media is an editorial content provider to media outlets and its own hosted community news outlets across Canada.