Retail-based businesses aren’t exactly in the best of times right now. Globally, retailers face significant headwinds due to a number of factors, ranging from the ongoing pandemic to changes in the demands of employees.
For a retail business, large or small, to navigate the holiday season and transition into 2022, they’re going to have to get creative in how they deal with challenges.
The following are some of the influences and also trends to pay attention to if you’re in the retail business right now.
More Physical and Cybersecurity Threats
The pandemic has changed the world, and many people are continuing to struggle financially as a result of its effects. That’s led to increases in physical security risks for retailers. For example, shoplifting is on the rise, often because people are feeling economic pressures. At the same time, retailers are in no financial position to deal with so much inventory loss.
If you’re in the retail industry and you haven’t already done so, now is a good time to start thinking about how you will approach physical security going forward. From hiring guards to the use of more security technology and automation, you need to put in place policies and strategies that meet the challenges of where we are currently.
You also have to think about the role your employees play in your security. Disgruntled employees may be more common, particularly in retail, for several reasons.
First, they may feel like they were on the front lines throughout the pandemic, yet they aren’t appreciated for those efforts. Many employees globally have left the workforce, meaning that retail employees have to pick up the slack of these shortages, leaving them feeling resentful and underappreciated.
These factors can come together and create a perfect storm for internal theft, unfortunately, or less employee engagement that can then contribute to more of an opportunity for external theft to occur.
Physical security isn’t the only thing to think about.
During the pandemic, cybersecurity threats have grown exponentially as much of our lives moved online. Ransomware attacks, for example, have gone up a staggering amount since the spring of 2020, affecting businesses in all industries.
If you’re a retailer, you have to consider how you can secure your own data, as well as your customer information. This may be even more difficult if you’re doing significantly more e-commerce business than you were prior to the pandemic.
We discussed the impact of labor shortages on employee engagement and satisfaction above, but the effects are much more far-reaching. For example, the global labor shortage shows no signs of easing up, even though retailers offer more pay and perks.
Retailers are trying to hire for the holidays, and they’re not having much success even with the higher wages, bonuses, and tuition assistance they’re often offering.
Governments worldwide offered pandemic assistance, which was thought to be one of the reasons people weren’t returning to the labor market. That has largely ended, however, and employers still aren’t finding that people are coming back to work, especially in retail.
Factors that may continue to play a role include COVID concerns, vaccination requirements, general burn out and issues finding childcare.
Retailers along with offering more pay, can do other things that might help them deal with the labor challenge.
For example, unpredictable work schedules are one reason employees are reluctant to work in retail. Employers can start to give more stable hours to these workers, post schedules at least two weeks in advance, and make sure there are at least 10 hours of rest between shifts. Employers can also consider offering premium pay when they change the posted schedule.
Retailers that have started experimenting with stable scheduling have found it’s helped improve employee productivity and sales.
You can also work as an employer to create an environment that’s motivating and engaging. You might provide training, job-sharing, or support professional development.
Continuation of Online Shopping
Online shopping since the pandemic has shifted. It’s not just about basic e-commerce. Now, people want items almost instantaneously but don’t want to go in stores, which means a significant expansion of curbside and delivery services.
There may be a bit more rebalancing in the months going forward as far as online and in-person shopping, but you should still expect that a digital-first approach will continue to be relevant into next year.
With that, as a retailer, free shipping and fast delivery are high priorities for consumers.
Bringing these elements to your customers can be a challenge because delivery times are currently slow due to worldwide logistics issues. This might be something you address independently by, for example, hiring delivery-based employees to go to local customers.
If you can figure out a way to facilitate same-day delivery, it’s going to mean that you can charge a premium in exchange for that convenience.
Some large-scale retailers are working on creating urban warehouses as a way to reduce delivery time, traveled miles, and overall costs.
When you use your own fleet, you have more control over delivery, and you can end up ultimately saving a lot of money as opposed to outsourcing your delivery services.
Contending with Supply Chain Issues
Global supply chain issues are a massive problem right now, and it doesn’t seem like they will be repaired any time soon. Retailers have long relied on the just-in-time model, and it’s looking like that’s no longer going to be feasible, at least for the foreseeable future.
Retailers are overordering to combat supply chain challenges, which is making the problem even worse in a lot of cases.
Individual factors affecting supply chains include flooding and other weather events, container shortages, and port closures due to labor shortages and Covid infections. Demand is soaring with economies reopening, making things substantially more challenging.
Specific things that retailers can do right now include:
- Talk as frequently as needed with your strategic suppliers, so at least you’re prepared for what’s coming.
- Reallocate your staff so they can focus on high-demand areas.
- Consider overriding any algorithms to redirect your inventory to the places needed.
- Use order maximums and enforce them.
If you’re a retailer, you’re going to likely have to shift your product orders to be focused on where the demand is. If there are nondiscretionary goods, retailers are changing purchase plans to favor the items that are in highdemand and then direct their inventories to the needed places.
Large retailers, in an effort to maintain their cash reserves, are reallocating their inventory across different geographic locations.
Building redundancies can be a way to mitigate supply chain issues. You should assume that everyone within your own chain is likely to experience issues in the coming months, so redundancies will help you be better positioned to combat short- and long-term threats.
Leveraging relationships is more essential now than perhaps ever in your business, and you should prioritize your future inventory.
Other Retail Trends
Above we focus primarily on challenges, but there are also interesting and innovative trends on the horizon, including the following:
- There’s a term in retail called last-mile delivery. Last-mile delivery is the most expensive final step of the process to get items to your customer’s front door. Paying attention to the last-mile element of your business is important right now, as we touched on above. However, last-mile delivery is affected by weather, traffic, and the requirement to move single package delivery fast. Along with some of the things we mentioned above, such as insourcing the last mile element, you might also want to consider if you should be investing in more advanced technology to help you monitor your packages and also allow customers to have a complete view of where their items are at any given time. You should think about how you’re going to use technology to create upselling opportunities too. For example, maybe you create opportunities for drivers to offer additional purchase opportunities at customers’ doorsteps.
- As far as marketing trends, brand storytelling has become front-and-center through the pandemic. Your brand story needs to be consistent so that you can build loyalty. You want your customers to feel like they’re getting a shopping experience from you, and a lot of how you facilitate that depends on the personal connection they feel to you. With so much of the average person’s life being online at this point, storytelling gives a refreshing opportunity for personal connection in the consumer’s eyes.
- The in-store experience is different but not gone. With that comes innovation like the store-within-a-store. Large retailers are working on forging partnerships with other retailers, which then creates a new selection of products, grows the sales per square foot, and lowers their own financial exposure.
For retailers, both the challenges and opportunities have perhaps never been more significant than they are now, and to remain competitive, you have to be poised to respond to both.