This article is part three and the last part of three parts: Part 1: Portrait of a perfect restaurant. Part 2: Portrait of a perfect hotel. Part 3: Portrait of a perfect retail store.
Retail firms provide customers with distribution services, which can vary in cost and availability . Store characteristics such as product availability, quality, layout, employee politeness, decor, music, lighting, and aroma impact the in-store shopping experience .
Three pillars of the retail industry: Replenishment, allocation, and transportation. The retail industry is one of the most dynamic and fast-paced sectors, comprised of a variety of stakeholders engaged in selling finished products to end-user consumers.
The retail industry is currently in an era of big changes and big challenges, with no sign of it slowing down any time soon.
Retailers have to combat pressures brought on by new competition, e-commerce, an oversaturated market, and ever-changing consumer demands.
However, despite the challenging landscape, starting or expanding a business is a natural desire for many, but finding the right formula in today’s market is no easy feat.
Yet, there are many retailers all around the world that keep thriving, even when faced with adverse circumstances. They continue to gain market share, sustain profit growth and provide their customers with good shopping experiences.
But, how?
The answer lies in the characteristics that these retailers share, regardless of industry sector, strategy and context. While not all characteristics are always present in every successful retail concept, some of the traits that the majority of them share are as follows:
They have a clear vision – successful retail concepts tend to have a strong, clear vision that allows them to connect with a core customer group. They understand their brand values and who their target customers are. This is the first essential step when defining your customer strategy, setting business goals, optimizing your marketing activity and shaping retail strategies.
They evolve – the retailers that are winning didn’t just have overnight success with an out-of-the-box concept, they evolved over time. Through experimentation with product/merchandise mix and/or various store concepts, they refined, tweaked, and kept their concepts fresh and therefore, ahead of the competition.
They scale – a retail brand that wants to flourish must be able to scale. Expanding your concept is an incredibly difficult challenge not only because of the cost involved, but also because it usually involves adapting the brand to be successful in different geographies.
They localize – with few exceptions, many of the retail concepts that are doing exceptionally well are practicing localization of both their physical store formats and merchandise/product mix. In today’s retail environment, it’s becoming increasingly difficult, if not impossible, for retailers to grow by simply reproducing a one-size-fits-all store format and one-size-fits-all merchandising strategy across all locations. The leaders in the retail space demonstrate an understanding of the differences between regional, national and international customers and focus on providing the best merchandise and store experience that serve their specific needs.
They are investing in both e-commerce and brick and mortar – retailers are being more strategic with their investments and selective with their stores, balancing both bricks and clicks. In many cases, retailers are closing poorly performing stores and making sure that the store itself is assuming more of a marketing role as opposed to a pure sales role.
They offer a seamless shopping experience – successful retailers closely integrate their online and offline channels. Omni-channel retailing is the now and the future, so, no matter how customers choose to interact with the brand, the customer experience is seamless and convenient – day or night.
They have exciting in-store experiences – the retailers that have properly reinvented their physical stores have transformed these stores into competitive weapons and substantial growth vehicles that drive repeat visits and attract new customers.
These days the old adage of “if you build it, they will come” is far from reality. New market entry requires careful understanding of customer segments, regional preferences and site location.
The dynamic industry landscape represents a reshaping of retail where traditional business models, store formats and customer segmentations are no longer sufficient to survive.
Analytics can provide the insight behind the customer and allow business leaders to make well-founded and accurate decisions for the growth and well-being of all aspects of your company.
How does your retail business compare?
Times continue to get tougher and tougher for the retail industry. It was already suffering before the COVID crisis and lockdown but in many cases this has proved to be the final straw that broke Camel’s back for many in the retail business.
But tough as times are, there are many positive stories out there. At THP we’ve helped retail clients open thriving new branches, launch new product lines on the High Street and online and diversify into new retail markets. Indeed, we’ve cheered them on as they’ve moved from success to success.
Of course, there’s no magic formula to success, but in my experience the more that smaller retail and business owners think and act like big businesses, the more likely they are to succeed.
That’s why I’m sharing five key characteristics that I believe make a retail business succeed:
- HAVING A CLEAR STRATEGY FOR YOUR RETAIL BUSINESS
If you plan and write down where you want your business to be in 1, 3 and 5 years’ time, you are much more likely to succeed than if you simply keep your goals in mind — so share your plans with business partners, fellow directors and your accountant. - CREATING A FLEXIBLE BUDGET
If you want to succeed, it’s crucial to have a budget that allows you to react to changing circumstances. - MEASURING YOUR PERFORMANCE
Always compare your monthly figures with the previous month’s, with your budget and with the same period the previous year. Drill down into the figures to find out what’s profitable and what’s creating a drain on your budget. Look at ways of protecting good margins and increasing poor ones. Setup some KPIs (Key Performance Indicators) and monitor those regularly to measure your performance. - FORMALISE THE PROCESS
Insist that your fellow directors or business partners spend scheduled time reviewing your management accounts every month. There’s always a temptation to put this vital task off and get on with the day-to-day work of the business — but if you take your eye off the figures, they’ve a nasty habit of slipping out of control. - UNDERSTANDING THE ACCOUNTS OF YOUR RETAIL BUSINESS
It may seem obvious, but business owners who really understand what their accounts mean have a much stronger grip on their organizations.
By implementing strict and focused financial reporting systems and procedures, retailers can make informed and timely decisions based on numbers they trust and understand. In these tough times it can make all the difference between success and failure.
