Most retailers experience a downturn in a weak economy. As consumers rein in spending, a downturn is usually not distributed equally among all retailers. The extent of the downturn depends on a number of factors, including geographic location of stores, product categories being sold and specific market segments. In order to survive a tightening economic climate, retailers must focus on their short- and long-term objectives.
Despite current economic conditions, retailers should continue to explore investments in technologies that provide improved customer service and optimize operational efficiencies in order to improve their competitive market position. The strength of retailers' e-commerce systems can make or break their profit margins during tough times. This article outlines some of our recommendations for retailers facing various market-driven challenges.
In our opinion, retailers should place emphasis on the following objectives:
- Maximizing sales potential;
- Effective planning and inventory management;
- Increasing efficiencies to reduce costs; and
- Building customer loyalty.
Retailers should move quickly to implement strategies to achieve the objectives listed above. Effective implementation of these strategies will improve retailers' sales performance during the downturn and will enhance retailers' competitive positioning during the upturn.
Aside from strategies to deal with physical stores (i.e. closing underperforming stores) this article will focus on e-commerce and cross-channel strategies, marketing strategies as well as systems to optimize inventory levels. Retailers often overlook many of these strategies; however, the retailers that have successfully executed them are achieving significant results and payback. The effective execution of a sound plan in these areas will go a long way in providing major sales benefits; the plan will bolster survival in a downturn and will enhance competitive gains vis-à-vis competitors during an upturn.
Customer Acquisition Strategies
Success is directly connected to the adoption of effective customer acquisition strategies, which will not only assure repeat sales to their existing customer base but will also attract new customers to stores. Internet marketing is an effective way to reach customers. Internet-based marketing is relatively inexpensive and is very effective when planned and executed properly.
In order to successfully market to customers, it is important to know the attributes and behaviors of your customer base so that you can run personalized marketing campaigns targeted to specific customer characteristics. These personalization features typically include the following:
- Designing specific marketing campaigns tailored to the specific customer type;
- Offering loyalty programs to reward high-frequency customers and maximize repeat sales;
- Tracking conversion rates of each campaign and refining future campaigns based on past experience;
- Capturing details of customers shopping activities including styles purchased, customer feedback, last date of purchase, returns and reasons for abandonment of an online purchase; and
- Monitoring customer feedback on a regular basis in order to gauge store performance.
Survey systems are usually integrated with a point-of-sale system while the return (reward) coupons for customers filling out the survey serve to increase store and Web sales. Customers filling out the survey normally receive a discount coupon for a future purchase.
In addition, we all need to make sure that our customers can actually find us. Your search engine optimization must be up-to-date. Focus on search effectiveness and enhancing your product descriptions.
As we approach this crucial holiday season, savvy retailers must weigh options such as investing in cross-channel solutions, order management and CRM systems and utilizing their purchasing power to negotiate better pricing from suppliers. Companies that blend these options with their overall operational strategies will end up with competitive advantages during both good and bad economic times.
We all need to remember that this downturn won't last forever. Let's make smart decisions now in order to stimulate sales and shore up our future.
