Among other lessons the global pandemic is forcing on the retail industry, two stand out.
First, if you’re a retailer, it’s time to forget whatever definitions you’ve used in the past for “normal” in thinking about aspects of your business.
Next, when you’re ready to move forward in the pandemic’s wake, you’ll discover that much of your new reality will deal with risk mitigation, even from governmental perspectives.
Given the current hard times, failure to learn these lessons is a serious threat to the welfare of your business.
Your risk mitigation strategy should be all about securing your supply chain, managing your employees and overheads, ensuring the safety of staff and shoppers, and – critically – addressing issues of inventory control, pricing and discounting.
It should be about proactive marketing and an altered mindset about your customers’ “new retail” experience because your marketing, growth, and sustainability initiatives ARE your risk mitigation strategy.
Risk Mitigation: Stop Waiting for “Normal” to Come Home
Normal has left the building. It’s not coming back.
Even if there is no resurgence of the COVID-19 virus in the coming months, we’re not going back to the way things were. It’s already clear to retailers that the pace of retail evolution has increased, and that the new evolutionary path is pointing in directions many retailers simply did not anticipate.
And if, like far too many of their industry colleagues, they’re struggling with a glut of store inventory or unshipped stock, changing overheads, and critical supply chain issues, they can’t rely on established pricing and discounting practices to pull their chestnuts from the fire. Even as seasonal measures, the old ways were only marginally successful.
The changes retailers face are real, and the only permanent element on which they can rely is that change – at greater rates than in the past – will continue.
About Mitigation: Avoiding the Dangers of Inaction
So, we know there are plenty of obstacles to address, and potential threats waiting in the short term especially. What do we do?
As retailers, we build mitigation strategies on some critical realizations:
◊ consumers are adapting to new retail practices and technologies, and they seem to be liking them – and that means the nuts-and-bolts components of one’s business must change to serve those new practices and technologies;
◊ immersive, engaging experiences that establish personal connections with both online and physical shoppers are crucial; and
◊ we’ve got to join a new generation of “digital retail native” retailers, and serve digital native shoppers proactively.
Consumers Like the Changes: New Habits for Old…
To be clear, we understand that nobody – ourselves included – likes enforced change. We’re particularly resentful of the sort of enforced change for which we can’t assign blame, other than indirectly.
Like the retail changes driven by COVID-19.
But the reality is that shoppers, having been forced into doing more online shopping, are liking the experience. Savvy retailers are taking steps to make sure their shoppers keep liking it, for two reasons.
Firstly, even reluctant online shoppers have come to appreciate the speed, convenience, and safety of properly structure and streamlined online transactions, especially when those transactions are becoming more engaging and user-friendly. There’s ample evidence that retailers are taking online shoppers’ cues and working to keep them engaged.
To support their engagement efforts, they’re also working on supply chain stability, innovative marketing, and improved inventory controls and cashflows.
It’s about retail stability, longer site visits, more purchases, better direct connections with shoppers.
Secondly, retailers are increasingly recognizing the need to replace old-style retail experiences with something that’s both immersive and adaptable to rapidly changing circumstances and sensibilities. They’re realizing that current retail technology can turn the entire sales process into fun – an enjoyable and enriching experience that engages retailer and shopper in a relationship, rather than merely a transaction.
It’s a relationship one can nurture, so that it grows and flourishes over the longer term.
As a result, proactive retailers are working hard to create new, more immersive experiences both online, and in rapidly changing brick-and-mortar stores.
Once again, longer visits, more direct interactions, better connections, increased sales.
Retail mitigation, much?
About the Experience: Person-to-Person Means Something New
For those of us who are old enough to remember when brick-and-mortar retail was all there was, person-to-person has always meant something special – a direct, personal relationship with a retailer we got to know over time. We often miss those retail connections from the old days, when a trusted seller looked after us, offered us occasional deals, located hard-to-find items for us, and knew us by name.
It’s been harder to build such relationships in the era of big-box stores and discount outlets.
That’s not surprising, but in the wake of the pandemic, brick-and-mortar retail is under enormous pressure to find meaningful ways to reconnect with shoppers. It’s had no choice but to move online, both for sales and to recreate relationships with shoppers it hopes will soon be able – and willing – to return to physical outlets.
And online retailers are introducing voice and other technologies to engage directly with each shopper, so that he or she begins to feel identified and personally valued – key attributes in the emerging online marketplace.
As a result, person-to-person is morphing into something new, vital, and exciting. Proactive retailers now recognize this. The resulting changes in infrastructure, strategy and tactics, while focused on retailer-shopper relations and growth, also directly address risk mitigation by focusing on relationships rather than transactions.
The New Digital Natives of Retail
There’s a lot of talk currently about digital native retailers and their impact. This is good for you – if you’re struggling, there are retailers on the bleeding edge from whom you can learn as you go forward.
We’ve now got at least one generation of digital native shoppers – whether forced into that role or not – who are comfortable in an increasingly digital retail world.
This generation spans age groups, cultural groups, nationalities, and economic backgrounds, though they represent definable shopper groups and interests. What unifies them, increasingly, is their ability to navigate the world of online retail in pursuit of products and services that address their needs and expectations.
Their expectations include a focus on getting the products they want when they want them, and at the best price. And they move quickly.
Given the immediacy of the retail experience online, these shoppers are arguably more demanding, and less willing to wait for seasonal discounts. They’re also becoming conditioned to expect discounts in the wake of the pandemic as once-strong retail brands resort to desperation discounting to move inventory gluts.
This means that a clear and innovative discounting strategy is no longer a seasonal tool or a hard-times strategy to keep your retail ship afloat. Instead, it’s critical to ongoing risk mitigation and inventory control.
Inventory Control, Margins, and Smart Discounting: Your Primary Mitigation Tool
At last, the heart of the matter.
As a retailer, you can use smart discounting as a primary mitigation tool to keep your margins solid, control your inventory, and avoid desperation discounting. Smart discounting both mitigates against the potential for future losses, and lets you manage and market proactively rather than reactively.
Purple Dot’s smart discounting solution works by enabling you to offer shoppers some control over each transaction: they can pay at your regular price, or they can select a discount and then wait to see whether you’ll agree to sell at the discounted price.
You get to decide based on how particular items are selling and how much stock you have on hand. With two prices available to shoppers, you never need worry about the prospect of desperation discounting or seasonal “races to the bottom” with competitors. You mitigate against the potential for inventory gluts, you get control over order planning, and you solidify relationships with engaged shoppers.
That’s not just good marketing. It’s good mitigation.