Retail’s 3 Greatest Challenges (and How to Respond to Them)
In the retail market right now, there are winners and losers. What side you are on is dependent on how you react to these challenges.
Our guest on this episode of the Retail Doctor Podcast is the Managing Director and Retail Analyst at GlobalData, Neil Saunders.
Neil’s job is to advise pretty much anyone in the retail landscape.
He helps them understand what is happening with their business and customers, and, using that information, devises a business strategy.
In this podcast, Neil, through his years of data analysis and consulting work, uncovers his insights into the retail industry.
We discuss what Neil feels are the three biggest challenges retail faces today (and how to respond to them), and what everyone starting a brick and mortar retail business should ask themselves.
Retail’s Biggest Challenge #1: Differentiation
With so much competition in the retail market, how you differentiate yourself is critical to your success as a business.
There is a right way and a wrong way to go about differentiation.
In my conversation with Martin Lindstrom, we talked about this in detail. Retail must provide something besides the same drab experience everyone else has. Because if it doesn’t, why wouldn’t they just buy it online?
Neil agrees, “The question every retailer should be asking is, how do you stand out? How is what you are providing different? And I think when you look at the failures and the retailers that are not doing well, Sears obviously being one, JCPenney falling into that category, they don’t have an answer to that.”
Retail’s Biggest Challenge #2: Managing Investment
What change has Neil seen in retail from when he first started?
“When I started, there was a lot of shifting going on in retail, but it was comparatively slow. You could almost take your time to digest and understand before reacting. I think nowadays everything moves with great speed.”
Digital technology has made disruption the name of the game. New highly-scalable software can come out and literally change the world within months.
To keep up, retailers must be highly adaptable. But this must be done with caution.
In this digital world, with all this new technology coming out giving us more abilities and insights than ever before, it is easy to get distracted. It’s easy to say, “We need beacons. Oh no, wait! Now we need Foursquare. Oh never mind, Facebook and Twitter are where we need to focus all of our efforts!”
But when you take this “scattergun” approach, as Neil calls it, you spread yourself too thin and do none of it well.
So how do you pick what is right for you?
The strategy Neil suggests is to tie whatever you are doing back to your reason for existing. Yes, that latest fad sounds cool and fancy, but think about your customer for a second. Is this going to add value for them when they walk into the store?
The people who are going to be successful in retail, are not the ones who invest in everything, but the ones who pick the right investments for them and their customers.
Retail’s Biggest Challenge #3: Understanding Your Customers
Understanding your customer is critical to any business. But even though Neil works at a company called “GlobalData,” he does not suggest scouring through massive databases of what they buy, or trends from your area to get started.
The best place to start collecting data and understanding your customer is through your employees.
“Your staff on the shop floor, your colleagues, your associates, they are your eyes and ears.”
These are the people talking to your customers. They are the ones that are hearing about their gripes, their wants, and the problems that they deal with every day.
It would be a huge waste of resources not to listen to them.
What to Keep In Mind When Starting Your Brick and Mortar Business
Neil says that anyone planning on opening up a brick and mortar retail store must be able to answer two questions.
What are you doing that is different? Why are you passionate about it?
Although this aimed at those starting new businesses, it can be transferred to everyone in retail and gives them a path to take on the challenges above.
Cause what’s different about you should fire you up! You should want to scream it from the rooftops! It is something that is going to add value to your customer's lives!
This passion is going to give you the dedication to see it through and take on all these challenges in a smart way.
Because if you are not offering something different, and you are not passionate about it, why in the world would your customer be?
You can find more about Neil by following him on twitter @neilretail and find more on GlobalData by going to globaldata.com.
Listen to the podcast! There, we go into more detail on these challenges, along with how to use data (without being creepy), Brexit, and other retail case studies.
