Guess what’s costlier than diamonds these days? Acquiring customers in the retail industry.
That’s right. The customer acquisition cost in retail has skyrocketed in the last eight years, recording a whopping 222% increase.
How did we get here? Among other things, stricter regulations around consumer privacy, the imminent demise of third-party cookies, and the launch of Apple’s iOS 14.5 update that requires apps like Facebook or Instagram to ask for the user’s permission to “track” them for marketing purposes, are the key reasons behind this increase.
With retailers losing an average of $29 for every new customer they acquire, coupled with the current economic situation, short-term survival tactics aren’t going to cut it anymore. Instead, you must go back to the basics and focus on building long-term business growth.
Here are five store operations best practices you should implement to ensure your retail business continues to run smoothly.
1. Hiring and Training Employees
Your store staff is the face of your business, so hiring the right people for the job is key to your success.
So, what are the key skills you should be looking for in your salespeople? Product knowledge? Sure, but what matters most today is people skills.
Gone are the days when consumers could only learn about a product in-store. Bob Phipps, CEO of The Retail Doctor says;
“Now shoppers have already selected, cross-referenced, and read more reviews than anyone on your floor. They KNOW the product features.
But what converts that knowledgeable shopper? Someone who just loves your product? Nope.
Unless they have mastered the soft skills of engaging a stranger, building rapport, and bonding enough that the shopper will let them into their confidence, you’ll struggle.”
Also, ensure that they are teachable and can manage several customers at once without compromising the shopping experience.
At the same time, see to it that you provide a supportive environment where your employees can thrive. Offer adequate training, competitive pay and benefits, and their due recognition so they feel valued and appreciated.
The best retail employers (e.g. Lululemon, H-E-B, Trader Joe’s, etc.) have this in common, so it shouldn’t come as a surprise that 85% of their staff would happily recommend them to their friends.
2. Inventory Management
In 2020, 56% of retailers reported moderate disruption to their supply chain while 12% faced heavy disruption. Over time, this has led to a greater likelihood of product shortages. As such, anticipating the correct amount of inventory to meet customer preferences or seasonal demand is now more challenging than ever.
The good news is, you can predict demand and potentially prevent future shortages by maintaining accurate data. However, doing this manually is not only tedious, time-consuming, and error-prone, but may also lead to poor decision-making.
So consider investing in high-quality inventory management software that automates inventory tracking and syncs your data reliably in real-time. You can also benefit from other features like reporting, automated purchase orders, and low-stock alerts.
After all, running a successful retail business largely depends on having the right products available for customers at the right time. Only accurate, real-time data can make this possible.
3. Customer Service
In the age of social media, providing top-notch customer service is an absolute must for retailers. For one, people tend to remember negative customer experiences more than positive ones. What’s more, they are more likely to share poor customer service experiences with others than good ones.
That’s why it’s crucial that you train your staff on customer service best practices and how to make the customer feel welcome and valued.
Danny Meyer, CEO of Union Square Hospitality Group, believes that the concept of hospitality can be applied to any business, not just hotels and restaurants.
“We believe that the way you make people feel, is what they remember more than anything,” he says.
“What we’ve been able to do in terms of hiring employees is to hire people 49% for their technical skills and 51% for their emotional skills such as kindness, optimism, work ethic, curious intelligence, empathy, self-awareness, and integrity.”
These attributes determine whether someone has what Danny calls “a high hospitality quotient.”
“We’re in a day and age with the internet where every good new idea gets copied, and the shelf-life of innovation is probably about five seconds, but nobody can take out their smartphone and take a picture of how you made my heart feel,” he adds.
4. Store Layout and Design
Contrary to popular belief, brick-and-mortar retail is far from dead.
The proof is in the pudding. A number of digitally native brands like Asos and Shein have recently started to explore the physical shopping environment, because of their ability to create more memorable experiences for shoppers.
These brands have realized the importance of physical stores and the role they play in enhancing brand visibility and awareness, and offering shopping experiences that grab the customer’s attention. Not surprisingly, your store layout, design, and aesthetics have a crucial role to play here.
Your layout of shelves, racks, and displays will depend largely on the products you sell and your brand. You may decide to arrange them at angles or geometric patterns, but whatever you choose, make sure that it draws in customers easily, helps them find what they are looking for, and flows naturally toward the checkout counter.
Ensure that displays are well-stocked, clean, uncluttered, and organized. Attractive displays help sell experiences — not just products. In addition, use signs throughout the store to help customers navigate it easily. Last but not the least, strive to create a pleasant store atmosphere with the right kind of lighting, music, fragrance, ambient temperature, clean and well-maintained restrooms, etc. that keeps customers coming back.
5. Technology Implementation
When it comes to ensuring that your retail business runs like clockwork, technology is your best bet. It’s hardly surprising, that the North American smart retail technology market is projected to reach $28.6 billion by 2026.
Technology can help you in a number of ways. Use it to streamline day-to-day activities, manage inventory, or create standard operating procedures (SOPs) for maintaining your restrooms, parking lots, air-conditioning, or product displays.
These SOPs will ensure that your team has a playbook to refer to whenever any problems arise and to make sure your brand standards are always met. It’s also equally important to conduct store audits periodically to check if these procedures are being followed properly or not.
As it happens, technology can be your friend here too. Bindy helps you drive performance with custom checklists, corrective workflows, sample photos, and signatures, so you don’t need to spend hours on inspections. It also helps you communicate your brand standards easily with every member of your team to ensure they are all on the same page.
It’s a challenging time right now in the retail industry, which makes it the perfect opportunity to streamline your store operations by following the best practices. Ultimately, the most successful businesses are those that can quickly adapt and meet the changing needs of the marketplace. Follow the tips mentioned above to set your retail store up for growth and success now and in the future.
About the author:
Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.