Retailers and consumers alike have been facing the brunt of inflation of late. You don’t have to be an expert in economics to see how dramatically the prices of everything — from gas to household essentials — have been rising since the past year.
June 2022 recorded an inflation rate of 9.1%, the highest we’ve seen in decades, while the annual inflation rate reached 8.3% in 2022 from 3.2% in 2011.
Wondering how we got here? As COVID-19 and the ensuing government stimulus initiatives drove consumers to switch from services to goods, the surge in demand severely strained an already disrupted supply chain. Consequently, prices started to climb in April 2021 and went on to reach a forty-year high, eating away at consumers’ purchasing power.
As such, retailers are facing a lot of economic uncertainty as they struggle with higher costs of goods, wages, transportation, utilities, rent, etc. amidst labor shortages and price rises. Thankfully, there are a few ways you can navigate these challenges. Let’s take a look at how to run a successful retail store during these times of inflation.
1. Keep your finances in check
A period of economic uncertainty is a great time to get your financials in order. While it’s always important to be aware of your finances, this is the perfect time to reassess and cut down on bad costs.
Take a closer look at your unit economics, revenues, and profits. In particular, see how much money you are actually keeping versus how much you’re making. This will help you come up with ways to cut back on unnecessary expenses and improve your cash flow.
While cutting back on staff may seem like an obvious choice, remember that this can have a negative impact on the customer experience. So be strategic about the costs you may want to reduce.
Source products directly from manufacturers or renegotiate better rates with your vendors or suppliers if you have built great relationships with them over the years. Offers like bulk pricing or free shipping can help to a large extent.
However, ordering more products to get bulk discounts may put you at risk of excess inventory, so you’ll need to get creative. Perhaps do this only for your top-selling products.
2. Position yourself as a customer-centric business
In times of economic uncertainty, customers are likely to be much more particular about what they buy and where they buy from.
With 42% of consumers choosing to shop at discount stores and 45% looking for cheaper alternatives, you’ll need to position your business as one that customers can trust and rely on. This may involve rethinking your marketing strategies and adjusting your messaging accordingly.
To do this, you’ll need to think about why customers may need your products and how you can best cater to their needs in these times. For example, last year, Target came up with its “What we value most shouldn’t cost more” campaign to highlight its commitment to offering affordable healthy choices and community support without customers having to pay more for them.
Also, being flexible with payments is of utmost importance in these turbulent times. Your business needs to be able to offer multiple payment options such as credit cards, digital payments, and even “buy now, pay later” schemes. This can encourage customers to spend more at your store since they have the option of taking on debt.
3. Help customers save money
It goes without saying that shoppers are more price-conscious during times of economic uncertainty, so implementing sales and promotions is vital to keeping them happy and getting them to come back for repeat purchases. However, you’ll need to be judicious so that these discounts don’t eat away at your profits.
For example, if your objective is to motivate first-time shoppers to make repeat purchases, offers like “Spend $150 or more and get 20% off on your next order” can help. On the other hand, if you want to increase order sizes, offers like “Free shipping above $75” might be more suitable. If you want to get rid of excess inventory, you might want to utilize “Buy one, get one” or “Buy 2, get $X off” types of offers.
Also, since it’s less expensive to retain loyal customers than to acquire new ones, you’ll want to focus more on your customer retention strategies at this time. Find creative ways to engage with them, offer personalized service, or come up with subscription models to boost loyalty.
For example, Lululemon recently launched a membership program that gives customers exclusive access to new products, savings, special events, fitness classes, etc. in an effort to boost customer loyalty.
4. Keep your employees happy
As important as it is to keep your customers happy, you must also focus on the well-being of your staff during times of economic uncertainty. After all, your employees are crucial to the success of your business. So make sure you provide stability and security to them through clear communication and transparent policies.
Invest in their training and professional development so they can improve their skills and knowledge. You should also offer the necessary support and resources employees need to keep stress and anxiety at bay in these tough times. Finally, don’t forget to recognize and reward their contributions.
5. Keep your store in top shape
This one may seem like a no-brainer, but you may be surprised to know that 70% of shoppers have had recent negative experiences in stores due to disorganization and lack of cleanliness. Dirty bathrooms, broken lights, messy floors, disorganized inventory, or empty shelves — any of these are enough to send your customers packing, never to return to your store again.
That’s why it’s extremely crucial to streamline your store processes so you can maintain a clean and organized store layout with optimum inventory levels and fully stocked shelves and displays. You must also conduct regular audits and inspections to make sure that your brand standards are being met at all times.
Bindy makes it really easy for you to execute your standards on time and drive performance through checklists, signatures, and photos. It also helps you identify bottlenecks or issues early, so you can take the necessary corrective actions and prevent them from escalating further.
It may be a difficult time but that does not mean your business can’t thrive in these conditions. Follow the tips mentioned above to make sure you’re in top shape even during times of economic uncertainty. It’s also important for you to keep yourself informed about the state of the economy and adjust your strategies accordingly.
Thinking creatively and quickly adapting to changes will help you navigate any challenges that may come your way. Finally, leverage Bindy to streamline your store audits and ensure that your procedures and standards are always on point. To learn more, contact us today.
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.