Many retailers are skeptic about the economy's future. The retail sector has been one of the hardest hit during this time, with over 66 percent of shop owners stating the economy has had a negative impact on inventory levels and profit margins. Despite hopeful economists’ projections for annual inflation to fall by two percent in 2012, along with a slight increase in the average annual salary by the end of the year, 30 percent of retailers are likely to close their doors before reaping the benefits.
The biggest threat to most retailers has been competition closing in on their territory. The steady rise of online shopping and e-commerce has reduced the sales of brick-and-mortar stores. Internet venders have grown to conquer ten percent of the retail market and are predicted to grow at an annual rate of at least 15 percent over the next six years, according to a 2012 Harvard Business report.
Over 68 percent of retail shops are reporting either stores closures or no growth at all. The ability to expand businesses has been put on hold.
In the wake of the recession, and a general feeling of mixed messages from the government, economic uncertainty has been putting retailers in a tough spot. Some retailers are playing it more risky; investing more money, and expanding their business. Others have been playing it safe, and often end up selling their business in fear of the uncertain future.
These days, the more riskier of the retail stores offer significant discounts in hopes to generate “subscribers” with hopes a bigger payout in the long-run. Over 45 percent of retail customers have said they enjoy seeing how much more they can save. In the short-run, retailers are financially aware that there will be customers who walk out with a full cart for practically nothing. But, ultimately, the biggest risk in question is whether it will convert to customer loyalty.
All is not lost for the retail industry, however. Some retailers are finding creative ways to decrease these risks while saving costs. While online shopping may be popular and convenient, it is unlikely to ever replace bricks-and-mortar shops altogether. Certain perks like being able to handle and inspect items or try on clothing before purchasing, as well as not having to wait for shipping, will always be important to customers.
Quality generally attracts more retail shoppers, while quantity generally attracts online shoppers. Often, online customer’s find ridiculous deals online, but it only takes 1 or 2 sales for them to figure out why it was so cheap. In short, when a deal is too good to be true, they are smart enough to know why.
With that in mind, make sure that everything in your retail department shows quality. Display your merchandise in a welcoming way. You can find some effective slatwall displays that can add to a store’s display space and enhance a customer’s shopping experience. These come in large panels as well as stand-alone slatwall fixtures that allow retailers to feature particular products and sale items. Clothing shops can also benefit from headless mannequins and user-friendly garment racks.
Price matching encourages customers to purchase early, knowing they can seek a refund of the difference should a competitor advertise a lower price. It also allows stores to raise prices slightly, since the majority of customers do not bother to return for price-match refunds.
Create a loyalty program. Rewarding customers for their patronage, via extra discounts or gifts with purchase, is a great way to build brand loyalty and ensure repeat business over time.
Add a personal touch. Everyone likes to feel special, so a simple greeting when customers enter a store can actually increase how much a customer spends in a store. This is another characteristic that online shopping lacks. Calling frequent customers by name and a sincere smile can go a long way.
The bottom line is that retail stores are discovering trade-off opportunities to capitalize from the downsides of online retail.