The long-term trend in retail sales is utterly undeniable. Consumers are gravitating towards online sales and forgoing their once coveted trips to malls. Is it because
mailing shipping tubes are more preferable than other means of buying or shopping for products? That is only part of the story as it turns out. The December retails sales report was dismal and that was followed up by a tepid report that just came out in January. You can see analysis in the full reports that are linked below.
Going Forward – The New Normal for Retail
The new normal is abundantly clear. Now that we know that the trend is in place, the question becomes what to do about it. In order to be successful, retailers need to innovate constantly and have a hybrid in store and online presence. Conventional wisdom is that retailers need to be online only, but that is not always the case. The best buy ‘window shopping’ and ‘kiosk models have been very successful because they don’t create much overhead and they get the new, higher margin products out in front of the consumer early on in the purchasing process. This will help from both a visibility and engagement standpoint.
Inventory and Shipping Concerns
There is also something that needs to be addressed with inventory and shipping. The new normal is making sure that retailers aren’t getting burdened by debt. One way to reduce debt is by increasing cash flow and making sure that inventory is turning at a reasonable rate. This will be different for each retailer but inventory controls are an often overlooked area for retailers to make sure that they are executing well. The other area that is often overlooked is shipping. We all know that free shipping has become the defacto industry standard and something that consumers expect. The problem that poses for retailers is that shipping is incredibly expensive. The important piece for retailers to remember is that shipping needs to be watched every day and managed so that expenses do not eat into margins. There are more ways than every to ship products and many consumers don’t need expedited shipping if they are getting it free. They see free shipping as a way that they can get there products without expense in a reasonable amount of time. This is where retailers have the ability to look for the cheapest avenue to get their products shipped.
Manage Expenses, Innovate and Stay Flexible
All of these steps are meant to put retailers back on the offensive against Amazon. They need to be nimble and start to challenge many of Amazon’s perceived negatives with the consumer. If retailers can remain innovative, manage expenses and inventory while being nimble in the marketplace, they can easily stick around for the long-term and compete with Amazon. If not, retail growth will continue to remain tepid and the future will look bleak. The new normal must be embraced and not fought.