In the past two years, the pandemic has been the biggest and single-most catalyst for retailers to accelerate their digital transformation. However, there is an irony – with rapid digital transformation initiatives, the post-COVID-19 business and political environments have been key reasons for inflationary pressures, which in turn, directly affect consumer spending habits.
What can Retailers do about it?
The good news is that most retailers at present have achieved a certain level of maturity in their digital transformation journeys as their systems and processes are already streamlined and efficiencies are in. But there are still a few areas where retailers can focus to gear up for maximum success during a recession.
Integrate, Integrate, Integrate
Retailers can make sure all the revenue-generating and customer experience channels are fully integrated and working seamlessly. This means keeping all your customer data clean and in sync. This will help the retailers provide new products & services as the systems of growth are already in place. This will also help retailers in generating revenue from multiple channels.
Multiply with Supply Chain Efficiency
Supply chain efficiencies can single handedly help retailers sail through the recession turbulence. Data-driven technologies can help retailers run a leaner business with better predictive ability in their supply chains and inventory management. By rethinking their approach to meeting customer demands and by incorporating advanced technologies retailers can solve some of the challenges in their supply chain. Supply chain technologies can offer increased flexibility and simplify retail operations. With a real-time view into the entire supply chain ecosystem, retailers can ensure streamlined and effective operations, make preemptive decisions, which can further lead to meaningful business outcomes. This will protect against some of the major roadblocks that occur in their supply chain.
Know Your Customer Better. Now!
During a recession, consumers are naturally going to be more careful about spending as they will look to prioritize their needs over their wants. Understanding this is critical as positioning yourself as a smart retailer can help you market products and brands differently and be relevant to your customer base. This can help retailers provide smart offers and services to their customers. For example, changing the product mix so that they are more relevant in the times of recession or an economic downturn, could be key in maintain a steady revenue generating strategy.
With the changing consumer priorities with rise in inflation rates, certain segments of the retail industry are getting hit harder, such as restaurants and electronics. This puts the retailers at a risk of having a higher inventory, leading necessary mark downs and squeeze-in margins. Target for example, has just gone through a similar situation with some missteps in their supply chain planning. But they were able to pivot in time and with an early recognition of the problem, they have swiftly achieved a cleaner inventory now. With Back-to-School and robust loyalty programs, retailers can still manage the impending slow down better with proper planning.
Do a double take at Returns
Managing product returns and using this a channel for growth will be crucial to reduce the impact of recession. Returns of products purchased online account for 20-30% of total returns, compared to 9-10% for in-store purchases. Higher returns add costs for retailers, and to the already squeezed margins under the current economic environment. If managed smartly, even returns can be a growth channel, by easing return policies and launching smart programs to reduce returns. By creating a transparent and riskless shopping experience, retailers can eliminate their shoppers’ returns anxiety. Delve deep into the analytics of returns processes and optimize that data for a better returns experience. In fact, by in-store returns can even be used to increase in-store sales. A recent study revealed that 87% of consumers like to return in-store while 71% bought more items during their return. There is a real opportunity to cushion any slowdown impact.
Retailers’ digital maturity has increased manifold in the past two years with the pandemic accelerating digital transformation. This has also increased the ability of retailers to withstand recessionary trends with better systems of growth and operations. Why look outside? Rather than looking anywhere else, Retailers may just find what they need if they look inward to counter the current inflationary economic uncertainty.
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