Better Retailing -get to the basics: The doom-and-gloom in Retail, bankruptcies and store closures, is largely limited to the apparel, chains, and department stores. Physical retail is quite robust, with the mid-tier retail market being the most impacted due to unimaginative and undifferentiated product offers, destructive discounting, poor store layouts, and service. The headlines often attribute the retail downturn to retailers not able to master on-line sales, returns, and service and millenials and Genz’s nor buying or visiting the stores. This is not quite true. And there is a penchant to focus retail sales model on this demographic while thinking less about the other demographics, who happen to be the larger spenders. An additional factor is the steady increase in spend for on-line customer acquisition and the tremendous cost of free returns, estimated at 33% of revenue.
Back to the basics mean the following:
- Cleaning up and rationalizing the product assortment and families. If done well, this will reduce unnecessary product creation, ordering, manufacturing, distribution, and store square footage.
- Analyze sales by customer demographics and model product management accordingly to their demands and life-cycle.
- Do not focus on one segment at the expense of others in developing and implementing execution plans. Due to the short demand cycle of most products – customers want them quickly and then move on – the changeover between product designs and fulfillment has to be quick. This requires a technology based nimbleness.
- Identify general global trends in customer perceptions and drive retail to meet them. For example, climate change, circular economy, sharing economy, authenticity, are characteristics defining the GenZ demographic. Retailers catering to this demographics should approach product design and fulfillment with these values. However, there are other drivers of product value for other demographics as well. Therefore, for the same retailer selling to different demographics should not have a “one-size-fits-all” approach to product design and distribution.
- Integrate physical and on-line retail capabilities to the fullest.