The retail industry is at a crossroads.

Once dominant brick-and-mortar retailers are now struggling to stay afloat in the face of rising e-commerce sales, an increasingly complex competitive landscape, and evolving consumer preferences. These challenges, while significant, present an opportunity for retail companies that are willing to adapt, claim a larger share of the market as companies that fail to address these changes are left behind.

The next decade is critical for retail companies. In this article, we’ll explore three key retail strategies that, when properly executed, will enable retail organizations to successfully take advantage of e-commerce, anticipate customer needs, cultivate customer loyalty, and position themselves for growth - now and in the future.

E-commerce’s significant growth in recent years has changed the way people shop. The convenience of buying anything you might want from the comfort of your couch combined with rapid shipping and delivery timelines is hard to resist. On top of that, online shopping makes it incredibly easy to compare prices from multiple retailers creating pressure to provide additional value. Customers are more informed and have higher expectations.

The rise of e-commerce has also broken down several of the barriers to entry that previously protected brick-and-mortar retail companies. It’s easy to start an e-commerce store without having to make significant capital investments, manufacture product, hold inventory, or pack and ship customer orders. This has led to a more complex and evolving competitive landscape. Brick-and-mortar retailers have to now compete with online companies all over the world vying for their customers’ wallet share.

In 2023, roughly 16.4% of retail purchases in the U.S. are expected to take place online, according to Forbes. If retailers aren’t competing in the e-commerce and social commerce spaces, they’re forfeiting an opportunity to address these customers, worth $1.1 trillion in sales in 2023. That number is expected to grow to $1.7 trillion by 2026, a CAGR of 11.5%.

So how can traditional retail organizations compete in this new era of e-commerce? Here are two essential strategies that can be used.

1. Establish an E-Commerce Presence

A strong e-commerce presence is a must for traditional retailers to compete in today’s environment. According to GE Capital Retail Bank, 81% of consumers will research online before buying, even if they intend to buy in-store. This figure is from 2013 but appears to be the last available data and is commonly quoted. It’s likely that 81% has grown with the prevalence of e-commerce over the past decade.

Establishing an e-commerce presence is about more than opening an online store. Consumers expect a smooth, simple experience and will abandon your site if they’re not getting it. Consider the following factors when establishing an online presence:

• What do your customers want the store experience to look like; how can you deliver that while making it intuitive and easy to use?

• How will orders be fulfilled? Will you partner with an existing fulfillment service or perform your own fulfillment? What investments are required?

• What’s the strategy to generate consumer awareness? How can you leverage digital marketing effectively?

• How can social media be effectively used to drive brand awareness?

• How can e-mail marketing be utilized to foster customer relationships?

2. Create Complementary Online and In-Store Shopping Experiences

Retail companies should find ways to leverage their traditional brick-and-mortar locations to give consumers an enhanced experience compared to what they get online. Doing this can give consumers a reason to come to the store other than making a purchase.

One common example is creating an in-store pickup and returns feature. Customers can buy online and then come to a physical location to get their order or return other online orders. Customers will appreciate the added convenience and creating additional in-store visits will likely result in incremental purchases that may not have occurred otherwise.

Another strategy is finding ways to give customers unexpected or unique experiences while in-store. This not only differentiates your stores from the competition; it provides something that consumers cannot get online. Examples of experiences include offering exclusive products, giving product demos or hosting events in-store. Providing a fun and memorable environment for consumers will keep your stores top of mind.

Lastly, deliver fantastic customer service. Customers want to be appreciated and feel they’re getting great value for their money. Offering services like price matching, a hassle-free returns process, and a friendly, well-trained staff can go a long way in separating you from the competition.

In the ever-evolving retail landscape, understanding and adapting to changing consumer preferences has become more crucial than ever before. As the world continues to progress, so do the tastes, expectations, and behaviors of your customers. In an era marked by digital transformation, information is readily accessible, competition is fierce, consumers are more knowledgeable than ever before, and they understand the leverage they have.

To thrive in the current environment, it is imperative for retail companies to stay ahead of the curve by anticipating and accommodating these evolving consumer preferences.

According to research by Accenture, 64% of consumers wish companies would respond faster to their changing needs while 60% of consumers say their priorities keep changing as a result of everything going on in the world. This puts the strain on retailers to act quickly and decisively while being able to anticipate how individual, social, and economic factors will cause consumer preferences to change in the near future.

In summary, consumers are looking for more meaningful connections and experiences with companies they give their business to. Delivering these meaningful connections to consumers comes down to creating personalized experiences, convenience, and brand authenticity.

1. Personalized Experiences

One consequence of e-commerce is an increasing consumer preference, and expectation, for personalization. According to a Salesforce study, 73% of consumers expect companies to understand their unique needs and expectations, and 62% think companies should anticipate their needs. Knowing your customers is critical to providing the quality experience they expect. Components of delivering a quality, personalized experience include:

• Data Collection & Analysis - the first step to knowing your customers is to gather data across multiple touchpoints including in-store, online, and through social media interactions.

• Customer Segmentation - utilizing the insights from data collection and analysis, segment your customers based on demographics, shopping behaviors, and preferences they demonstrate. Create multiple customer segments and develop customer personas for each of these segments to understand their needs and motivations.

• Personalized Product Recommendations - as you begin to understand your customers, and which segments they fall into, you can begin to make personalized recommendations that show customers you understand them and can anticipate their needs. This is a great opportunity for cross-selling and up-selling initiatives.

• Customized Offers & Discounts - another opportunity to demonstrate you understand your customers. Deliver special offers tailored to specific customer segments, initiate milestone offers such as birthdays or customer anniversary dates, develop loyalty programs that reward normal customer behaviors.

2. Customer Convenience

Today’s consumers will always have multiple alternatives. If your company makes the purchasing experience difficult or inconvenient, customers will switch to a competitor. The same Salesforce study states 71% of consumers switched brands over the past year with 44% of those switching stating convenience was a deciding factor. Consumers appreciate and seek highly convenient purchasing experiences. You can provide a more convenient experience for your customer through the following strategies:

• Synergistic Omnichannel Experience - many consumer transactions begin online and finish in-store. Give your customers a simple, well-integrated experience that provides convenience and makes them feel valued. Some examples include allowing them to search store inventory online, select in-store pickup or same-day delivery, and offering easy in-store returns for online purchases.

• Virtual Shopping Assistance - though online shopping continues to increase in popularity, there are still shortcomings (not being able to see/touch the product) that need to be addressed. Offering customers live chat or video chat options is a great way to address the shortcomings of ecommerce in a way that’s quick and convenient for consumers.

• Deliver a Great In-Store Experience - give strong consideration to store layout, making it as easy as possible for customers to find the products they need. The checkout process should be simple and streamlined, offering multiple payment options including contactless. Deploy a well-trained, highly informed sales staff to quickly and confidently answer any customer questions. Returns should be easy to process, loyalty programs should make it simple to redeem rewards.

3. Brand Authenticity

Consumers today expect the brands they spend with to represent their values and beliefs. In fact, 70% of consumers reportedly spend more with brands they perceive to be authentic. To be clear, authenticity means being genuine, transparent, and consistent in communication and behavior. In deciding if a brand is authentic, customers look for credibility and consistency in actions the company takes towards achieving stated values. A few examples of ways to create brand authenticity include:

• State Your Values and Mission - the first step towards establishing credibility is defining how your organization should be measured. Whatever your stated values and mission are, every action taken by the organization should have an eye on adhering to those values and achieving the mission. Inconsistencies between what you say you value and what your actions say you value will quickly destroy any credibility and erode customer trust.

• Be Customer-Centric - customers should always be the focal point of an organization. Listen to customer feedback to improve products and services; be responsive to inquiries and complaints. These things will build trust among the customer base and demonstrate your brand’s authenticity.

• Be Transparent and Honest - consumers value honesty and transparency. Something like sharing some details about your supply chain, manufacturing processes, and sourcing shows customers that you intend to be honest with them. If your organization makes a mistake or does something out of line with stated values, admit it and take steps to correct the mistake and prevent it from reoccurring.

• Be Patient - building brand authenticity takes time to establish but as consumers have multiple, consistent interactions with your organization, authenticity will begin to grow. If you’re an older organization you may already have significant brand authenticity with an older generation of consumers, but has that reputation permeated through younger generations as well? Are the actions you’re taking aligned with the priorities and values of those consumers?

As we’ve touched upon in our first two pillars of strategy, customer experiences are a significant factor in determining whether consumers choose to do business with your organization. Even the most well thought out and unique customer experiences can be ruined by a poor staff. In fact, 94% of consumers state that a positive customer service experience makes them more likely to purchase again while 96% say excellent customer service builds trust.

These figures make it plainly evident - a quality staff greatly improves the customer experience and builds loyalty. In a world with record low unemployment rates, increasing wages, and fierce competition for talent, how can you differentiate your organization and entice quality employees to stick around?

1. Compensate Employees Well

As the saying goes, money talks. Employees that are well compensated and have good benefits typically have better morale and are more engaged than those that aren't. However, we’re not just talking about pay - benefits play a significant role in employee satisfaction. According to the Society for Human Resources Management, 60% of employees rated benefits as a very important contributor to job satisfaction. As wages increase and competition for talent becomes tougher, designing attractive compensation packages can set you apart from other organizations. Below are a few suggestions for beginning a strong compensation package:

• Provide High End Wages - providing your employees with wages that are higher than the market average serves several purposes. Employees will feel cared for and motivated to perform. Your organization will attract more job applicants for open positions and, more importantly, you’ll attract better qualified, more talented job applicants.

• Healthcare Benefits - this is one of the most important benefits you can provide for employees and it has almost become an expectation from an employee standpoint. Providing affordable, quality healthcare options for employees and their families gives them peace of mind and fosters appreciation. Some additional ways to show employees you care about their wellbeing include providing on-site healthcare services such as blood pressure or cholesterol checks, wellness programs for weight loss or quitting smoking, or subsidized fitness classes.

• Retirement Benefits - giving employees an avenue to save for retirement is another great way to enhance your compensation package, especially if your organization can afford to offer a matching contribution. Work with your retirement plan provider to offer financial planning services, provide a variety of investing options, and initiate automatic enrollment to help all of your employees take steps towards retirement.

• Tuition Reimbursement - employees want to work for a company they know they can progress with. What better way to demonstrate the intention to develop employees and promote from within than to offer a tuition reimbursement plan? Enabling motivated employees to pursue higher education and enhance their skill sets not only reinforces to the employee that they’re valued, it also creates a talent pipeline that can grow into leadership positions.

2. Provide Quality Training and Development Opportunities

The cost of replacing a average employee is significant. Using a sales representative as an example - our client experience has demonstrated that between recruiting, interviewing, on-boarding, training, ramping the new employee, and lost sales from the prior employee, the total cost to your organization is likely to be $13,500 per employee at a minimum. Minimizing employee turnover is a critical component to maximizing the performance and value of your retail organization. The following are a few examples of ways to provide quality training and development opportunities for employees.

• Establish Clear Training Needs and Goals - work with your team to determine what trainings would most significantly improve your employees’ performance and their impact on your organization. Establish a minimum performance standard that each employee must demonstrate prior to moving on from the training. Trainings should be available for a variety of topics including sales skills, customer service, product knowledge, inventory management, and more.

• Provide a Variety of Training Methods - different employees learn in different ways. Your organization should offer various forms of training so employees can continue to develop their skills in a way that resonates best with them. Examples include but are not limited to on-the-job training, virtual training modules, classroom training, and formal training programs.

• Empower Employees to Continue Developing - encouraging employees to take ownership of their career development is highly empowering and demonstrates that the organization is invested in providing employees with not only jobs, but a path to development and new career opportunities. Help them establish goals for themselves and implement action plans to achieve those goals.

• Provide Optional Development Programs - providing optional programs for ambitious employees is a great way to keep track of employee development and understand which employees desire to grow within the organization. Examples of these programs include access to career coaching and development resources, mentorship programs, leadership development programs, and tuition reimbursement programs.

3. Create a Culture Employees Appreciate and Participate In

In today’s hyper-competitive environment, a strong culture can set your organization apart from the rest of the pack. Organizations with strong cultures are able to attract more talented employees, provide better customer service (and experiences), and tend to be more innovative. Regardless of how well employees are paid and how great the training and development opportunities are, a toxic culture will destroy your organization through high employee turnover, low morale, and low performance. Begin to create a strong culture people want to be a part of with the suggestions below:

• Establish a Clear Set of Values - leadership should clearly communicate to employees the expectations that come with working for your organization. As an example, our values a P.C.S. are performance, innovation, collaboration, and integrity. All decisions and actions we make are driven by those values. As employees see leadership living the values, they’ll adopt them as well. This helps to establish a code by which all employees know they should act, and employees that don’t align with your organizational values will self-eliminate.

• Create a Fun Work Environment - high performing organizations are driven by hard working individuals. It’s important to demonstrate appreciation for the hard work your employees do outside of their paychecks and bonuses. There are many ways to create a fun work environment that people want to participate in. Some examples include buying lunch for your employees from time-to-time, having optional social hours outside of the office or store, promoting a healthy work-life balance, being inclusive, promoting and listening to employee feedback, creating employee clubs or groups.

• Celebrate Successes - celebrating success creates a positive work environment, boosts morale, and promotes innovation among employees. When the company achieves a goal, or an employee accomplishes something significant, take time to acknowledge it publicly with the rest of your organization. This can be via an e-mail to the entire organization, an announcement during an all-hands meeting, or with an office party to name a few examples.

The Future of Retail is Here

Though the retail industry is at a crossroads, the future is bright for organizations that employ strategies emphasizing the three keys we discussed today: e-commerce, the customer experience, and attracting, developing, and retaining talented employees.

E-commerce is already a major force in the retail industry, and it’s influence will only continue to grow in the coming years. Retailers need to develop a strong e-commerce presence in order to compete. This means a user-friendly website, a variety of customer payment options, fast and reliable shipping, and an experience that integrates with brick-and-mortar locations.

The customer experience is more important than ever before. Creating a positive, unique experience at every touchpoint is critical to creating customer loyalty in a hyper-competitive environment. Retailers need to invest in capabilities that allow them to know their customers, anticipating their needs, and creating personalized experiences that customers will appreciate.

Finally, attracting, developing, and retaining talent is critical. Retailers need a strong and talented team to execute the above strategies quickly and efficiently. Investing in leading salary and benefits packages, training and development programs, and creating a culture that people want to be a part of are the best ways to ensure your organization is a popular destination for highly talented, team-oriented individuals.

By taking the steps outlined above, retailers can prepare for the future and continue to thrive.

Is your retail organization struggling to adapt to industry changes? We can help you develop and implement a strategy that gets you back to growth. Get started today with a complimentary discovery session!