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GUEST ANALYSIS Retailers face reality check as sales slump

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Sadly, nothing lasts forever. The latest retail data appears to herald an end to the extraordinary period of robust consumer confidence. But rather than fall into defeat, retailers must strengthen their offer to weather the storm.

Data from the Office of National Statistics shows that in March, British retail sales posted their biggest quarterly fall since 2010. Widespread economic uncertainty is causing consumers to curtail their spending, meaning retailers of all sizes need to do everything they can to remain competitive and stay one step ahead.

The assumption is that traditional bricks-and-mortar retailers will be at the sharp end of this pinch. But despite their endeavours to offer a far more frictionless and convenient shopping experience, online retailers are not immune to this slump. Visa’s ecommerce spending index shows that online consumer spending has also declined for the first time since 2013.

Instead of panicking about these tougher, less predictable market conditions, retailers must see this as an opportunity to rediscover their strengths and optimise their offer. Now is the time to stand out from competitors, not get lost in a thinning crowd. So what do retailers need to do to take matters into their own hands, attract sales and successfully retain customer loyalty?

Don’t lose sight of your customers



Most comedians would agree that well-timed delivery is imperative to success. The same rule applies in retail.

Fulfilment is still a huge missed opportunity to win loyalty and repeat business. Times may be a little tighter, but the demand for convenience isn’t going to suddenly stop. Consumers are still attracted to the products and services that make their lives easier. Naturally, this extends to delivery and returns options, which need to fit in seamlessly with customers’ busy lives.

There is a wealth of research and insight – not least our own – that shows a positive delivery experience would encourage a shopper to buy from that retailer again in the future. In the same respect, a bad delivery could have a huge impact on the business and brand.

If this sounds obvious – and it’s something I will readily admit to have been saying for years – then we have to ask why so many retailers still aren’t leveraging the benefits. As recently as this week, I found some products with a value of £50 available online, from a well-known brand, that came with a delivery cost of close to £30.

This is madness.

Certainty and surety – not necessarily speed



You don’t have to take my word for this. Industry behemoths like Amazon and Argos are already pioneering hyper-fast delivery to bolster the convenience they offer and become an indispensable part of day-to-day life for their customers.

In light of this, retailers might be tempted to push for speed above all else. But speed does not necessarily equal convenience. The important thing is that retailers figure out what’s best for each customer instead of spending unnecessary amounts of money and energy on the pursuit of speed.

To win over today’s shoppers, retailers need to offer a diverse delivery suite that caters to their individual needs, whether that’s same-day, next-day or a week in advance. This was the premise behind On the dot; to help retailers of all sizes offer the ultimate convenience at flexible prices.

Cutting back on the range of fulfilment options as times get harder would be unwise.

Returning the favour



The customer journey is longer than it once was. As consumer behaviour changes and competition escalates, the path to true fulfilment nirvana goes further than a parcel in the hand. It is essential to also enhance the after-delivery experience.

Shopping online means that a customer won’t see and handle a product until it’s shipped and paid for. For that reason, the new norm is for shoppers to purchase multiple items of clothing in a variety of colours and sizes, with the intention of keeping one item and returning the pieces that were ill-fitting or not quite the right colour or fabric. Inevitably, this places pressure on retailers’ returns capabilities.

Though retailers of the past might have attempted to hinder returns by making the process cumbersome or expensive, today’s merchants will be aware that easy returns are an effective means of boosting customer loyalty. In fact, a recent report from payment provider Klarna showed that 67% of consumers say easy returns are an essential factor in their choice of retailer.

Understandably, merchants might feel hesitant about making returns cheaper and easier; returns are ultimately an additional cost. But it’s a price well worth paying. Shoppers will spend more if returns are easier and they’ll come back again if they enjoyed a positive experience.

Don’t let size hold you back



It’s all well and good to say that retailers need to pull out all the stops to keep up with competition. But how can businesses – particularly smaller, independent retailers – quickly become experts in fulfilment?

It certainly won’t fly to make empty promises about one’s capabilities. Retailers must first ensure that they have the infrastructure to follow through with their fulfilment offering. After all, few things are worse for a business than failing to deliver – and convenient delivery does not need to cost the earth. The fulfilment USP of smaller operators is their closer relationship with their supply chain. They may find it easier to offer a more personal relationship with their customers compared to larger players, but they can also leverage the benefits offered by tighter control of their stock.

Forming partnerships with fulfilment providers allows retailers large and small to cherry pick the best services from each stage of the supply chain, providing a top-quality customer journey, which will see shoppers returning again and again.

This theme of collaboration is a good one, and goes beyond delivery. Retailers should be looking across the breadth and depth of their offer, looking for opportunities to surprise and delight their customers. Stagnating now is risky. Again, this is about starting with the customer and working back.

Partnerships make stronger brands, so taking a step back and seeing where there is the opportunity to boost and expand your offer through new relationships is even more essential for smaller retailers – but it’s also easier. Smaller retailers are far more flexible and certainly have less red tape. Working with other partners of a similar size exponentially enhances your strengths.

The very latest data may offer some balm to soothe the sting; sales in April are back on the up. But don’t be fooled. This optimism is illusionary; a distortion likely caused by the timing of Easter and the hunt for bargains as price rises bite.

The fact is that the forthcoming Brexit negotiations and snap General Election have inevitably contributed towards uncertainty. As the pound plummets, retail prices judder skywards and the rising cost of shopping baskets has been met with a slump in sales.

Retailers must boost their offer to stay competitive in a tougher climate. Cutting back on the customer experience is a shortcut to disaster.

Patrick Gallagher is chief executive of On the dot VCSP

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