Building a retail startup from scratch has never been a walk in the park, but the current state of the industry is especially challenging for retailers with limited resources and big ambitions.
The pandemic may feel like a distant memory for many people, but the disruption it’s caused to the global economy and businesses of all kinds is far from over.
As a small retailer, you may not be able to control the economic and technological changes on the horizon, but you can fortify your operation to weather the storm and maximise your chances for continued success.
In this post, we’ll take a closer look at some of the biggest obstacles faced by modern retail startups, and how businesses like yours can overcome them.
Economic Uncertainty
In recent years, many startup owners have been enjoying relatively favourable economic conditions. Liquid capital has been easy to get a hold of, and high spending has meant that revenue has been flowing steadily.
Unfortunately though, macroeconomic factors that have been bubbling for a long time are now set to explode and trigger a rude awakening for many retailers. Out-of-control inflation is driving up operating costs, on everything from stock to staff to software. Both individuals and businesses need to pay closer attention to the self-assessment deadline for tax returns.
With the IMF projecting that the UK economy will shrink by 0.3% this year, a recession is probably just around the corner. Households across the nation are regularly running out of money for essentials, and there’s an increased demand for equity release and similar products as Brits try to liquidate their investments.
With all this financial adversity, consumers are going to need more convincing than usual to part with their money while they deal with a high cost of living.
Retailers as a class of business can’t afford to pass these expenses onto their customers. Instead, you need to be seeking sound financial advice, and continually demonstrating your value to your customers in order to weather your cashflow for the turbulence ahead.
The Rise of Personalisation
Though customers are expected to tighten their belts and spend less in the coming years, it’s still hugely important to satisfy the wants and needs of your audience. In 2023, this means aligning your business with the growing trend towards personalisation in retail.
Studies from last year reported that 71% percent of customers will buy more often from businesses that personalise their interactions with customers. As technology paves the way for greater personalisation options, you need to position your business to accommodate for this trend and stay aligned with your forward-thinking competitors.
If you maintain a brick-and-mortar store, training your staff in giving personalised shopping advice, and leveraging technology like geofencing marketing and omnichannel shopping data can go a long way to tailor the shopping experience around the individual, and showcase a higher degree of value to your customers.
When it comes to ecommerce, there’s many more options for you to make sure the shopping experience speaks to individual customers. Retargeting, timed recommendations, adaptive product detail pages, and dynamic bestseller lists can all make your site visitors feel a little more at home, and help you maximise your conversion rate for each individual buyer profile.
Though granular personalisation may not be expected across all retail niches yet, the ongoing trend towards personalisation shows that customers will soon take it as a given. By taking a proactive approach to it now and learning your strengths and limitations, you’ll be able to accommodate for personalisation demands easily while your competitors are scrambling to catch up.
Employee Turnover
Employee retention is a challenge for any startup, but it’s a notoriously difficult force to contend with in the retail sector, with many retail businesses citing it as the biggest challenge they face.
With repetitive and unstimulating routines, retailers need to go the extra mile to actively improve employee engagement, and develop their best talent into long-term assets who will help the business face its numerous other challenges.
Many retail employers are guilty of being cheap with their incentives, so try to ramp up retention initiatives like staff discounts, regular one-to-ones, and staff social events. Past these steps, it’s also important to set out a clearly defined progression path for all of your employees, and facilitate a work environment that shows people they have a career at your business, and not just a job.
Fairly high turnover rates are just a fact of life for many retailers, but that doesn’t mean you have to just grin and bear it. Doing everything in your power to show your employees that you value their work, and that you’re more than willing to reward their efforts, will help to minimise your turnover and maintain a more effective team.
Developing a Sustainable Operation
Consumers are more concerned with sustainability than at any other time in history, and with the ongoing climate crisis, this trend isn’t going to reverse any time soon.
Across all touchpoints, your customers will be expecting you to address the environmental, social, and ethical issues they’re most concerned with, and show that you share their values with tangible actions.
While the societal shift towards environmentalism is undoubtedly a good thing, with huge floods of brands cottoning onto this trend has caused the retail arena to become full of tokenistic sustainability messaging, which has led many consumers to experience “green fatigue” – a kind of cynical aversion to this messaging after hearing too much of it for too long.
To make sure your sustainability and marketing doesn’t stray into giving your audience green fatigue, it’s important to go the extra mile and ensure that any environmental initiatives are transparent, authentic, and significant enough that you’re not seen as simply pandering to a trend.
Whether it’s going paperless, switching to green energy, or making larger sweeping changes through your supply chain to make your business more sustainable, be sure to review separate green initiatives in detail, and ensure that you’re really doing all you can for a lasting impact on your brand perception.
Moving Forward…
The retail industry has a bumpy road ahead of it, with old challenges finding different iterations and newer ones set to upturn long-standing best practices.
By adopting a forward-thinking attitude across finance, customer experience, worker satisfaction, and sustainability, you can help to minimise the disruption to your retail operation, circumvent the obstacles, and move towards a brighter future for your business.
