For the modern retail SME, it can be difficult to keep up with rapidly changing consumer demands. Customers are becoming increasingly sophisticated, adept at changing between offline and online and expecting convenience and personalisation as core to their shopping experience. Retailers have been feeling the pressure – the beginning of 2016 has been a tough period for shops, with political uncertainty, a seemingly interminable bout of unpleasant weather and plummeting footfall contributing to a bleak outlook. Yet for those who can adapt to these shifts in consumer behaviour, the retail world is ripe with opportunities for business growth.
Adapting To Shifting Consumer Behaviour
We’re seeing a really interesting development in customer preferences for shopping location – it seems that despite ecommerce’s behemoth status, customers are embracing the old-school, bricks and mortar way of shopping. A sense of nostalgia is in the air and customers are craving that old-fashioned retail experience that simply cannot be provided by often depersonalised online or larger stores.
This is coupled with a growing yet established trend called ROPO (research online, purchase offline) that was identified a few years ago. Whilst customers love to browse online at their own convenience, when it comes to making a purchase they prefer offline.
Whilst there are clear benefits to shopping online – namely speed and convenience – the classic pain points remain. Inconvenient delivery times, the hassle of returning goods and risking not liking the item when it arrives prevail. So perhaps it’s not that surprising that people are craving that traditional experience, the physicality and materiality of a bricks and mortar shop where they can try and buy immediately.
The millennial demographic are showing these preferences and successfully engaging them will be a crucial factor in the new landscape for SMEs. Not only are they researching online, purchasing offline but this age group (those born between 1980 and 2000) are looking for the more personal, authentic customer service and real-life interaction that SMEs can more easily provide. The emergence of concept stores show how this trend is being materialised by keeping customers interested through innovative ways.
Here lies the opportunity for SMEs to step up and capitalise on current consumer appetite. Being smaller and therefore more agile they can more easily provide an exclusive experience and become the driving force that keeps the UK retail market going strong.
Setting Up For Success
That said, it is imperative that SMEs embrace digital to help fuel their growth. Many SMEs are technologically behind, some even failing to have a web presence at all, let alone a dedicated social media strategy, mobile optimised site and streamlined online payment system. Considering that we now live the majority of our lives online, failing to adapt to consumer behaviour in this way is a recipe for disaster. With 51% of UK ecommerce sales taking place on mobile and devices last year – it is crucial that smaller retailers truly align themselves with this paradigm.
Blending Online And Offline For A Seamless Omnichannel Experience
Genuine success means a seamless blend of offline and online experiences – otherwise known as omnichannel. That translates as a huge opportunity for digitally equipped SMEs who can also marry that with a solid physical experience, therefore fulfilling all customers’ needs and building loyalty.
For existing real-life retailers, it means having a comprehensive online presence behind the high street shopfront, technological back-up, and logistics support for deliveries and returns, all of which modern consumers have come to expect.
We’re also seeing a growing trend towards ‘click & collect’ – this is where a customer pays for their item(s) online then heads in-store to complete the transaction. Click & collect has proved incredibly successful over the past few years – even beating mobile as the retail technology that has most impact on the way consumers shop. Customers will often spend even more in store to collect their items – so the convenience for them is matched by increased sales for retailers. SME retailers would do well to establish a seamless click & collect service if at all possible.
Funding Omnichannel Retail Success
As the industry rapidly evolves how can SMEs support themselves in keeping up with their increasingly sophisticated customers, when things seem to be changing so quickly that it can be difficult to stay ahead of the game? At Boost Capital we have years of experience working with retailers who are making the necessary investment to ensure they remain relevant – and solvent – for the long-term. From online retailers looking for funding to develop physical stores, or shops needing to upgrade their digital offering, many smaller retail businesses accept that capital is vital to growing and adding value to their enterprises. Thanks to this, Britain boasts the most innovative retail market in the world.
To survive in this shifting world, retailers must place the customer at the heart of any strategy. Knowing their preferences, what they like and how they want it, and adapting accordingly is the cornerstone to success in this blended world. Undoubtedly, small businesses are operating in a tough market but with adequate capital there remain many opportunities for growth for those willing enough to embrace the new.