The consumer slowdown had a negative impact on the entire South African retail industry. Your retail store only produced modest gains over last year’s total profit, but nothing more.
Creating steep discounts and generous promotions increased the amount of customers in your store, but only resulted in capping your profits.
In order to turn things around, you’ll need to understand the landscape and outlook for 2017. Planning your strategies for the year ahead is vital to your retail business keeping its doors open.
Here are the top four impactful retail trends of 2017:
1Divide and conquer
A recent trend that will continue to grow into 2017 is a strategy that both Uber and Amazon employ. Both companies establish their credibility in core competencies, and then expand into other industries or add a variety of options to current services.
Related: Latest Trends Driving Retail Today
Examples are how Uber has expanded into delivering food with UberEATS and how Amazon is creating AmazonGo, which allows customers to walk in and walk out without having to physically pay for their goods, with the amount being deducted from their Amazon accounts.
Physical retailers will be adopting this trend in 2017. Consider how your store can, in a novel way, get products into your customers’ hands. You’ll also need ways to drum up new products and services to offer what could seem a little unusual, or even unorthodox.
The growth of the millennial market has caused a new innovative concept to develop: Experiential marketing. According to renowned retail broker and consultant Faith Hope Consolo, this allows customers to not only see a product on the shelf, but try out the lifestyle, concept or product.
“Experiential shopping is a growing movement. For luxury, the trend means selling a lifestyle associated with the brand as a way to showcase the product,” explains Consolo.
As an example the Hershey Company’s store trades up to three times its size because it incorporates this trend into its strategy. Shopper expectation is driving retailers’ decisions.
“These area retailers are bringing on the experience with more dining options, gyms/spas, theatres and experience-focused stores. They’re creating more reasons to visit and are becoming a one-stop shop for all family members. It is luxury mixed with necessities mixed with services,” explains Consolo.
3Storefronts are on the way out
Numerous stores across the world have either announced closing down retail stores or will in the coming year. This isn’t because the bricks-and-mortar stores aren’t profitable. It’s because retailers aren’t capitalising enough on the advantage they have with a physical space.
According to Euclid Analytics’ report, two out of three shoppers would prefer to inspect the products personally, they want to see, touch and hold products before they buy.
To compete against the e-commerce giants, you need to make it fun and valuable for shoppers to transact in-person. Unless you can make your retail space more effective and engaging, you might be a part of further store closures in 2017.
Related: The Future Of Retail?
4Marketing using e-commerce
E-commerce will continue to function as another arm of the multi-channel approach. “Shoppers like to be informed and are keen on comparison shopping, so when they walk into a store, they’ve likely done their homework and are ready to buy,” explains Consolo.
“Retailers must be open to expanding technology, using social media to capture attention and connect the dots online.”
Consolo explains that shoppers want instant gratification, but they also want to touch, see and try products too. This is leading to online giants, such as Amazon, to create real-world stores to appeal to both their online and the ‘in-store’ consumers.
If you’re looking to improve your retail stores profitability, keep these top four retail trends in mind. Ensure you meet your customers’ expectation and offer services they need to create a dual revenue stream.
Use your physical store to your utmost advantage this year to compete against online stores, as customers prefer to physically inspect their purchases before buying. Additionally, keep your e-commerce online store up and running as customers like to research about the product before going in-store to buy it.
Benefiting From The 80/20 Principle In Business
It is by leveraging the compounding effect of focus that entrepreneurs can enjoy exponential success.
By our very nature, entrepreneurs are explorative, often traversing a multitude of paths to success at any one time. While this approach is invigorating, the truth is that the lack of focus cannibalises new businesses before they have a chance to take off.
I have found that honing in on what really matters is imperative for success, an approach that aligns well with the 80/20 rule, or Pareto Principle. While initially an economics ratio that 80% of all wealth is owned by 20% of the population, the notion that focusing effort on the important aspects leads to more significant results, rings true in my business and personal life.
Letting Go of the Other 80%
The catalyst for utilising the 80/20 principle to manage my focus, was a meeting I had with a potential investor. At the time, my partners and I were involved in 7 or so businesses, in addition to ad-tech company Popimedia. These ranged from systems to manage doctor appointments to a social network for new parents. The investor we met with was enthusiastic about us, but would not provide funding due to our lack of focus on a single venture.
It was sobering feedback. We decided to cut chords with the other businesses and focus solely on Popimedia (the golden 20%), a decision that I believe lead to the company’s success.
The Compounding Effect of Focus
The differentiating factor was focus. If we had chosen to pay attention to one of the other businesses instead, then that would have become the successful venture.
Focus works like compounded interest on an exponential curve; the more you centre your energy on something, learn, and reinvest your knowledge back into it, the better it will perform over time. Subsequently, any endeavour that is not receiving focussed attention from those heading it up is doomed to fail.
I use this principle in my VC investments too; I will only back someone who has unwavering focus on their venture, along with the ability to embrace failure.
Implementing it Day to Day
Being selective in what to focus on not only applies to those big business-defining decisions, but, perhaps even more importantly, to the day to day activities too. There are several ways in which the 80/20 principle can be utilised to guide the investment of focus:
1. You Cannot do Everything
Entrepreneurs are great at what they do, but we need to accept that we cannot do absolutely everything, on account of limited time. Choose the most impactful 20% of the tasks and focus on those.
2. Delegate to Smart People
I find it useful to accept that not everything has to be perfect. While you may not receive the same quality when you delegate, the freedom you gain from having time to focus on the important things provides a much higher return. And if you have surrounded yourself with people who are smarter than you, you may be surprised.
3. Make a Bad Decision if You Have to
I have one rule when it comes to decision making: “Rather make a bad decision than no decision”. When you have a solid vision-based framework, making quick decisions to prioritise (or omit) tasks becomes easy, and having the ability to embrace failure allows for quick adjustments if it turns out to be a bad decision.
As entrepreneurs, we need to continuously recalibrate our focus by asking ourselves; “Am I pouring this energy and effort into the right 20%?”
Your Organisation’s Values Must Generate Value – Otherwise Why Have Them?
Your values have to be the foundation of your organisation’s present AND its future if you are going to ensure sustainable value for your stakeholders.
In the modern world of business, where social media compels organisations to tell the truth, transparency and ethics have become essential. Consumers no longer only care about getting value for money, but also about what your company values and how that transpires in what you offer.
Defining a set of values that describes your organisation’s heart, i.e. your organisational culture, is immensely personal and, if lived, immensely powerful. Successful leaders realise that an important factor in building brand loyalty is getting their organisations to wear their proverbial hearts on their sleeves and to authentically honour it in the way they do business. Sadly, many organisations define their values as a tick-box exercise that serves as mere decorations for their website.
Just think of infamous examples like KPMG, SAP and Steinhoff as well as more recent culprits like Bain and Gartner: Besides the millions many of them had to pay back, their severely tarnished brands are still costing them dearly. It is clear that if the values you proclaim to espouse are not overt in your client-facing staff and the way you do business; this lack of integrity will eventually catch up with you. As what happened with KPMG, this not only leaves you with less clients, but with a diminished team too. High potential employees do not want to be associated with leaders who don’t honour the organisation’s values.
Related: Here’s How To Value Your Business
For the organisation’s values to truly become visible in how they engage and do business, it has to start with the leaders and their message. Those we lead must see it in our example on a daily basis. Our organisation’s values serve as a moral compass, but if the leaders responsible for steering the ship do not abide by this compass, our crew can’t get us to where we want to go. Our team members either follow us, become disengaged or abandon ship. They will not make an effort to uphold the values within a business where the leaders themselves disown it.
As a business, we make a certain promise or commitment to our clients. However, if our values do not underpin this promise and if we, as the leaders, don’t role-model our values to achieve this, it remains an empty promise. Therefore, it is important to keep the following aspects in mind when selecting or re-viewing your organisation’s values:
- Before defining your values, you should ideally define what kind of culture you want your values to underpin. Consider what is important to you and what is important to your customers: Is your organisation’s culture customer-centric, as it aims to exceed customer expectations, or quality-centric because of its strong focus on excellence? Perhaps your organisational culture leans more toward being cost-centric, as providing real value for money is important to you. A service orientated organisational culture, on the other hand, implies that providing your customers with the best possible experience is top of mind for you. Your organisation’s culture could be one of the above, or your culture could consist of a bit of an eclectic mix.
- Once you have defined the above, choose values that will help your desired culture become a reality and that your team members and customers will buy into. Again, ensure that it captures the heart of your organisation.
- Values are personal and we all interpret them in our own way. Although we don’t want to promote a homogeneous culture, we do have to communicate what we mean by our values. Therefore, the next step is to craft a set of behaviours that describe how the individuals in your organisation will live these values. Again, it is important to emphasise that the example must be set by the leaders but that it is the responsibility of every team member to role-model these behaviours.
- Finally, your organisation’s values must come alive and inspire, as they are intended to, and it is your responsibility as a leader to make this happen. Ask your team and your customers to tell you how they will feel if these values are lived authentically, and then measure the organisation against their feedback. If your team and your customers do not experience your values in this way on a daily basis, chances are your values are probably still dormant.
It is the responsibility off all leaders to inspire hope and trust in the organisation’s future in good times as well as bad times. To keep your team engaged, you constantly have to paint an emotive picture of what the future looks like for your organisation. If you connect this picture to your values and role-model them as a leader, they become a powerful tool for fostering the emotions and engagement that will help your team members buy into your vision.
How You Can Achieve Growth Through Access To Markets
If your goal is to scale your business, you need to increase your sales and access to markets. We found the best way to do that was through key strategic partners whose existing clients were our target market.
Many sales-led organisations have come to the same conclusion at some stage in their business growth life-cycle: In order to build a sales-led business for scale, you need to adopt a multi-channel sales distribution strategy. In our world, this means a combination of direct sales (boots on the ground), digital marketing and strategic partnerships.
After five years we had grown Merchant Capital as far as we could organically. We needed a much larger sales distribution channel. Understanding the need for a multi-channel sales distribution strategy is one thing, execution is something else entirely. After paying significant school fees, our strategic partnership distribution strategy was crystallised, and off we went to bring our chosen partners on board.
1. Finding strategic partners
Re-calibrating our sales strategy led us to the conclusion that we needed a strategic partner who could bring us ‘one-to-many’. In other words, we needed to identify potential partners (‘one’) who have ‘many’ sweet spot clients who are also our target clients, and whom they are already servicing with other products daily.
The end result of this three-year process has been strategic partnerships with Standard Bank and Discovery Insure. In the case of Standard Bank, every business that utilises a Standard Bank point of sale (POS) system can apply for a cash advance from Merchant Capital. Thanks to the partnership, Standard Bank POS merchants can access a cash advance within less than 24 hours of application.
It sounds incredibly simple and straightforward, but the process of identifying the right partner, creating the value proposition and then building a relationship that can result in such a partnership is anything but.
The most crucial element in this process was identifying partners who could benefit as much from a relationship with us as we could from them — in other words, ensuring a strong mutual value proposition.
When you have a business need, it’s easy to convince yourself that your prospect or potential partner needs you as much as you need them. Unless you are absolutely sure that this is the case however, there’s a strong possibility that you end up having a life-changing initial meeting and then never hear from them again.
This can happen for one of two reasons: Either you haven’t found the right partner who will also benefit from a partnership with you, or you haven’t been able to adequately distil that value. If this happens, very often you’ve missed your opportunity and won’t get a second chance.
We therefore had to be extremely disciplined in identifying which partners we wanted to approach. We focused on removing any subjectivity from the process by building an objective ‘partner scorecard’ that allowed us to weight certain attributes of the partner (such as a large client base, deep client relationship and mutual value proposition) with what we could offer them. This empowered us to make educated decisions.
2. Making first connections
Identifying the right partners is only the first step — now you need to make contact. By design, the partners we had identified were behemoth corporates with much larger priorities than meeting us, and convincing them on the upside of a strategic partnership needed to be robust and well-articulated.
Step one is getting your foot in the door. We began the process by identifying ‘champions’ within the partner organisation. This process takes time. We were able to secure meetings and found that running pilots was a good way to provide demonstrable evidence of the proposed ‘win-win’ proposition.
Early on in a business life-cycle (before any traction and brand equity exist), we found that leveraging off our network of shareholders and mentors to make introductions to the appropriate decision-makers within the organisation was of great assistance.
When we signed our previous investment deals, this was actually a key consideration for us. For obvious reasons, growth funding holds value, but the network and mentorship that the right board and shareholders bring to the table can be much more valuable.
Until you’re able to build brand equity and gain traction with a partner (or client), the right networks, introductions and referrals help you secure the meetings you need to prove yourself. And then you need to start small. Don’t expect a meeting with the CEO. Start with someone who could be your champion within the organisation.
3. Finding your champion
Finding a business sponsor to champion the partnership within the corporate partner is fundamental to your overall success. They will understand the internal friction and potential hurdles in navigating the naysayers within the organisation.
There will always be people, and rightly so, who challenge the partnership and ask why they can’t just do it themselves. If you don’t have an internal champion who is engaged and passionately buys into the partnership, then the initiative will most likely fall over and die.
Being the first mover in a partnership with an innovative start-up has many advantages if the product takes off. Often, these people want to be involved on the ground floor.
That said, big corporations are still taking a chance teaming up with young companies (brand risk and financial losses, to name a few). The upside of having already landed a smaller partner where significant traction can be demonstrated goes a long way in softening the initial concerns and risks from the large corporate’s perspective.
4. Nothing worth having can be rushed
The one word that comes to mind when thinking about this journey and the past three years is grit. In our experience, landing great partnerships takes many years of relationship-building and demonstrating solid business metrics and track record.
As I’ve already mentioned, our discussions with Standard Bank began three years before doing the deal. What we found useful in the early days of the partner discussions was communicating that in the next quarter we were going to achieve certain results and then coming back the following quarter and presenting the fact that we had hit our milestones, or hopefully exceeded them.
Just as you would do with an investor, this built a track record and credibility. The rhythm of checking in every few months and reporting back on progress is a great way to build the relationship over time without being too pushy as well.
Pulling it all together
There are two types of growth: Organic growth and scale. We’re an organisation that wants to scale. We’re aiming for exponential growth. This wouldn’t be possible without exponentially increasing our access to market.
We identified that the best way to do this was through the right strategic partner, but there are many channels that business owners can consider.
The important thing is not to just do what you’ve always done, unless you’re comfortable with organic growth. Evaluate your current model, and critically examine what you need to do to increase your sales, distribution and access to market. There is no one right way to do this. It took us time, and we needed to learn a few tough lessons before we were confident in the direction we wanted to take.
Related: My Business Is Growing… What Now?
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