How technology can help overcome challenges in the retail industry

Footfall Analytics

Retail landscapes are changing. Changes in consumer shopping behaviour, accelerated by COVID, have solidified, with a wider range of shopping methods available to customers leading to more competition than ever before. Combined with increases in energy costs and overheads, retailers cannot afford to be complacent – they must focus on reducing costs as well as growing revenue to stay ahead.

Adapting to changing customer expectations

While 70% of retail purchases still happen in store, customer behaviour is changing. Many are using online shops first, and know exactly what they want by the time they set foot in a physical location. This means that fewer are spending time browsing other items, meaning that an increase in footfall does not necessarily translate into an increase in sales.

This functional approach to visiting stores is also reflected in the rising popularity of retail parks, with convenient parking and less traffic than town centres, which in turn is putting pressure on the high street.

To combat this, brands are utilising a range of tactics to make in-store shopping more enticing:

Creating brand experiences

To tempt shoppers to return to shopping as a leisure activity, brands are restructuring stores to prioritise experience over showcasing stock.

For example, LEGO has reduced the number of products on display to prioritise floor space where children can play and interact with products, encouraging them to spend more time in store and creating a new generation of LEGO lovers (whilst giving parents plenty of time to browse themselves!).

Maintaining customer loyalty

Other brands are turning to a model based on personal shopping, for example LUSH who, rather than displaying their entire stock in store, focus on setting out enough products to create the famous in-store smell, and then offering a personal shopping experience via in-store staff to help customers discover the products that are right for them.

More still are seeking to be relevant to customers year-round. In a world where customers can access virtually any product with a few taps or clicks, retailers are turning away from a heavy focus on seasonal product lines to instead showcase a more diverse range. By putting new products in front of in-store visitors, brands can generate interest and increase cross-sell potential whilst improving customer experience by providing greater novelty.

Fostering brand partnerships

Alongside showcasing their own brand experiences, retailers are turning to partnerships to further elevate their in-store experiences. Adding Costa Coffee shops to stores like Next encourages customers to treat an in-store visit as more of an occasion, increasing time on site and fostering deeper brand engagement and loyalty.

Winning against digital disruption

To reimagine in-store shopping and create these new and engaging brand experiences, retailers must have a strong understanding of their customers. While big data comes naturally in the digital space, fuelling innovations like Netflix’s recommendation engine, it can be more challenging to build a deep understanding of customers in bricks and mortar stores.

With many retailers maintaining both online and in-store presences, however, there’s potential to draw demographic, interest and behavioural data from digital analytics to fuel in-store recommendations. However, in-store analytics is also in development, with footfall technology helping to build an understanding of how customers browse stores and providing insights to fuel redesigns. At the more advanced end of the spectrum, technologies such as Amazon’s Store Analytics platform fuels the online giant’s “payment free” physical stores, whilst collecting in-depth analytics data on the products in-store customers look at, and which they choose to buy, cross-referenced against their online account data.

Staying on top of rising costs

While maximising footfall and customer value in-store is key, there are two sides to the pressure on retailers. With maintaining a physical store more expensive than ever, reducing costs and increasing efficiency is also vital to protecting the bottom line and ensuring that improvements in sales performance are not eclipsed by rising overheads.

Reducing energy consumption

A 20% reduction in energy costs can have the same impact on a store’s bottom line as a 5% increase in sales. Retailers are generally energy-hungry, not only for lighting and heating during business hours but for maintaining stock temperatures via fridges and freezers, or promoting the premises 24 hours a day via signage and totems.

Since every retail operation is unique, it’s vital that instead of blindly following best practice, stores have an understanding of their own usage and a tailored strategy for energy management. Effective metering and sensors can help to build a personalised picture of both the level and sources of energy consumption, identifying faulty equipment or other opportunities to reduce usage, for example through renewables.

Retaining and engaging employees

Employee churn can be a big issue for retailers. Seasonal fluctuations in demand can put pressure on staffing levels, and the need to invest in seasonal recruitment campaigns can add significantly to costs. With a model based on delivering an elevated customer experience, training is also more important than ever, so retaining high-quality year-round and seasonal staff is essential not only for efficiency but also for performance.

Building a strong employer brand is key to attracting and retaining the best quality team members. Strong policies offering flexibility, competitive pay and good benefits might cost more in the short term, but can lead to significant savings in recruitment and training costs over the longer term. Engaged staff are also more likely to build strong relationships with customers and drive direct sales performance, so considering models such as John Lewis’s partnership approach, where employees have a direct stake in the business, can help to significantly increase engagement and productivity.

A technology-driven future for the retail industry

With the dual challenge of delivering elevated customer experiences whilst driving down costs, it’s more important than ever that retailers make evidence-based decisions from trustworthy data. This means a technology solution that provides and end-to-end view of the entire retail footprint.

Delivering a strategy that delights customers and maximises profitability requires a fully-integrated view of your retail operations, from smart facilities management tech to ensure that asset value is maximised and that premises are inviting and compliant, to footfall and movement analysis that drives strategies to maximise store space and engage customers, to advanced energy management tools that help drive down consumption, to portfolio-wide lease management solutions that drive business-level decisions on store locations and contracts.

MRI Software’s flexible and scalable software solutions offer all you need to gather business-critical insights and make sound strategic decisions. To find out more about how we can help, contact us today.

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