Challenges - Retail Industry
Retail today is all about being better, faster, and leaner.
The retail industry faces challenges similar to those in other industries. What is different is that they combine together to put a great deal of pressure on retailers in today's modern economy. With a fast-paced society and faster-paced technological changes, customers want new, different, and customized goods now, and they're not willing to wait.
At the same time, pressures on the backend are mounting, too. Larger retailers, with their efficiencies of scale and international scope, are pushing prices down and slashing margins.
As a manager, ideally you'd like to be able to walk down the hall from your office and into any one of your stores or warehouses. In reality, that's not possible. You have to hire the right people, staff your other locations, and rely on them to do the job right.
Technology has the advantage of being able to bring you and your employees together – whether they're located in within the vicinity or elsewhere, what you really want is able to get information instantly for your decentralized business.
Information flows from your stores and warehouses to your head office every night, so you have up-to-date sales and inventory information. You can make pricing changes across the board, or implement a new sales campaign to reflect the success or failure of one of your major products at one store – or all of them.
There's a higher rate of staff turnover in the retail industry, compared to other industries. This varies by country. European countries, for example, tend to retain store-level personnel more successfully. North America and Asia has a turnover rate of 200-300% of front-end employees in certain segments.
What does this mean for your business? While you can implement and pursue staff retention programs – and it makes good sense to do so – you're going to have new employees coming through your doors on a regular basis. Getting them trained on your systems rapidly and cost-effectively is critical so that they can become productive members of your team as soon as possible.
The bottom line: It's simply a fact of life that your staff turnover is going to be higher than in other industries. Therefore, how to keep the staff idling/unproductive time to the minimal is utmost important to your business success?
Consider these sobering statistics on shrinkage (also known as inventory shrink):
- For every dollar lost to shrinkage, you can lose $11 to $15 in profits. (UK statistic)
- You'll only detect 3% of the shrinkage when it happens – the other 97% you'll discover later. (UK statistic)
- For every theft you detect, 46 others will go undetected. (UK statistic)
- In 2005, total inventory shrinkage cost U.S. retailers $37.3-billion US.
- Administrative error is responsible for 14.6% of shrinkage, and employee theft is responsible for 47.9% of shrinkage (National Retail Security Survey, 2001).
Loss prevention strategies and programs can be an important part of reducing shrinkage before it becomes a real problem. But did you know that your IT solution can also help minimize shrinkage?
We could help you control shrinkage from the ground up in five ways:
- Studies show that increased employee satisfaction reduces employee theft.
- Studies also show that higher customer service results in less shoplifting. Improved customer service and customer satisfaction by managing the supply chain so that your stores carry the goods customers want, at attractive prices. CRM capabilities also ensure that customers are treated on a one-to-one basis, whether in marketing to them or responding to them if they contact you.
- Accurately track and manage inventory and sales using technologies such as POS solutions, bar-coding, scanning, and RFID tracking.
- We will provide you with a retail solution that minimizes the chances of administrative errors. By only requiring employees to enter data once, and providing management with full reporting capabilities, data accuracy and integrity are increased across your retail enterprise.
- Lastly, you can reduce shrinkage by being on top of what's going on in your business, and having access to key indicators that can show if shrinkage is becoming a problem. As you'll see in the next section,
Lack of Information
The amount of information available to you as a retailer can be overwhelming. Each one of your stores' profits is influenced by daily sales, overheads, employees, shipping, campaigns, and traffic that change on a daily basis. At your head office, you worry about inventory levels, warehouse efficiency, key financial indicators, administration, and human resources information.
Your retail business generates an enormous amount of information that would be very valuable to you if you could:
- Collect it quickly, reliably, and efficiently.
- Analyze it to make sense of the past and plan future decisions.
- Distribute it to the right people in your organization so they can act on it.
If you don't have a system in place to track this information, you're losing out on a powerful tool that other retailers use every day -- the power of knowledge and information.
The customer is fickle. Global market situations can also change the demand for your products. And unexpected problems at your warehouse or stores can also affect what you need to supply - and who may be buying it.
Retail is built on uncertainty - but victory goes to the business who knows how to manage that uncertainty and make allowances for it.
You need to be able to learn from the past so that you can plan for the future. You need a sophisticated reporting and data mining about every aspect of your retail operation so you can make sensible choices about where your customers, suppliers, and your business are going.
You must be able to gather and analyze your past sales information so you can make the right decisions about what products to carry, where to sell them, and what price they should be.
It's no longer enough to be able to stamp a product's price and forget about it. Modern retailers are changing prices on goods daily, if not hourly. The benefit of flexible pricing is to be able to respond to changes in the market as they happen. Want to set a higher price for rush-hour customers and a lower price for off-hour ones? Or maybe you'd like to be able to run a test on a new campaign for one day and see how it compares to the sales results from the previous day.