How small retailers are embracing the multi-channel challenge
In today’s competitive and uncertain retail landscape, it’s becoming increasingly difficult for smaller retailers to compete against the scale and cost advantages of the larger players. For many smaller retailers, online commerce had become a secret weapon, allowing them to compete on a more equal footing and in a marketplace where their disadvantages are less pronounced.
However, bigger retailers are waking up to the possibilities multiple online channels play in multi-channel retail strategies. Just recently high-street giant Argos announced a “five-year transformation plan” to “reinvent” its brand, focusing on online sales and almost abandoning its heritage as a catalogue and high-street retailer. The questions is: how bad does the future look for smaller retailers now their competitive edge might be lost?
Smaller retailers leading from the front
For smaller retailers, adopting a multi-channel strategy is nothing new – they have been doing it for years and particularly well. Many understand how important multiple channels, particularly online ones, are to the success of their business and their survival in the current financial climate.
Larger retailers had previously been confident in their dominance over the smaller retailer – however, changes in consumer demand and shopping behaviours have changed that dramatically during the past few years. The popularity of smartphones and social media, for example, have played a big part in the evolution of retail and highlighted the need for multi-channel strategies regardless of size.
According to Ofcom’s recent Communications Market report, 74% of adults and teenagers now own a smartphone, while 60% of the population access the internet on a daily or nearly daily basis (Source:Experian Marketing Services).
“Large retailers love to compete on price but they cannot compete on expertise or customer experience,” says Dave Bell, managing director ofVesternet, a specialist energy and security retailer. “Smaller retailers will never be able to sell cheaper than Amazon, for example, and therefore it’s key to sell better. Smaller retailers must ask themselves: can I provide expertise, guidance and knowledge in a way that larger retailers cannot? If you can, then you can sell at a profitable margin and build a business online.”
“Online sales channels provide smaller retailers with the opportunity to look comparable to the big players,” he adds. “Done right, you can look as big as your competitors. For instance at Vesternet, we have a team of only seven people but you can’t tell that by looking at our website or our eBay storefront.
“Today there are some great online commerce platforms like Magento, which help smaller retailers to build attractive and completely professional commerce sites without huge cost, which in turn builds customer confidence because for them – there is no difference between you and the big guys in terms of credibility.”
Size does matter
The good news for smaller retailers is that they don’t need to be afraid of larger retailers adopting or expanding their multi-channel strategies as there are a number of ways they can remain competitive.
For example, customer service is often an area where the smaller retailer excels. Whether it’s greeting customers as they walk through the door or emailing them when you know there’s something new in stock, consumers know they won’t experience that type of genuine, personal care at a mass retailers.
Bell agrees: “We have the flexibility to go the extra distance for our customers. On our website we provide our customers with real insight through resources such as guides, how-tos and an interactive home planner. We give it all away for free, whether you buy from us or not because we want our customers to know they have come to the best place to learn about the items they want to buy.”
Smaller retailers can also enhance the customer experience by ensuring their back-office is in order. Simply being able to confidently answer a customer’s question in terms of product availability can be the difference between a sale and lost custom. Bell adds: “The most misunderstood aspect of selling online is what happens once the order is taken, and this matters more in terms of profit than anything else. Being able to automate the order, take it through to shipping, inventory management, accounts, and finally the customer communication in a seamless process is vital – and the difference between selling something at a profit or a loss in terms of the man hours we have to dedicate to packing and admin.”
A centralised system will offer smaller retailers a clearer, overall picture of their business performance and enable them to identify and resolve any issues swiftly. Typically this type of technology and insight has only been available to larger retailers with limitless budgets, but this is no longer the case. Software-as-a-Service (SaaS) has transformed the technology that is available to smaller retailers and as a result made it much more affordable.
Looking to the future
It’s vital that smaller retailers continue to lead the way in multi-channel, and by offering their customers choice while teaming it with great, personal customer service they will continue to remain competitive. Embracing new technologies such as a commerce acceleration platform will transform their working processes and heighten the customer experience even more, which can only be a good thing.
Chris Tanner is founder of Brightpearl – follow the company on Twitter@BrightpearlHQ