Five More Key Challenges Facing Retailers Today (and How to Solve Them)
If you’ve been with us for a while, you’ll remember an article we posted in which we identified five key challenges facing retailers and suggested how they might go about tackling them.
Well, there has been a global plague since then followed by several other crises such as the Russian invasion of Ukraine and spiraling inflation. This means that the landscape I which retailers are operating has transformed significantly and the challenges the industry is facing have metamorphized in kind.
So, what better time to build on that previous article and see what the top five challenges facing retailers in 2022 are and what steps might be taken to address them for the betterment of the industry.
#1 The Talent Crisis
While the world of physical retail has bounced back well from the COVID-19 crisis in terms of employee acquisition, the ecommerce business has not fared nearly so well.
Marketing and advertising are showing the worst numbers when it comes to finding the right talent with data and analytics (84% at both advertisers and agencies), eCommerce/retail media (71% at advertisers and 73% at agencies) and measurement (69% at advertisers and 74% at agencies) all showing significant shortages.
Because there is a much smaller talent pool available for these roles, ecommerce brands need to make sure they are making their positions and working environment as employee friendly as possible. Employee experience has become an incredibly important aspect of job selection, with many people expecting features such as the ability to work remotely or hot desking.
Businesses in the ecommerce space need to understand we are in a buyers’ market and ensure their offering is as attractive as possible to those considering a role.
#2 Supply Chain Resiliency
The global COVID-19 crisis, the war in Ukraine, and geopolitical events such as the UK’s exit from the EU have all exposed the fragility in our supply chains and brands have found it increasingly difficult to get products from one place to another – whether up or down the value chain.
This has led to supply chain resiliency becoming a far greater challenge for any brand involved in the business of buying and selling physical products and those which want to survive through the coming years need to find solutions.
Most experts agree the supply bottleneck could take years to resolve so, in the meantime retailers should be working on making their supply chains more open and transparent than ever before. Disruptions cannot be avoided, but with every link in the supply chain openly sharing information with one another, it becomes far easier to plan for such events and reduce their impact on customers as much as possible.
#3 Omnichannel
In case you though everything had changed, it’s good to know some things stay the same right?
Continuing to pose a challenge for retailers is meeting the customer desire for blended experiences which offer the absolute best of both digital and physical shopping. The high street isn’t going anywhere yet, but customers are increasingly being drawn to brands which can seamlessly blend ecommerce and brick-and-mortar retail together.
This is one situation where things are easier for brands with existing physical stores – and a big part of the reason Walmart has been making gains on Amazon in recent times. After all, it is far easier for physical stores to incorporate digital shopping elements into their shopping experience than it is for a purely ecommerce retailer to pull a brick-and-mortar location out of their hat.
It's not impossible however, as we have seen Amazon step into the convenience store arena with Amazon Go. While not every ecommerce retailer has the resources of Amazon, we are seeing many brands set up kiosks and popups to help promote their products in the physical space.
#4 Delivering Value
As inflation continues to rise and a cost-of-living crisis truly begins to take hold thanks to the rising cost of energy, fuel, and everyday products, people are going to increasingly have fewer financial resources to spend.
The challenges presented by this are twofold. Retailers which sell essential products will need to make sure affordable alternatives are available as people inevitably turn away from premium brands in an effort to save money. Customers will also increasingly be drawn towards retailers which are able to offer discount incentives such as exclusive offers, vouchers, or high yield reward schemes which can help them budget better.
The second challenge will apply to those retailers who sell products which are not essential. These brands will likely see reduced custom as the crisis bites and will need to plan accordingly. People will still want to enjoy treats during this period, so make sure they are able to with special offers and other promotions.
This is how Domino’s succeeded during the last economic crisis – by recognizing that people still wanted to treat themselves and offering amazing discounts to allow them to do so.
#5 The Last Mile
With fuel costs and courier rates on the rise the last mile of delivery is set to become even more expensive than it was previously. Already the costliest part of any supply chain, retailers need to find new ways to solve the last mile problem if they’re going to continue providing ecommerce customers a wonderful experience.
One way in which retailers are tackling this issue is by incentivizing click and collect or delivery to a central location – such as a local post office – as these both serve to significantly reduce the costs associated with last mile delivery. Naturally, offering click and collect is a far simpler prospect for those ecommerce brands which also have a network of physical stores, but that doesn’t mean other businesses in the space can’t form innovative partnerships with other brands to offer the same.
Final Thoughts
There are five more challenges facing retailers in 2022. However, perhaps the most significant factor to consider is the fact that the challenges from our previous article on the topic haven’t gone away, but rather been compounded by additional ones brought about by the ongoing permacrisis and other events.
The ever-expanding list of challenges facing retailers is sure to be part of the conversation at eTail West 2023, taking place in February 27 – March 02 at the JW Marriott Desert Springs, Palm Springs, CA.
Download the agenda today for more information and insights.