Brexit uncertainty isn’t a death knell for retail growth
Beyond concerns over stock availability and pricing, the uncertainty of Brexit is bleeding in to a number of other areas in the retail sector. For many, this is a bitter pill to swallow because as it stands, the retail landscape is already under extreme pressure. Retailers are struggling to maintain their foothold in the market, rallying against each other as well as a host of e-commerce companies. In a nutshell, they are doing all they can to stand out improve loyalty and ensure customer retention.
There are a number of tools retailers use to do this; discounts, geomarketing, loyalty rewards. But increasingly it’s about the experience, making it frictionless, convenient and entertaining across both offline and online platforms. This includes streamlining the customer experience across channels to deliver that same level of support and efficiency regardless of how (or where) consumers interact and engage with the brand.
Technology has a key role to play here, whether that’s using tablets on the shop floor to empower sales staff, or use more interactive displays around the store, or incorporate experiential marketing elements into stores, such as virtual reality or augmented reality installations.
In order to sustain success, retailers need to do more than maintain the status quo. This means growing market share, reaching new customers and focusing on expansion. Again, technology can certainly help in this regard, but it is costly and requires a significant capex investment.
However, economic uncertainty, particularly around Brexit, is holding many retailers back from spending money and investing in new systems, applications and technology that will help them further their aims. While this might be financially prudent, businesses still need to operate as usual. And a crucial part of this, is ensuring they have the right technology estate in place to support their staff, end users and ongoing operations, particularly those items that fuel sales and growth.
So how can retailers mitigate this risk while still achieving their objectives? Many are turning to alternative funding models – such as subscription services – that remove the burden of capex spending. While this certainly requires a change in mindset, the benefits are wider reaching. This model is widely adopted by consumers; many of us already fund our cars and mobile phones this way. In the case of cars, we pay monthly for them for a few years, then hand them back at the end of the term and choose a new car, one with updated technology and more bells and whistles.
This same principle can apply to funding technology. From tablets to make sales staff more mobile, to revamping the entire point of sale (POS) system to minimise queuing, streamline the payment process, and improve the user experience.
Not only can the subscription model ease the burden of making an upfront (and often large) investment, it also ensures that retailers are always using the most up-to-date technology that will enable them to improve and deliver the best possible customer experience. Technology advancements move at a tremendous pace which means even if retailers had the money to invest initially, they would need to invest more at the end of the typical 3 to 5 year refreshment cycle to ensure they were still using the most current devices. In addition, they would need to pay unpredictable costs relating to that ownership, such as for maintenance, breakdowns and damages.
Subscription models also make retailers more agile, able to react to changing market conditions more quickly, be more proactive and stay ahead of the competition. This is especially true if they need to make a large unexpected investment in technology that isn’t covered by budget, insurance or some other contingency. In an extreme example, if a retailer with multiple stores had to replace something that was business critical, such as on-site servers that were infected by a virus, where would that budget come from?
If the retailer used a subscription model, the cost would be spread over a period of time and depending on the technology partner used, the assets would also be under warranty and replaced at the right time during their lifecycle. However, without the flexible funding option many retailers could incur significant debt, or fail to purchase the technology and face potentially devasting consequences, such as loss of revenue, reputation and customers, or fall behind the competition.
There is no doubt retailers are operating in a highly competitive market characterised by the encroachment of e-commerce organisations, more demanding customers and a need for more technology. If you add economic uncertainty to the mix, the challenge is even more obvious. However, with the right approach, especially around flexible funding and alternative investment methods, there is a way retailers can take charge of their environment and forge forward on a path that helps them grow and ultimately be more competitive.