Retail Industry: Current Challenges
Today consumers are choosing multichannel buying experiences and expect that to be a seamless experience. To attract customer loyalty, retailers need to provide an experience that stands out from others. Learn the challenges faced by the retail sector today. Multi-channel sale avenues, changing consumer behavior, technological advances, rising competition, rising frauds, and supply chain management are some of them that require immediate attention.
Consumers today have changed the way they interact with businesses.
Given below are some challenges that are faced by the retail industry today:
1. Multichannel Availability:
The means by which consumers purchase products, services, or offerings have undergone vast changes during this decade. The consumer has adapted to multiple channels and they move easily across channels to search for products, decide on the best product through discussions or reviews, search for the best prices and promotions on the net, finalize a store/web-store and finally make a purchase. Retailers need to understand this need for changing behavior and enable themselves to service the customers through various channels while presenting an integrated view of the business.
2. Changing Consumer Behavior:
In today’s world product differentiation is minimal and consumers are becoming more and more price sensitive. They look for differentiation and consistent experience when they move across different channels to buy the same product. Retailers succeed where they are able to offer a personalized experience.
3. New Technology Innovations:
A proper framework is needed to understand all the facets of operations and technology which need to be deployed to deliver on the expectations. With the advent of the internet, retailers can create online stores that are open 24 hours a day, 7 days a week. Customers can shop from the comfort of their own homes, searching for products, and comparing prices of retailers around the world. The Internet has increased both opportunities and competition within the retail industry.
4. Rising Competition:
The competition between players in the industry is increasing day by day as the products, items, or services that were only available and sold at only one type of store but are now available at many different types of stores. The four traditional areas of competition between retailers are price, variety, assortment, and convenience. Prices can change frequently due to sales and promotions. Product variety refers to the number of categories of products carried by a retailer. Assortment refers to the number of items a retailer carries within a certain category. Convenience refers to where a store is located.
5. Availability of Skilled Workforce:
The industry is facing a shortage of middle management level professionals. Major retailers are hiring aggressively from the similar and smaller organizations by offering better packages. They are creating various levels of management and hiring on a spree. Some of the areas such as technology, supply chain, distribution, logistics, marketing, product development, and research are becoming very critical for the success of the organizations. All of these would lead to the recruitment of highly professional people who specialize in these fields. The sector is likely to produce 5 million jobs in the coming 3 years in the developing nations alone.
6. Optimization of Supply Chain Management:
The retail scenario is characterized by logistical challenges, constant changes in consumer preferences, and the evolution of new retail formats. All this increases the challenges faced by the industry. Various strategies are to be implemented to improve core business processes, such as logistics, innovation, transparency, distribution and inventory, management of point sale (POS) data. Retail majors are under serious pressure to improve their supply chain systems and distribution channels and reach the levels of quality and service desired by the consumers. Warehouse facilities and timely distribution are other areas of challenge.
7. Preventing Frauds in Retail:
It is one of the primary challenges retail companies would have to face. Frauds, including vendor frauds, thefts, shoplifting, and inaccuracy in supervision and administration are the challenges that are difficult to handle. Retailers have to deal with customer theft, employee theft, and supply chain theft. This is so even after the use of security techniques, such as CCTVs and POS systems. As the size of the sector would increase, the number of thefts, frauds, discrepancies, etc. in the system would also increase.
8. Improving Infrastructure & Logistics:
Lack of proper infrastructure and distribution channels in any country results in inefficient processes. A non-efficient distribution channel poses problems for retailers as it is very difficult to handle and can result in huge losses. Urbanization and globalization are compelling companies to develop Infrastructure facilities. Transportation, including railway systems, has to be more efficient. Highways have to meet global standards. Airport capacities and power supply have to be enhanced.
9. Maintaining Loyal Customers:
To sustain customer loyalties, retailers must be able to provide their customers, right products, at the right time and at the right location. This can lead to higher revenue growth, which can enable the retailer to obtain better purchasing conditions and pass the savings on to customers, leading to more profitability and growth.
10. Inventory Management & Optimization:
Inventory management refers to the processes retailers use to control ordering, shipping, receiving, storage, tracking, and delivery to customers. Poor maintenance of inventory means either having too much of one product or having too many slow-moving products that result in space constraints for other fast-moving profitable goods. Requirements of an inventory management system include capabilities for tracking inventory, evaluating sales, analyzing and comparing products, and collecting sales data for individual stores.
Some other challenges faced by the industry are media explosion, corporatization of retail, the new breed of entrepreneurs, and entry of foreign retailers. On the other hand, the rising income of consumers across the globe is also creating huge opportunities for this industry.
Related Links
You May Also Like
-
Competitive Landscape of Retail Industry
In an increasingly competitive landscape, retail industry players must compete in a number of ways. In this article, we will learn about the competitive landscape of the retail industry. Learn the key players in the retail industry and their business profile. Learn more about the top 5 industry players. Competition is rough, especially for the small business. Knowing how business stacks up to the competition is important to your business strategy.
-
Retail Industry: Revenue Model
Understand the traditional retail revenue model and, what are the variations in different revenue models adopted by key players in the retail industry. Analyze the pros and cons of various models. The most common and most profitable revenue model is that of the traditional retailer. The traditional retailer profits by selling products and services directly to buyers at a mark-up from the actual cost.
-
Retail Industry – Drivers & Dynamics
To succeed in the retail sector, retailers must offer compelling value propositions and be responsive to market dynamics. The continued rise of e-commerce has altered the dynamics of the retail industry in such a way that has forced retailers to drastically reallocate their resources to multi-channel strategies. This article focuses on retail industry drivers and dynamics that provide the reader with a basic understanding of the factors that influence this trade. Understand the business drivers and dynamics of retail industry
-
Retail Industry: Key Performance Metrics
You cannot manage what you do not measure and cannot measure what you do not define. Learn the key performance metrics for the retail industry like Sales per square foot, Gross margins return on investment, Average transaction value, Customer retention, Conversion rate, Foot traffic, and digital traffic and Inventory turnover, etc. These metrics are used across the globe by key industry players to track and improve their performance.
-
All of us are consumers, from cradle to grave, to be more precise, from the womb to grave or cremation. In a sense, the history of the consumer is the history of mankind. Consumers are the largest economic group in any country. They are the central point of all of our economic activities. But the very same consumers ate the most voiceless group also. The nature of consumer in terms of needs, consumption patterns, and problems has been changing and evolving along with the social and economic development in the course of history.
-
Markets are continuously changing and to understand the dynamics of any industry it is important to understand what is happening and how the industry market players see the future for the industry. In this article, we will discuss the recent trends witnessed by the retail sector. This document provides insights into major trends identified for the retail sector.
-
FMCG or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost, examples include non-durable goods such as soft drinks, toiletries, and grocery items. They generally sell in large quantities, so the cumulative profit on such products can be substantial and these industries often operate on thin margins.
-
Retailing is the combination of activities involved in selling or renting consumer goods and services directly to ultimate consumers for their personal or household use. In addition to selling, retailing includes such diverse activities as, buying, advertising, data processing, and maintaining inventory. This article explains the meaning of retail and its etymology. Understand the meaning and constituents of the retail industry and the role it plays in the economy of any nation.
-
Challenges in Consumer Goods Industry
There are tens of thousands of general consumer products manufacturers in the United States. They compete to develop the best products at the most affordable price for the greatest number of consumers. Challenges for these organizations include meeting the changing demands of customers, maneuvering through a consolidating market, and executing strategies to grow profitably.
-
Business Dynamics of Consumer Industry
The consumer goods industry is impacted by many dynamics like economic considerations, product considerations, price considerations that impact consumer buying choices. Advertisements, branding, marketing, variety of goods, and technology are the main drivers. Manufactures, retailers, warehousing, and logistics are all part of the supply chain for the consumer goods industry.
