By Ellie-Rose Davies, Content Executive at IMRG
If you’ve been struggling to keep your revenue and sales afloat, you’re not alone. The market has been turbulent since the pandemic, and it was expected to bounce back from the dip in sales as the high street reopened. However, our data shows that it’s been nothing but negative for the past year. The effects of staff shortages, the war in Ukraine, and the cost of living crisis are to blame. Increased prices of gas and fuel are driving prices upwards, meaning customers are paying more, despite having less disposable income.
In June 2022, the market saw a slight uplift, however, this can’t be considered permanent and doesn’t fit into the general pattern of the last few months. For example, the revenue growth across categories in the second week of June was rather anomalous, as many more categories such as Home, Makeup, Furniture, and Garden joined Clothing in positive growth. Beers, Wines, and Spirits lead the way with over +32% YoY growth. It seems the market is staying afloat, despite a downwards overall trend.
Some of the trends which have dominated the market include a decline for all categories except for clothing; this has been predominant for the last few months as clothing dropped during the pandemic, and is now re-emerging as people want new outfits. Other trends include sharp declines for Home and Garden, Health and Beauty, and Electrical.
During the July heatwave, electricals actually dropped compared to home generally, likely because people were mainly ordering fans, which aren’t high ticket items – as seen in the graph below.
In the last 4 weeks of July, revenue only hit positive for the w/c 10th. This data demonstrates the generally downward, and precarious state of the market at present, with many retailers employing discounting strategies to stay afloat.
Looking at average basket volume (ABV) is quite revealing. Whilst there’s a cost of living crisis, and the overall market growth has been down, the average spend in one shop is actually higher this year than it was in 2021, reaching an all-time high of £160 back in June. It’s thought that whilst customers may be cutting back on spending in shops, such as on groceries and household items, they’re actually spending more in one go on online items. Buying bigger bottles of perfume, for example, allows for less frequent replacements, and customers can make the most of free delivery thresholds. Perhaps this is good news for online retailers reaching higher average basket valuebut in reality, customers are likely spending less often as a result.
So, how can retailers futureproof their business in tough times? We spoke to some experts within our membership community to find out their thoughts.
For Barley Laing, the UK Managing Director at Melissa, ensuring smooth and flexible delivery services is crucial to building customer experience, and subsequently, futureproofing your business. Laing states, “the crux of building a strong customer experience is having accurate data on customers. This ensures the fast and accurate delivery of products.” Businesses can use an “address autocomplete or lookup service” which is great for “preventing mistakes caused by fat finger syndrome, it reduces the number of keystrokes required when typing an address by up to 81%. This speeds up checkout and reduces shopping cart abandonment.”
Jordan Westley, eCommerce and OMS Expert at Mintsoft voices how “it’s important to start building customer loyalty” in the generally downward growth of shopping. Businesses might consider streamlining their fulfilment processes and widening their access to a range of couriers.
Businesses can futureproof their business by giving shipment its fair share of attention. Paul Dodd, CTO at Huboo, echoes the necessity of having an integrated fulfilment strategy; “Retailers need to recognise that sales and shipping are two sides of the same coin. Without an integrated fulfilment strategy, it’s going to be a struggle to fully capitalise on potential sales.” Retailers might struggle to keep on track of their stock if they try to access more markets and sale channels. Dodd argues that omnichannel fulfilment helps balance inventory with orders.
“Begin by analysing your business with a full health check”, says Mike Hayers at ShipStation. Knowing your costs and choosing whom to ship with can create “leaner, more agile businesses.” Hayers also explores the ever-growing necessity and customer demand to go green. This might be daunting given the current economy, but businesses achieve this, and outstand competitors, by pushing forward “click and collect options or by using sustainable couriers.”
A business’ responsibility to its customers doesn’t stop after delivery. Having a secure and well-working returns process establishes a good rapport and welcomes repeated purchases. For Monica Eaton-Cardone, Founder of Chargebacks 911, chargebacks (where customers get their money back, i.e. in the event of a faulty or undelivered item), “is an indicator of eminent loss”. Such loss can be “mitigated by improving your listings, refining your returns policy, reducing error with quality control checks, prioritising customer service, and comparing chargeback data to identify and remediate return fraud.”
Foregrounding advertisement is another remedy used by businesses in declining markets. Sam Benkel, MD at Retail Media Northern Europe, Criteo, exclaims that “at times like this, brands are conscious that simply battening down the hatches isn’t enough.” Retailers can use online advertising, ‘retail media’, to grow their sales. “Criteo research found 92% of CMOs at UK retailers of all sizes feel commerce data i.e. the retailer’s transactional, shopping intent, and contextual signals, has increased in value.”
Customers tend to lean towards businesses that talk to them and bring them on a journey. For Chris Gorman, Head of Professional Services at Esendex, “customer conversation can make or break an experience- whether businesses are engaging prospects or strengthening existing relationships.” Businesses might make themselves futureproof by considering using “Communications Platform as a Service (CPaaS) technology as it generally provides a flexible, frictionless, and seamless way of interacting with customers across everything from email to web chatbot or text/SMS and WhatsApp.”
Jennifer Griffin Smith, Chief Marketing Officer at Brightcove, reflects on the role of video in driving sales: “76% of shoppers report having purchased a product or service after watching a video for it. Given this, retailers across the board should appreciate this in order to effectively communicate with customers and ensure they feel supported throughout their purchase journey.”
As we can see, with growth in the negative post-pandemic, there are numerous steps businesses can take to futureproof their business and thrive. Businesses can fly, even during great economic turbulence.