Responding correctly to improving retail sales
The retail industry lives or dies on the financial condition of the consumer, and responding to economic situations appropriately can give you a significant edge over your competitors. For instance, during the 2008 recession, merchants were able to win over new customers by offering discounts and “always low prices,” essentially capitalizing on consumers’ smaller budgets.
However, the times are different now. According to a recent report from the National Retail Federation, retail sales are improving on the back of rising employment numbers and greater consumer confidence.
The most recent report from the industry organization suggests sales were up 0.6 percent in April and 3.9 percent compared to the same time last year.
“In the face of higher taxes and sequester, consumers provided the economy a bit of a reprieve this month,” NRF president and CEO Matthew Shay said. “Despite colder spring weather and an early Easter, consumers shopped in April, demonstrating an inherent resiliency even as the economy faces serious headwinds, including stagnant job and wage growth.”
In particular, building materials and garden supplies were up 7.7 percent over year, while other retail sub-sectors, such as clothing and apparel, electronics and appliances, furniture and home furnishing as well as general merchandise stores also showed improved sales over the same time frame.
Using eCommerce software to identify customer needs
You need to plan your engagement strategy based on customer buying habits. In times where customers aren’t buying as much, sales and discounts make a lot of sense – they turn someone who wouldn’t normally make a purchase into a converted sale. However, in times when consumers are already spending money, taking that approach may not maximize profits.
In fact, a number of major retailers actually lost the confidence of their shareholders last year because they failed to hit forecasts. They slashed their prices too heavily during the run-up to Black Friday and the holiday shopping season, and as a result, they didn’t make as much money as they expected to.
You must understand your target audience as you create an engagement strategy. Maybe now, customers are more willing to pay for a better shopping experience. Or they want more item variety from their favorite merchants. They could also be willing to pay more money for various service offerings, such as warranties. It’s critical that you know what your customers want so you can fine-tune your offerings to accommodate their needs.
ECommerce software can play a major role in helping you identify your customers’ needs. Whether they want a better experience or still just want sales, having this information can go a long way in informing your operational strategy.