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Innovation has been one of the common factors behind any successful business across the world. In the retail sector alone, this has helped brands bridge any gap caused by pandemic restrictions. It also prepared them to recognise future trends and adapt accordingly, as well as overcome challenges that may arise later.
We refer to this action as future-proofing, wherein an entity anticipates possible changes in the future and gears up in advance. Future-proofing is not just about embracing new technologies, but also about formulating a sustainable strategy for long term success.
For instance, when the Covid-19 pandemic hit the world at large, businesses that valued the importance of planning ahead were able to innovate and thrive even though their operations and target markets were severely affected. This enabled them to maintain a sizable lead against their competitors. On the other hand, companies that were complacent with their future-proofing had to downsize, or even shut down completely.
To overcome these challenges, retailers need to consider a lot of factors starting with embracing more than a single sales channel, managing their inventory, sharpening their value agenda, valuing talent as much as their capital and other resources, and managing risks. These are the key pillars to set up one’s retail business for long term success.
An increasing number of people are now into online shopping, and in 2020, over two billion people worldwide have purchased goods or services online. At least 18 per cent of all retail sales worldwide also came from e-commerce in 2020, and this figure is expected to increase up to 21.8 per cent by 2024. This gives a glimpse into how e-commerce is now changing the retail business as we know it.
While the pandemic has heavily affected physical stores in many ways, successful retailers who were able to emerge on top of those challenges chose to invest in their e-commerce platform and saw significant online revenue growth.
Retailers can also future-proof their e-commerce business by integrating artificial intelligence (AI), enabling a more efficient back-end system, automating time-consuming tasks, and optimising fraud detection and supply chain operation. In the long run, operations will become relatively cheaper since they need not open their physical stores 24/7 when they have an online platform.
Moreover, the consumers’ mindset is now navigating towards high expectations around product discovery. Today, most prefer online shops instead of a physical store, even for purchasing a large product. Therefore, retailers need to move away from the traditional static photography to leveraging 3D models and interactive augmented reality (AR) experiences, enabling consumers to preview the products in 3D or customise them online.
Future-ready retail businesses should also implement an effective value agenda, wherein the company focuses its time and resources on the activities that generate both short-term and long-term value. If the company is struggling with reaching its target market, then a more effective campaign must be conceived and implemented.
Nonetheless, if the business is finding it difficult to hit its sales target, there may be an immediate need to refine the unique selling proposition (USP). This way, the business will not be overwhelmed by several concerns, allowing it to focus on accomplishing all its strategic priorities first before tackling other non-urgent matters.
Meanwhile, the one aspect that will remain relevant in the future is acquiring good human talent and workforce, which is one of the scarcest resources of retail businesses. Those that know how to value good employees tend to attract more talents. Employees who love their environment and realise their potential will stay, while those who are dissatisfied will leave and negatively impact the business’ performance and reputation.
Predicting future problems is very difficult, but businesses can prepare by intently looking for various risks. In addition, retail businesses need to explore the current or possible gaps in the overall process and find solutions before they turn into real problems.
The world of retail is innovating at such a fast pace, and successful retailers today may no longer be the ones on top in the future if they do not adapt accordingly. That is why they need to be prepared for the future to guarantee long-term growth and success.
Ayman Beydoun is the chief operations officer at BFL Group