The year of 2020 will go down as possibly the most tumultuous year in living memory for many industries – not least the retail and wholesale distribution sectors. With regional and national lockdown restrictions affecting consumer behaviour on an unprecedented scale – accelerating omnichannel sales and forcing a new normal on the sector – combined with meeting social distancing guidelines in the workplace and remote working, it’s been a year for rapid adaptation in order to survive.
But along with the disruption, the opportunities in this sector have been as plentiful as the changes that have been rung. Capitalising on these is the key to profitability, and there are a whole host of steps that can be taken into the new year and beyond to achieve this.
1. Integrate your data
Cutting back on expenses and looking for cheaper suppliers are often go-to tactics for reducing business costs, but to understand where the costs are and how to stock smarter, you need to be able to rely on robust data. Data holds the key to understanding consumer habits, customer demand and shifting behaviours, so you can ensure stock is available to capitalise on demand, but not end up with stock that exceeds demand. Overstocking ties up warehouse space and can often result in having to then sell it at lower prices. Some companies can manage inventory, forecast and control cash flow using spreadsheets and other manual processes, but with the availability of solutions that can automate these processes – and present real-time data from which to make fast, informed decisions – it’s worth exploring in order to create real efficiencies that tangibly affect the bottom line.
And of course, with cash flow being the lifeblood of many businesses, having a single, truthful understanding of the business is crucial in avoiding cash flow issues. The Government has developed a whole host of support packages for businesses in the wake of the pandemic, so consider utilising them if you need to. As well as help for paying employees, business rates relief and deferred VAT payments, to give businesses a little breathing space in these difficult times, the loan options to help businesses stay afloat include the Business Interruption Loan, Business Bounce Back loans and the Future Fund. Help is there, so make sure you take it if you need it!
2. Make understanding your market an ongoing activity
You’ll have no doubt undertaken market research when setting up in business, but a commitment to periodic re-evaluation of your target audience will pay dividends. Your target market may have changed, or new targets arisen. Understanding what products they want, how they want to purchase them and how quickly they want them is key – particularly in a new normal.
The retail and distribution sectors have faced infinite challenges and consumer behaviour changes due to Covid-19, so firms need to identify customer drivers such as free delivery and preferences, for example, Amazon marketplace shopping. In an omnichannel world where consumers purchase online, in-store, through social platforms and via their smart speakers, it’s never been easier to generate opportunities and target customers in a variety of ways. However, keeping abreast of sector trends, analysing your own customer data on a regular basis and understanding how your target market wants to shop is fundamental for success.
3. Invest in the right technology
Technology has permeated all our lives and countless business sectors, helping firms increase efficiencies by automating key processes such as purchase orders and invoice raising, financials and accounting and business forecasting. In the wholesale distribution arena, sophisticated options enabling integration into third-party products or carriers are helping operators in this space achieve the flexibility and agility needed in a rapidly changing landscape to easily spot opportunities and act on them. From inventory control and visibility to warehouse management functions such as radio-frequency (RF) scanning, directed putaway and picking, intelligent technology increases efficiency and reduces errors. Solutions such as Oracle NetSuite’s Enterprise Resource Planning (ERP) system brings together the often disparate business functions on one cloud-based platform offering a 360 degree a real-time view of the business at any one time. It is this kind of visibility that can help businesses increase profitability in the most turbulent times.
4. Prioritise effective internal communications
With workforces becoming more disparate, through functions being performed remotely where possible, and some under social distancing guidelines, establishing effective internal communication processes is crucial if you want your business to run efficiently and profitably. While firms may have thus far relied on manual processes to engage with employees, with the new workforce normal, engaging more sophisticated technology will be far more effective. Oracle NetSuite doesn’t just transform the management of financials and operations, but also a number of actions that really matter to employees. For example, the SuitePeople product in NetSuite facilitates easier management and visibility of personal information, time off requests, self-service workflows and payroll management. This makes communication with employees and HR actions fast and seamless. Happy and engaged employees = better productivity = increased profitability.
5. Don’t discount diversification
The old adage ‘if you do as you have always done, you will get what you have always got’ doesn’t hold true anymore, because even if you are happy to stand still, your customer won’t be. There can be real opportunity in diversification, so it’s worth factoring this in your business plans and growth strategy. Use general market research, your understanding of your customer behaviours – whether gathered manually or through business software that facilitates customer relationship management (CRM) – and utilise staff knowledge to see how you can develop a new-look stock list for 2021.
The national and regional lockdown restrictions enforced during 2020 have created a seismic shift in consumer behaviour, so perhaps your product offering can evolve to capitalise on this. With a reported 39 per cent of people encouraged to buy products they hadn’t considered buying online before – soaring to 61 per cent among Generation Z – diversifying your offering to cater for an increase in willing and frequent online buyers seems like an opportunity too good to be missed. If your competitors have increased their offering, failure to adapt yours could be catastrophic.
Prosperity is the ultimate goal for any business, so focusing on solid strategies to increase profitability throughout 2021 and beyond should be a priority. The pandemic has transformed the wholesale distribution and retailing landscape beyond recognition, and the winners will be those who are happy to transform their business to cater to a new customer.
If you want to know more about solutions that can help retail businesses maximise profitability, book an appointment in Tim’s diary by clicking here.