With Shopify laying off cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth as the company reports $1.2 billion net loss. And Glossier laying off a third of their workforce. One may wonder what that means for them and their business While recessions can be difficult to navigate, they can also be an opportunity for retailers to examine their business and optimize their operations for the future. Below are tips to stay competitive.
How can retailers stay competitive in a recession?🚀
1. Embrace your "why"🤝
- Retailers must define their value proposition. “The main thing you can do is figure out what sets you apart from your competition,” says Euromonitor International’s Bob Hoyler. “What attracts customers to your stores? Find those positive attributes and emphasize them. Embrace your core message.”...Read more
2. Be customer-centric 🤸
- During a recession, understanding consumer preferences is critical. Often retailers will put in place new initiatives to capture customer loyalty. While loyalty programs and promotions can be valuable tools, they can be costly if they don’t meet customers’ needs....Read more
3. Create an experience🎊
- Finding ways to engage with the customers is more important than ever. Customers expect personalized service. Fifty-eight percent of consumers won’t buy from a brand that doesn’t provide a valuable customer experience.
4. Rethink marketing🌨️
- During a recession, the right marketing strategy will communicate and strengthen a brand’s value proposition. “While general conversion rates may go down, many advertisers are pulling back [on] spend,” Dan McCormick says. “This presents an opportunity to buy cheaper impressions and build awareness. Look for marketing arbitrages as marketers pullback spend.” Read More
5. Cut Costs✂️
- A recession is an opportunity to identify and reduce bad costs. “Are your unit economics upside down? Did you overhire? Does a contract need to be renegotiated? Take this opportunity to get your financials in order,” says McCormick. Read more.
6. Using savings to reinvest💸
- By cutting expenses, retailers can better weather reduced profits and use savings to reinvest in their business. “Recessions are a time to focus on efficiency rather than making large investments in innovation & growth,” says McCormick. While studying the impact of the previous two recessions on retail, Deloitte found that companies who reinvested savings during the recession showed a higher growth rate during the recovery period.
7. Look for opportunities to expand market share🌲
- Recessions can also be an opportunity for retailers to capitalize on growth opportunities. Recessions can be an ideal time to expand into new formats and markets. Retailers can often lock into lower rents and better lease terms. Subscription models can be an opportunity to capture additional market share and drive brand loyalty. It can also make it easier to forecast revenue and offer more security. Meaningful partnerships can build brand awareness and unlock new value for consumers at a reduced cost....Read more
8. Stay informed 📰
- During a recession, retailers must keep up with changing consumer habits. “The one big mistake retailers make is that they don’t change course,” says McCormick. “Forecasts remain bullish, common-sense promotion periods are avoided, and large teams are kept on to chase non-core initiatives. The market changed, [and] so should your strategy.”
Want to learn more? Join the Lanor community here or Subscribe to the weekly newsletter here
Feel free to share the article with your friends 🌟
-Abiola Doherty, CTO & Co-founder, Lanor