Retail is constantly changing—retailers have new automation tech, an exciting new generation of shoppers emerging, and an ever-expanding online world to explore. But despite the influx of innovations, the industry still faces a myriad of new challenges including a labor shortage, high inflation rates, and supply chain bottlenecks. That means that retail owners need to stay on their toes if they’re hoping to stay ahead.
The current state of the retail industry
We’re diving into the top retail industry trends and sharing insights expected to shape the future of retail so you can meet these changes head on.
Retail labor shortages
Talent is in high demand and low supply in retail right now. In fact, around one million retail jobs remained open at the end of 2022. What’s more, this talent shortage spans across the board—literally. C-Suite staff are some of the most in-demand roles to be filled, and their retention rates are at an all-time low.
Optimizing brick-and-mortar
We’re all familiar with how the pandemic shifted many customers to shopping online. However, that doesn’t mean customers have given up on brick & mortar stores. In fact, there’s become a blurring of online and in-person shopping, with many shoppers preferring to buy online or via mobile and picking up their items in person. Retailers understand that they need to balance and optimize multiple channels, including brick and mortar, and they’re making it a priority this year. Forrester predicts that over 70% of retail sales will come from physical stores in 2024. Brick-and-mortar strategies not only include opening additional stores but also adding new in-person services and revamping locations to become fulfillment centers.
Ongoing supply chain challenges
Supply chains are the backbone of any business, but especially the retail sector. And the pandemic not only highlighted just how important they are but also how volatile they can be. At the same time, conflicts in Ukraine, Brexit, and the ongoing geo-political relationships across the world are causing severe delays in supply chains, with some grinding to a halt altogether.
Inflation and customer spending
Even though inflation remains high, consumers are still spending on major categories like dining out and entertainment. Yet McKinsey research found that day-to-day retail spending is trending down: 74% of consumers are looking to shop from lower-priced retailers and trying to save wherever they can.
Because of these conflicting trends, experts are hesitant to put a timestamp on how long these spending trends will continue, making it hard for the retail sector to predict exactly what will happen in the back half of 2023.
How your retail business can respond to these trends
With all of these factors in mind, what does it mean for the future of your retail business? Let’s take a look at how you can work with these trends and strengthen your retail business.
1. Streamline operations
One thing all retailers need to be capitalizing on is the advancement of technology, specifically AI automation, and what it can do for you. Today’s market is full of smart tools that can help you streamline your business and build out operations that require low-to-no human input. That helps eliminate human error while streamlining operations—giving you time to work on those projects that only a human mind can solve.
For example, use this checklist to onboard new restaurant employees. Streamlining operations doesn’t need to be as scary as it sounds. It can be anything as small as vetting and documenting them all the way through to those larger changes like onboarding new tools to keep your store ticking away like clockwork.
P.S: If you’re looking for a way to streamline and automate your payment processes, Branch can help you switch to instant, digital payments with tools like earned wage access and cashless tips.
2. Focus on employee retention
Due to the ongoing labor shortage, it only makes sense that HR departments in retail place a stronger focus on employee retention. If you’ve got the talent, why lose it? A few ways to boost retention at your retail business include:
- Reassess your benefits and offerings. Find new ways to support your teams, both in-store and in their personal lives.
- Introduce ways to earn more. In a tough economic climate, money matters, and if you can find a way to incentivize your employees’ work, then do so.
- Pay employees their way. Give employees easy access to their pay, and provide options like online banking, earned wage access, and more so they get their earnings when and how they want them.
- Stand for something. Show that you care for your community, the environment, or any other cause that’s close to the company’s values and mission. When employees feel engaged with the company beyond their work, they are more likely to stay.
3. Go beyond retail
The experience economy is booming. More and more brands are embracing in-person events and experiences to authentically connect with customers, transforming into service providers and ecosystem builders, and going beyond retail. As we discussed earlier, customers are hungry for experiences, and despite the recession, spending on experience remains high while spending for consumer goods is dipping. It's smart for retailers to go beyond the purchase and create experiences if they hope to keep selling and keep those customers coming back.
Why? When the cost of acquiring a new customer can be up to six to seven times more than retaining old customers, there’s no arguing the importance of keeping someone loyal to your brand.
Brick-and-mortar retailers like LuluLemon are doing exactly this by clearing shop floors for regular yoga classes for local communities, building micro-ecosystems and new communities around their brand. It will not only help increase sales but will help increase brand sentiment and naturally build brand ambassadors.
4. Opt for flexible, digital payments
There’s a lot of tech out there that can help you operate more efficiently while also selling more. Anything from creating more resilient supply chains by digitizing operations to bringing products to customers on screen before they even knew they wanted it.
More retailers are relying on the technology of flexible digital payment options to win customers and keep them coming back—but flexible payment options don’t stop at your customers; they should translate to your workforce as well. Today, frontline teams need flexibility in how they’re getting paid. Not everyone can wait until the end of the month or even the end of a bi-monthly period to receive their wages. Providing faster access to pay with tools like earned wage access or replacing paper checks with free direct deposit and digital banking can transform your team's morale, boost retention, and help your retail business thrive.
Now’s your chance to embrace the future of retail and beat the competition
“If you look back at previous recessions, in the five to seven years coming out of recessions, you see the most trading of market share of any other time. It’s partly because consumers are changing their behavior more quickly—changing where they shop, changing brands—and that spells opportunity.”—Richard Mayfield.
Despite the many hurdles of labor shortages, high inflation, supply chain challenges, and more, the future of retail has enormous potential—and your business has a place in it. Now is the time to seize new advancements and opportunities in order to win over customers, build loyalty among your staff, and expand your business. If you’re looking for a way to streamline payments and retain more of your retail workforce, Branch has the answer.
