The retail industry has been through a lot over the past few years. We’ve experienced a pandemic that resulted in supply chain issues and a laundry list of other challenges, and now talk of inflation and an impending recession is starting to bring many businesses back to square one. Money insecurity is causing consumers to reconsider what they’re spending their money on, and they’re being more cautious in general about what they’re buying, and how much. In some cases, spending habits and behaviors have done a complete 180 from even just a few months ago, leaving retailers scratching their heads and looking for ways to re-strategize.
“Consumers have inflation on the brain, and they’re changing the way they shop because of it,” according to online marketplace SaaS firm Mirakl, which surveyed 9,600 global shoppers during Q4 for its recent “Consumer Preferences in the Digital-First Economy” report. The research showed that 86 percent of U.S. shoppers are looking for better value when browsing and buying.
With these changes comes the need to put more of an emphasis on consistent sales and precise retail strategies. Retailers no longer have the room or flexibility for error when it comes to their inventory. They need to have exactly what consumers want—from color preferences to specific sizes—and they need to have enough of it. But not too much. This might sound nitpicky or difficult, but it’s the key to unlocking revenue flow and maintaining stability amid financial turmoil.
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Inflation and an impending recession can also test consumer loyalty. Fareeha Ali, director of market Intelligence at Mirakl, told Sourcing Journal, “I think before and during Covid, there was some deal-shopping, but customers were pretty loyal to the sites and retailers they were shopping with. Now, with more inflationary pressure and uncertainty in the economy, they’re willing to shop wider and veer away from the retailers they were shopping with.” This means that stores have even more responsibility to maintain a strategic inventory. If they don’t, consumers will have no issue finding what they need at a different store.
What retailers have in their stores should always reflect what consumers want, but it can be a struggle to ensure this when there is such a massive lack of data. During the pandemic, many brands leaned on their online platforms to keep revenue flowing and some might say it changed the game in terms of data collection and visibility.
When you shop online, the brand you’re buying from has a direct line of sight into what specific products consumers are gravitating toward. It even shows what colors, sizes, and styles are browsed more often and allows retailers the ability to track what products tend to be returned more, or exchanged for another size. This helps keep them informed about what items their customers gravitate toward, and what items they can stop putting dollars behind.
But as the pandemic starts to fade into the background, consumers are returning to shopping in-store. This means the visibility retailers once had, and the data they were able to gather from online shoppers, is falling to the wayside.
Today, brick-and-mortar stores are looking for ways to recreate the visibility they get from online sales, which includes gathering data on what their customers are engaging with and ultimately buying or abandoning. But it doesn’t end there, learning how to leverage that data to ensure the right product is in the right place at the right time, as well as what quantity is needed, is also imperative. This is achieved by following in-store customer behavior—from picking up an item, to trying it on and taking it home. And fortunately, the technology to achieve this does indeed exist.
Investing in the right tools that help you accurately understand in-store customer behavior opens up a plethora of opportunities for brands. The type of data that comes out of this understanding not only empowers retailers, it gives them the ability to ensure they have enough of what people want and not too much of what they don’t. It also allows them to be more strategic about where popular items are placed in the store or on mannequins, optimizing their merchandise and making the most of their retail space. All of this is what will ultimately help stores maintain a consistent flow of revenue despite impending recession.
Anat Shakedd is CEO and co-founder of Nexite, a real-time data technology startup that’s set to transform fashion retail before reshaping other industries. Prior to Nexite, her experience includes category manager at Israel’s largest FMCG manufacturer Tnuva and brand manager at Israel’s leading FMCG retailer Shufersal. She holds a Bachelor’s Degree in Behavioral Science from the Ben-Gurion University and an MBA from The College of Management Academic Studies in Rishon LeTsiyon.