We’ve recently seen data from the British Independent Retail Association (bira) that shows there’s been an average of four new store openings a day in the first quarter of this year. That’s a huge leap from 2016, when there was a net increase of just four stores over the whole year. Our customer data supports this too, finding that sales were up 15 per cent when compared to the same period last year. Not only are more stores opening, but existing stores are enjoying higher turnover and stronger profits.
Yet a look at the news headlines suggests rising inflation, cautious consumer spending and serious capital and operational costs are weighing heavily on store owners looking to grow and succeed.
For independent retailers to thrive this year, they’ll need to be prepared for these obstacles, and find smart ways to overcome them. Here are three key challenges currently facing independent retailers, and what they can do about them:
1. Drawing customers back to the high street
Recent data from Springboard shows an overall 2 per cent decrease in traffic across the UK’s high streets for the month of May. Whilst this contrasts with increased footfall over the Easter period, it reflects the wider challenge that retailers face in trying to get customers to leave their homes – or computers. The convenience of e-commerce and mobile shopping is allowing customers to find everything they need without even getting off the couch.
In order to lure would-be customers back to the streets, retailers need to be inventive and innovative in what they offer. Providing exciting and memorable in-store experiences, which go beyond their products can help. We see some incredibly clever examples amongst our customers. For example, urban surf store By Walski, taps into London’s frustrated population of landlocked surfers, by hosting screenings of surf competitions and tutorial videos on a biweekly basis. Not only does this draw customers to the store, but it also nurtures a sense of community and loyalty that has made the store a destination and meeting place for London’s surfer community.
2. Competing against the pressure from larger retailers
While independent retailers have some unique characteristics that make them more attractive to their local customers and community – such as the ability to offer more personalised service, economies of scale is still a major challenge. Large retailers with deep pockets for integrated marketing campaigns and the buying power that comes with ordering products on a national scale creates a playing field that independents cannot compete on.
Consumers have also come to expect a full suite of omni-channel services that large retailers now provide, which many smaller stores find hard to replicate as they focus on the day-to-day running of their businesses.
To overcome this, independents need to be smarter and more enterprising in the way they operate, thinking beyond the confines of their four store walls. Being smaller means these retailers actually have an advantage – they can be more nimble. For example, pop up stores at festivals, trade shows, and even street markets offer fantastic opportunities for independents to test new products, and new areas and audiences, and share their passion with a fresh group of customers.
Opportunities for pop up locations are also becoming ever more numerous and affordable, and intelligent apps such as Appear Here allow independents to quickly and cheaply book unusual pop up spaces across the world’s cities.
3. Thriving despite creeping overheads
The costs of doing business are increasing, with wider economic changes impacting independent retailers as well as the industry giants.
Finding ways to reduce overheads is key. One solution for many retailers is moving to cloud-based software. By their nature, cloud-based systems for areas such as point-of-sale, reporting, inventory management, accounting or staff management, are more affordable. They are built on a model of low-fee subscriptions, which keeps costs down whilst providing access to the innovative technology larger retailers use. We’ve found that on average a retailer saves £2000 per month just by switching from their old till system. The efficiencies that come from cloud technologies also create significant cost savings.
Cloud software also dramatically reduces the on-going service and upgrade costs associated with more traditional proprietary-based systems and is far faster and more flexible when opening a second store, setting up an e-commerce site or launching a pop-up outlet.
It’s not all doom and gloom for our independent stores. Everyday we see amazing, innovative, industrious retailers making the leap towards better systems, better in-store experiences, and finding news ways to reach their ideal customers. The first step is simply to start.
Vaughan Rowsell is founder of Vend.