To set themselves up for success, retailers need to focus on what they can control and lay strong foundations to overcome any challenges in the coming months, writes Shaun Broughton, Managing Director, APAC at Shopify
The beginning of a new year is often accompanied by feelings of reflection, renewal and hope. The promise of a fresh start serves as a powerful motivator for change, and for retailers a time to remedy outstanding issues and prepare for the future.
Where the economic story of 2023 was rising inflation and cost of living pressures, the story of the next 12 months is yet to be written. It’s easy to predict geopolitical shock and technological upheaval will have an impact, but the practical effect that this will have on retailers remains to be seen.
To set themselves up for sustained success, retailers should focus on what they can control and lay strong foundations which will help them overcome challenges that may arise throughout the coming months.
Three ways that retailers can strengthen their business in 2024
Build an efficient operation
If the economic landscape remains tight throughout 2024, doing more with less will be vital for retailers. Thanks to AI, there are a multitude of new ways that businesses can do things faster than ever before. Retailers have long been using AI to provide customers with highly personalised shopping experiences and seamless product discovery. However, leveraging AI to complete day-to-day tasks and improve workflows can provide a strong foundation for retailers to enhance efficiency. According to Shopify’s Australian Retail Report, 31% of retailers agree and are already investing in AI chatbots to interpret and respond to customer questions.
In addition, generative AI can be used to create and edit product descriptions, and generate images from text descriptions. Both of these tasks would typically require considerable time and expertise. However, AI-powered systems can now generate high-quality, engaging copy and images, in less time and with fewer resources. With less time spent on manual tasks, retailers can turn their attention to building up other aspects of their business, like creating new and innovative products.
In times of reduced consumer spending, every sale counts, and meticulous attention should be paid to optimising conversions. When most people think about optimising conversions, they immediately think of tactics relating to the checkout experience. This makes sense. In fact, research by BCG proved that ecommerce stores that offer accelerated payment methods such as Meta Pay, Amazon Pay, PayPal, Shop Pay, Apple Pay, and Google Pay can increase conversion rates by over 50%.
That being said, there are many situations that cause customers to abort their shopping journey, even before they’ve found anything to add to cart. For example, customers who are browsing a site for a particular item but can not easily find it using the website’s navigation menu or search features will quickly end the session and move on. The same is true, albeit to a smaller degree, when customers are looking for something in a physical retail store.
With this in mind, retailers should ensure that products are arranged logically and consider the value of semantic search features which can help customers find what they need quickly. Small tweaks to the discoverability of products can help move customers closer to the point of conversion.
Discover new customer segments
Businesses often shift their focus from raw growth to profitability in slower economic times. But it’s important not to stop focusing on customer growth altogether. In fact, connecting with customers has never been more important. Retailers that understand what drives their customers have an edge when it comes to pursuing growth.
There are multiple different ways that retailers can increase market share, but the approach they take will depend on their current situation. For some, especially those who have completely saturated their local audience, launching their business interstate or overseas could prove lucrative. Retailers looking to sell overseas for the first time can easily stand up a cross-border store with a customised shopping experience for that market, while managing it all from the same platform as the home country store.
Alternatively, adding a wholesale B2B channel to a dedicated direct-to-consumer (DTC) offering, or vice versa, can help retailers reach new customers. Either way, it’s important to understand where your customers are, what they want, and how they behave before pursuing growth.
While the jury is still out as to how the economic landscape will evolve this year, laying strong foundations now is key to building a business that can withstand a variety of tests. By optimising conversions, leaning on AI to save time and money, and strategically increasing market share, retailers can enhance resilience and position themselves for success in the unpredictable months ahead.
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