With two pandemic years behind us, retailers are looking ahead to what they can expect in the months and years to come. The global ecommerce market is expected to expand by more than $1 trillion over the next four years, and customer demands regarding contactless shopping and a seamless mobile experience are only increasing. Meanwhile, selling across platforms like Amazon, Instagram and Facebook remains key to profitability—as long as retailers leverage them correctly.
With so much at stake for mid-market retailers, we’ve put together the top 5 ways successful retailers are adapting to survive this quickly-changing landscape, increase their revenue and better reach their customers. Explore this article for insights on:
- Effectively selling across platforms
- New ways to build customer loyalty
- Inventory planning amid supply chain crunch
- Putting your data to work for you
Table of Contents
The past two years have seen massive disruption for retailers. Between unpredictable challenges plus the advancement of technologies and new customer habits, global brands and mid-market and SMBs alike have seen existing trends accelerate — while establishing new protocols that likely will stick around.
Take the trend of online shopping. According to a survey by Euromonitor International, the global ecommerce market is expected to expand by more than $1 trillion over the next four years. In the meantime, new platforms, algorithms and ways to reach consumers seem to pop up overnight, changing what it means to be omnichannel in an increasingly always-on world. Customer expectations also are changing. According to a recent McKinsey report, the retail sector saw 10 years worth of growth in US ecommerce penetration during the first 90 days of the pandemic. Meanwhile, retailers big and small are having to adapt to consumer preferences that embrace contactless shopping, the ability to buy-online-pick-up-in-store and the desire for seamless and trustworthy mobile experiences.
Global brands have scrambled to adjust to this new environment, but so too have mid-market retailers — doing so often without the big budgets or massive internal infrastructures the larger retailers enjoy
Sebastien Manigat, Senior Product Marketing Manager for Lightspeed, a one-stop commerce platform that powers businesses around the world and allows merchants to improve customer experiences, says he has seen this evolution firsthand.
It has now become clear that small and medium-sized businesses need to make the shift towards ecommerce. In fact, we’ve noticed that with our customers. Just in the past year, Lightspeed retailers saw an ecommerce GTV growth of 46% YOY. This helped our U.S. merchants achieve a growth nearly twice the Industry Average in 2021. – Sebastien Manigat, Senior Product Marketing Manager for Lightspeed
In other words, for mid-market retailers to stay competitive, the time has come to look across operations and make changes where necessary to optimize for this ever-changing landscape.
There’s no going back. We’re facing down a new normal, and customers bring lofty expectations with them. To be on the front foot heading into 2022 and beyond, we recommend focusing on these five key areas.
Operations, optimized: 5 things to review in this year
Selling across platforms
Expanding beyond ecommerce, the new omnichannel means selling across social platforms such as Instagram, Facebook and TikTok, as well as in online marketplaces, such as Amazon, Walmart or Wayfair.
Marketplaces have become lucrative for retailers, with Amazon reporting that from the early days of the pandemic through mid-January 2021, the number of SMB third-party sellers surpassing $1 million in sales on the platform grew by more than 30 percent.
“Selling across multiple channels is key in order to compete,” Manigat says, “but you have to make sure you keep an eye on your profitability – all these channels have different unit economics.” For example, smaller players selling in these marketplaces are likely to get squeezed out by the giants, so you must always consider your margins, says Manigat.
Similarly, for social platforms, mid-market retailers must consider the value of reaching a wide audience against what it will cost to meet them where they are.
According to a report on Influencer Marketing Hub, the top 5 social commerce platforms in 2021 were Instagram, Facebook, Pinterest, Snapchat and TikTok — each with its own unique capabilities for targeting consumers and allowing them to make purchases. From shoppable posts to virtual storefronts, there are many facets midmarket retailers must consider.
Omnichannel is not the future, it’s now. And, you need to have a strong 360 strategy that factors in these channels’ varied ROIs to achieve your revenue goals in this landscape. It’s about meeting your customers wherever they are. – Sebastien Manigat, Senior Product Marketing Manager for Lightspeed
Doubling down on loyalty
Another area mid-market retailers should be thinking about is their customer loyalty strategies. As reported in Harvard Business Review, the EY Future Consumer Index found that during the pandemic, 61% of consumers, depending on the category, became willing to consider a white label product or switch name brands. Mid-market retailers also found themselves fighting to retain customers, as consumers considered a range of reasons impacting where they shop and why.
In 2022 and beyond, successful mid-market retailers will figure out how to tap into the “shop local” ethos by making clear they offer what customers want (buy-online-pick-up-in-store, curbside pickup, etc.) and by being active in their communities. The key is to make themselves the obvious choice.
This was something A Runner’s Mind, specialty running stores operating throughout California’s Bay Area, took to heart as pandemic lockdowns limited their ability to interact with customers in traditional ways. Eileen Urtz, A Runner’s Mind General Manager, says the company viewed this as an opportunity to provide customers with more ways to shop.
“We’ve been around now for 11 years, so we do have a very good base of customers,” she says. “Our biggest thing was, ‘how do we flip them from when they couldn’t come into the store to shopping with us online, or doing buy-online-pick-up-in-store?’
In addition to reaching customers via newsletters and social media, the retailer began offering a virtual gait analysis, where customers could have an assessment done via video from anywhere in the country.
Derek Wun, Footwear Buyer at A Runner’s Mind, says finding new ways of reaching out to the community also helped build loyalty among their customer base. Where before the pandemic, the retailer partnered with physical therapists and podiatrists, during the crisis they worked with a local hospital, providing shoes to frontline workers.
“I think we gave away over 100 pairs of shoes,” Wun says. “And then, just recently, they have reached back out to us… purchasing $100 gift cards from us to give to their hospital workers. It is us reaching out to the community, and they are appreciating that and reaching back out to us.”
Manigat sees this as a boots- (or shoes) on-the-ground example of bigger trends.
It’s a behavior where people, more and more, would like to support their local businesses as much as possible. And buying online from your favorite store, it’s actually buying local. And it’s not just consumers. It’s entire communities rallying behind that trend. – Sebastien Manigat, Senior Product Marketing Manager for Lightspeed
That’s why Lightspeed pivoted quickly during the pandemic to build product add-ons for SMBs to meet consumer demands, he says.
“We help retailers capture the point-of-sale transaction,” he says, “but more importantly, we built the right capabilities so retailers can build their own loyalty program that fits their needs by understanding the shopping behaviors of their customers. … So specifically, for SMBs that have a multi-location offering, giving consumers the ability to shop online, but also be able to pick up their item at any given store in the network. Many consumers are now invariably expecting that kind of experience from stores they do business with, whether they are local or big boxes.”
Inventory planning amid supply chain crunch
Retailers also need to put fresh emphasis on inventory and stock, especially in light of supply chain disruptions.
“One important piece that Lightspeed has always focused on is the relationship between the retailer and their suppliers,” Manigat says. That’s why the company is launching a marketplace that enables retailers to buy directly from suppliers in a way that has everything integrated into one platform, he said.
“This means giving retailers the ability to accept payments from and sell to consumers, but also the ability to buy from your suppliers and your brands, right from one system.”
For A Runner’s Mind, inventory planning amid an ongoing pandemic has been an opportunity to get creative. Since many footwear warehouses are based in Vietnam, a country that imposed lockdowns for several months during the pandemic, the retailer, like many, has been bracing itself for disruption.
“We’ve been able to get a little bit ahead by overstocking and finding creative ways of storing things,” Urtz says. “Over half our office has just cartons of shoes.”
Wun says he uses a combination of personalized spreadsheets and digital platforms, like Lightspeed Retail, that can peek into inventory, so they can be sure to stay on top of what is available in stock, and pivot when needed, recommending alternative products, such as other types of shoes customers would like, based on their running needs.
Manigat says this work is vital — and it could also be a good time for retailers to think about automating more of their processes.
Doing the manual work of verifying which supplier has what is time consuming. That’s why having a powerful and smart platform that gives you access to a vetted network of inventory within your vertical is critical in these times. – Sebastien Manigat, Senior Product Marketing Manager for Lightspeed
Putting your data to work for you
Many retailers are finding that because of the pandemic crisis, they can no longer rely on the past 18 months of data to understand the future. How should they approach this instead?
“We kind of, to a certain degree, have just been ignoring 2020 and the first half of 2021,” Wun says. “But even within 2021 and 2020, there are certain trends that did exist and still did mirror those of 2018 and 2019. The volume was just different.”
In running, seasonality plays a big role in trends, with activity picking up in the warmer months and during major races. But not all industries are so lucky. This is where using data to have a 360-degree view of the customer can be critical, Manigatsays.
It’s not only about looking at the past to plan for the future, but using data to better understand your customers and what they want now. Smart retailers can easily view areas such as sales trends by day, week or hour; brand popularity over time; and inventory that’s selling out versus inventory that’s just sitting on shelves. Then, they can use that information to make informed decisions quickly, staying ahead.
“So when customers visit your store, whether online or in-person, you already have a good sense of what they might be looking for. You now have a unique opportunity to position other items as upsell or even cross-opportunities,” Manigat says.
Having one unified view of transactions can also help retailers gather data to make decisions and deliver what customers want. In the future, he can envision a world where aggregate data is used to help SMBs optimize their strategic decision-making in specific industries. The opportunities to evolve in this area are endless, he says.
In late 2020, McKinsey called payments the “next phase of consumer engagement,” noting how the pandemic reinforced digital adoption across payment types and demographics. This trend has continued through 2021, Manigat says, as consumers have come to expect frictionless and secure payments. Not to mention the ability to complete transactions in varied ways, whether it be buy-now pay-later, installment, or contactless payments.
Now it is up to mid-market retailers to continue to simplify — winning customers in the process through better experiences. By implementing faster payments at checkout, streamlining receipts and improving the ability to introduce systems such as contactless or digital payments, retailers can match customers’ expectations for frictionless shopping, because they’re not stitching together a bunch of different solutions to serve them.
That’s one reason A Runner’s Mind switched their payment processing to Lightspeed’s in-house payments solution, Urtz said.
We are very excited to switch over. Having it all in one place with Lightspeed will help tremendously. – Eileen Urtz, A Runner’s Mind General Manager
An intuitive, all-in-one platform is key, as it frees up business management time that could be spent innovating for customers.
Manigat agrees that being able to offer customers the kind of payment options they are looking for can be a big win for midmarket retailers.
“We integrate with payment providers to be able to offer installment options, and the ability for consumers to buy-online-pick-up-instore,” he says, not only making things easier for consumers but also simplifying operations for retailers.
All about ease
For Urtz, simplification is key, not just across payments, but all operations.
“As retailers, our days are busy running the business, and most of the time we’re on the sales floor, too,” she says “So we don’t have the time to put our own product up online, keep track of inventory, get descriptions and pictures and all that. And we certainly wouldn’t have the ability to have the brand feeds either. So this is all in one place, and all we need to do is when an order comes through, we need to fulfill it.”
The future of retail is unpredictable, an aspect that brings both challenges and opportunities. Making sure the house is in order operationally can help retailers be best positioned to handle whatever comes their way, so they can continue to provide customers with the seamless service they expect.