Improving Retail Margins and Profitability: Practical Strategies to Consider
August 2023
The rising popularity of e-commerce - predicted to account for a quarter of worldwide sales by 2025 - has changed the demands of retail customers. Buyers know they have access to an unlimited range of goods and their expectations of the shopping experience have changed.
As economic conditions shift, retail outlets are seeking new ways to meet their customers' changing shopping patterns and expectations. A widely embraced change in the retail experience is omnichannel shopping, with customers increasingly using digital platforms alongside the physical store. The rising popularity of e-commerce - predicted to account for a quarter of worldwide sales by 2025 - has changed the demands of retail customers. Buyers know they have access to an unlimited range of goods and their expectations of the shopping experience have changed.
Even when shopping in-store, customers are researching and making comparisons online prior to making a purchase. This makes delivering a leading customer experience (CX) a key differentiator and a crucial component to a retailer's success.
A report by McKinsey and Company shows that CX leaders experienced three times higher shareholder returns than CX laggards. Leaders in the CX domain have embraced omnichannel shopping and increased investment in digital technologies that help reduce friction in the shopping journey, across platforms and in-store. This investment provides retailers with an agile operating model that can adapt to changing customer expectations and advances in innovations. Successful retailers pay close attention to their physical stores, increasing customer engagement with brands, and ensuring their shopping experience is first-rate.
Step one in improving CX is providing customers with an experience they feel is exceeding their expectations. By using the features of online platforms combined with physical stores, retailers can engage with consumers more easily. Data gathering allows retailers to learn as much about their customers as possible and target individuals directly. Providing a great CX can also involve training your in-store staff so they have the required level of knowledge of brands and products, allowing customers to make purchasing decisions in-store.
Omnichannel shopping allows retailers to personalise shopping and offer customers the retail experience that suits them. Customers can engage through multiple avenues both digital and physical, a phenomenon that has its own name: phygital.
For example, a popular choice for customers is to buy online and pick up in-store. Merging data collected from e-commerce platforms and physical stores allows deeper analysis so retailers can interact with customers individually. This kind of personalised retail interaction is invaluable for building customer loyalty.
Statistics provide a revealing picture of the effectiveness of loyalty programs. For 2023, McKinsey research showed that for brands that offer loyalty programs, 64 percent of customers are more likely to purchase, 50 percent will recommend the brand, and 35 percent are more likely to choose that brand. Loyalty programs also allow retailers to collect personalised information about customers that can be used to improve overall CX. According to the same research, 87 percent of customers value personalisation over privacy, within reason, so the more data you can collect on your customers, the easier it is to meet their expectations.
It's hard to improve CX without a baseline to measure your performance against. Receiving feedback from customers provides retailers with solid data to evaluate how their customers rate them. Customer experience metrics are boiled down to two main measurements: The Net Promoter Score (NPS) and the Time to Resolution (TTR) score. The NPS asks customers how likely they would be to recommend a product or retail company on a scale of 0 – 10, and the TTR measurement is the average time it takes to resolve a customer issue. Having customer contact details makes the collection of this data easier for retailers, which is where loyalty cards and online digital platforms come in handy. Retailers can purchase software that automatically collects and analyses data at any stage along the purchasing pathway and at the point of sale. This makes it easy to assess customers' perception of the retail outlet and to make improvements.
According to Baymard Institute nearly 70 percent of shoppers abandon their shopping carts and do not complete the sale. This increases by device, with those who use mobiles to shop abandoning their purchase 86 per cent of the time. The primary reason for shopping cart abandonment is the final price of the purchase, especially when extra costs are included. Price shock can be remediated when shoppers are offered a line of credit that spreads out payments in manageable amounts at the point of sale.
With 18 percent of customers quitting the checkout because the process is too long, etika offers a smooth shopping pathway with a straightforward online application for customers. The option to spread payments provides an opportunity for customers to consider their budget. It offers flexibility, affordability and more options when they get to the checkout.
etika provides a reliable and trustworthy finance solution that can be incorporated into any shopping forum and becomes an integral part of increasing and improving CX for your customers.
To find out more about how etika can help improve your customer engagement, call on 1300-FAIRER (324 737) or contact us here.
etika (a trading name of etika Finance UK Ltd) is a company registered in England and Wales 07440512 and authorised and regulated by the Financial Conduct Authority, registration number: 697658. Company address: Suite 1.02, Colony Flint Glassworks, 64 Jersey Street, Ancoats, Manchester, England, M4 6JW. Copyright © year etika. All rights reserved.
