Richard Loh, CEO and founder of Eurostop, talks retail and planning for Brexit
Retail is the bellwether for the state of the economy. If there’s a slow down the retail sector feels it first. Britain is used to dealing with difficult trading conditions, so how is Brexit any different?
The biggest issue facing the retailer in my view is the strength of sterling in the current economic climate. Fluctuating exchange rates mean that retailers may need to reconsider how they source their goods and services.
Dealing with Eroding Margins
Exchange rates are expected to remain volatile, due to the uncertainty of Brexit. Sterling has already weakened, making purchases from overseas more expensive. These extra costs must either be absorbed, lowering margins, or passed onto the consumer. Most retailers will probably end up doing a bit of both.
As we all know, when margins are eroded, that increases the pressure to sell more. This is where brand awareness and customer loyalty comes into play – retailers that have a strategy for increasing engagement and keeping customers coming back are the ones that are going to remain or even gain market share.
On the flip side of the coin, early 2017 realised the predicted Brexit tourism boom, which has seen increased spending from overseas tourists in the UK. This is an area that you can’t afford to ignore. Of course, sourcing from the UK is also worth considering, which has the added benefit of reducing lead times and supporting the UK economy.
Customer Experience is King
Even in the aftermath of the post Brexit vote and falling pound, British retailers were whipped into a storm of price reductions and competition, in an effort to win customers. Savvy consumers are driving retailers to change. Those retailers with the insight to look at re-imagining their business strategies and adjusting to changing consumer behaviour will remain in the long term. Consumers aren’t just interested by the product you have to offer, but just if not more important, is the service and experience that you can provide. This is where retailers need to use technology to ensure a quick and consistent service to complement their product and brand, and stand out from the competition.
Digital disruption, Artificial Intelligence, the Internet of Things and Big Data are all emergent technologies that will see the future of retail change with an ever more customer-centric and personalised approach.
I guess the message here, is that in a more competitive Brexit era, we all have to work a little harder to stay ahead of the game. It’s the consumers who are dictating which court we need to play in.
52% of B2C customers stopped buying after a bad customer service interaction*
Market Rationalisation Opportunities
As ever when we are facing a storm, some retailers will flounder and others will sail through, all the stronger. For those that are supported by enabling technology, there will be opportunities to acquire more market share, either by acquisition of competitors, or by expanding to fill gaps left as competitors leave the market. Currency exchange rates may yet move back the other way, restoring margins and putting retailers in a better position.
Here are my top tips for making a success of Brexit
Five top tips for weathering the Brexit storm
- Start planning now. We all know it is coming. Start looking at your supply chain, negotiate with suppliers, wholesalers and manufacturers to get the best terms possible. Find alternative suppliers if you need to.
- Put your business on a solid footing. Take a fresh look at your operations. Trim the fat where you can, re-organise where you need to, and ensure that you have the technology to support a more efficient and competitive approach going forward.
- Look to improve your Customer Experience. Is your brand consistent and connected across all channels? Time, convenience and excellent customer service are now key differentiators for customers – can they get what they want, how they want and with least fuss?
- Build Customer Loyalty. Think about what you can do differently to build loyalty? Knowledge is power, so start by ensuring that you are collecting customer data, to use for more personalised marketing – show your customers that you care, and focus on building relationships. Keep them happy as they are your most powerful brand ambassadors.
- Make the most of your capital. In this challenging time, you need the right technology to make the most of your available stock. Have the right stock, at the right time, in the right location – are you making the most of every potential sale opportunity? You need transparent systems that are going to give you the information that you need quickly and with the least amount of work.
*According to a report by Dimensional Research