Jake is the CEO of Edge mesha global web acceleration company that enables e-commerce brands to deliver faster, more streamlined websites.
Retailers have experienced tremendous growth over the past four years. The total turnover from August to September 2022 has increased 8.9% from a year ago, according to the US Department of Commerce. However, with rising consumer prices and persistent inflation, some worrying signs are emerging.
In a recent Bloomberg surveyeconomists predicted the probability of an economic downturn at nearly 48%, up from the 30% forecast in June. According to the forecast, consumers would have less purchasing power, which would put retailers in a bad position. They will have to raise prices and shrink margins accordingly to remain profitable.
Bankruptcy is another ripple effect of a shaky economy. Unlike most public companies, many stores are small businesses with little to no cash reserves or capital assets. Borrowing money becomes difficult because lenders often won’t give money to businesses without reliable collateral.
With the headwinds of slower growth ahead, I think it’s time for retail brands to focus on efficiency. The good news is that there are actions brands can take right now to expand their markets and outsmart the competition. Walmart is a good example. Earlier this year, walmart positioned for growth in the likelihood of reduced consumer purchases and an economic crisis. Ensuring the company quickly adapts to consumer trends has been one of the giant retailer’s key strategies.
Other companies such as Target and Costco are devising strategies to increase their chances of remaining profitable during an economic downturn. Your business has a chance too, if you do it right.
Below are six strategies retailers can use to stay afloat in a struggling economy.
1. Increase content marketing.
Content marketing is not subject to higher costs (cost per click or CPC inflation) and retains the value of time (assets versus costs). This includes building a robust outreach program for blogs, affiliates, etc. It’s best to focus on incorporating keywords you can buy efficiently into core content themes. Competitive content marketing is valuable, so allocate some advertising budget to content marketing for a higher return on investment.
2. Go to indexing technology.
Content without indexing is like buying ads without posts. Technical SEO is simple and effective. Make sure pages can be indexed without a browser (or add dynamic rendering); make sure LD+JSON is embedded and accurate and ratings are indexed. Most importantly, check that the website content is crawled, indexed and ranked.
3. Examine the speed of your website.
Faster websites can make more money. (Disclosure: This is something my company helps with, as do others.) In 2016, Google found it 53% of mobile visitors would leave a website that takes more than three seconds to load. Revisit your large images to improve website speed. Large images take a toll on your website and your server by contributing to load time. And this means more waiting time for your consumers while shopping. Instead, use compressed images that preserve quality.
Some additional software is vital for online businesses, but it can also slow down your website while they run in the background and affect the efficiency of your online store. The solution in this case is to uninstall additional software in the form of third-party apps if you do not use them. Or you can use them when they are needed instead of running them on your website all the time.
4. Focus on improving channels with the highest ROI.
While increasing your reach to expand your business is the right move, knowing the right channels to increase is essential. Regardless of your business model, it’s impossible to have the same ROI across all channels. In some cases, Google ads may outperform SEO, or you may see more conversions through email marketing compared to Facebook ads. Double down on the channels that drive more sales to your business for an amplifying effect that boosts your sales.
5. Optimize your value proposition.
With an economic downturn looming, some retail businesses will have no choice but to close their stores. However, strategic brands will offer additional offerings at a lower customer acquisition cost. For example, if you run a pet food store, adding pet toys to the list will help retain existing customers while also attracting new ones at a lower cost. Combining both offers improves your value proposition as customers don’t have to worry about toys for their pets. The result is an increase in net sales with profitable margins.
6. Prioritize customer experience.
Consumers are wary of their spending habits. While discounts, referral programs, and promotions are great initiatives, they can be costly if the customer experience is neglected. In the U.S, almost 60% of consumers said that once they’re loyal to a brand, they stay that way for life. Yet 61% of global consumers have cut ties with a brand due to poor customer service, according to a 2018 study. Instead of trying to lower prices, focus on finding what consumers are looking for to make their lives easier. The aim is to gain insight into the purchasing decision process and the degree of consumer preference. This allows brands to create tailored, timely promotions to increase supply and conversion rates. I believe ensuring that consumer needs are met is the most basic yet underrated business strategy.
I especially advise you not to be tempted to lower the prices. Lowering prices may increase overall sales, but it will definitely lower margin. Stocks are low, so protect margins where possible. Adaptive pricing as a function of inventory works. While offering discounts and coupons may seem like an effective technique for engagement and customer acquisition, saving deals for loyal customers or for visitors who provide an email address or mobile number for text messages can protect margins.
No one can know the duration of an economic downturn. But one thing is clear: consumers are changing their habits and old trends are becoming irrelevant. It’s important to focus marketing spend on channels that deliver the best results, and collecting first-party consumer data is an integral part of this. Applying this strategy can transform your business into a sales generating machine and operate efficiently even in a crisis situation.