Online sales are taking a rising portion of total sales, according to a business insider report citing the National Retail Federation. Estimates in that report put brick-and-mortar retail growth at 2.8%, while online sales growth ranging between 8% and 12%.
Obviously, you don’t want to be left in the cold. So how should your retail business adjust its overall financial strategy? Should you abandon physical locations entirely and spend the funds on online advertising? Or is it better to refine the products your firm sells, focusing on tactile-specific items or creating store-specific experiences?
Below, members of Forbes Finance Council talk about how they’d approach the issue, as well as why their approach works.
1. Refine your product needs.
Online retailers and online versions of traditional retailers are biting into market share. It may be premature to dismiss the "walk up and experience the product" retailer. It may be simply a matter of refining which products require a tactile experience or are best served by a qualified sales specialist who can answer questions and anticipate things the consumer might not have asked. - Paul Ewing, Prosperity Advisory Group
2. Test different channels.
There are many channels for retailers to pursue just within e-commerce. In addition to opening their own online storefronts, retailers can sell through marketplaces like Amazon, eBay and Etsy. Retailers should make small investments across several different channels to determine which are the most promising. Then, invest more heavily in the channels that work and eliminate the ones that don't. - Paul Paradis, Sezzle
3. Offer an in-store experience.
The Ritz Carlton attracts guest because they are "ladies and gentlemen serving ladies and gentlemen." Starbucks has established an experience selling high-priced lattes. Have you been to a Bass Pro Shop during the holidays? It is an incredible time for the entire family. It is time for brick-and-mortar stores to creatively implement a consistent experience that pulls people from the sofa into the store. - Darryl Lyons, PAX Financial Group LLC
4. Focus on upselling and cross-selling.
With more opportunities moving online, retail businesses should put more of their focus on e-commerce. When you upsell and cross-sell online, sometimes it can be easier to close a larger order volume per customer, because the customer has more control over the experience. - Ismael Wrixen, FE International
5. Realize that online and retail aren't mutually exclusive.
Just because you're in a brick-and-mortar store, it doesn't mean you have to be confined to there. The internet is pretty much ubiquitous with business now, so you'll need to adjust your financial strategy to invest in a digital footprint. Why limit yourself to foot traffic when people are glued to their computers the entire day? Also, you can consider adding online sales to earn even more. - Elle Kaplan, LexION Capital
6. Free up pools of capital for digital marketing.
When brick-and-mortar retailers close their doors, this should free up pools of capital for operators to allocate towards digital marketing. Finding the right online channels to reach your customers and testing the messaging that will resonate with such customers requires capital. Retail businesses that adjust their financial strategies to double down on these initiatives will realize greater ROI. - Ibrahim AlHusseini, The Husseini Group
7. Sell by membership and continuity rather than one-off transactions.
Offer your products and services on a continuity basis rather than as one-off transactions. If you sell consumables, sell them by the week or month, rather than by the unit. If you provide services, sell them on a seasonal (or other time-oriented) basis, rather than as individual transactions. Packaging your offers as a continuity program means more consistent, committed income. - Bryan Ellis, Self-Directed Investor Society
8. Forecasting is key.
With brick-and-mortar stores typically carrying a greater overhead than online retailers, forecasting is key. Identify your target market and the niche you are operating in. Without the proper forecasting, both traditional retailers and those online could miss the mark. So, know what you're selling and who you're selling it to for a strong financial strategy. - Justin Goodbread, Heritage Investors
