Fast-changing customer demands often affect the sales and profitability of the apparel retail industry. Sometimes, there are many challenges any business has to overcome in order to turn a profit. For example, unsold inventory is one major problem in the apparel retail industry. Moving out unsold stock almost always requires high markdowns, which reduces gross profits. In order to grow, expand, and increase profitability, a small business has to prioritize and respond appropriately to the challenges they are handed.
People, Power, Places, Product, and Placement: The five P’s every apparel retailer should make a priority for their small business.
People: Your retail employees can influence the customer more than you think they would. Consider a time when you’ve had a bad experience at a store with an employee – how did it affect your view of their business? It probably wasn’t a positive one, was it? Having a positive experience with an employee can also positively impact a customer’s mood. This can encourage them to spend, as well as come back again. They’ll almost certainly tell their friends about their great experience.
Power: The power of omnichannel marketing, as well as the power of social influence, can both have an effect on customers and on sales. Retail industries now need to provide customers with a seamless experience, regardless of channel or device. Omnichannel marketing allows consumers to interact with a company in a physical store, online website, mobile app, mail catalog, or through social media. The ability for the consumer to use any one of these makes purchasing from a retailer an easy task. Consumers are also impacted by the power of social influence. We’re all persuaded by each other every single day, in person and especially through social media. Many people share what they like through their social media pages, giving them the power to influence their friends online.
Places: The future of the store as a place for shopping is evolving. As the convenience and ease of online shopping progresses, consumer shopping expectations are silently transforming the retail industry. Will retail stores still exist as a place to shop in the future? Only time will tell us that. Many stores will have to adapt and evolve along with their consumers in order to keep up. Retailers are beginning to focus on mobile apps for their businesses and transforming those into a “personal shopper” of sorts for their consumers. All content is highly personalized to consumers shopping techniques. Self-checkout is also becoming popular in stores, as well as location-specific coupons and discount offers.
Product: Retailers need a variety of products available that customers want to buy, but getting product-assortment right isn’t always easy. Most retailers rely on point-of-sale data to understand what kind of products they’ll need to have in stock. However, this data doesn’t consider the need for predicting consumer behavior in terms of sales. Insights from rewards programs, product reviews, and online searches are some ways to interpret future consumer behavior. It’s also important for the customer to have a wide variety of choices where they can purchase the product (i.e. online, in store, etc.).
Placement: Where, when, and how a product is placed in a store can dramatically increase or decrease sales. Store displays, signs, and promotions are often used to divert customers from their original goal and keep them in your store longer. There are many different product placement techniques retailers can use to capitalize on consumer behavior. For example, margin product placement – the more profit an item gives a retailer, the better position on the shelf display it will receive. Or, block placement – items that are similar to one another get placed together, making it more likely that a consumer will impulse buy. The location and placement of your store will have a major impact on sales as well.
Every apparel retailer should take into consideration the five P’s if they want to effectively overcome challenges to make a profit in the apparel market. Customers can be easily influenced by people, as well as the power of social media. The location of your store and whether or not you have a seamless shopping experience for customers can greatly influence sales. The variety of products and how they are placed in your store is also important. Taking all of these ideas and implementing them into your own business should be a priority if you’d like to continue to grow, expand, and increase profitability in the apparel retail industry.