3 Ways Your Retail Brand Can Embrace Recalibration Rather than Recession
All retailers can benefit from a moment of reflection, reassessment, and recalibration. Let’s examine where your brand can intelligently reduce expenses and increase revenue.
It is a confusing time for the retail industry. While broad economic indicators tell us that things are going well, the boots-on-the-ground story is different. Consumer confidence has steadily trended down, with only a small indication that it’s headed higher. This shows that consumers are still feeling the brunt of inflation and may be pinching pennies much more often than early 2021, during the middle of the pandemic.
Another indicator to consider: the recent retail layoffs. Reports show that retailers cut 13,000 jobs in January of this year, which amounts to an eye-opening 3,225% increase from last year. Retail brands across the board, from beauty to apparel, have been tightening their belts due to fears of inflation and lower consumer spending in 2023. It seems like we are headed for a downturn in retail, and brands need to go into survival mode.
Not so fast.
Retail Recalibration 2023
When margins are slim and competition is hot, every measurement matters, from the foot traffic to your stores to the conversions you see on your online shop. But signs point to this retail pullback as a potential recalibration. The fact is, retail has grown so much in the past couple years, that brands are shedding additional staff and optimizing budgets. Just like in bodybuilding, you bulk before you cut.
Retail stores went on a massive hiring spree in early 2022, so much so that the US Labor Department shows that in January of this year, there were 13.15 million working in retail compared to last January when there were 13.09. Meaning despite the layoffs, there are more retail workers today overall compared to a year ago.
Retailers are often too focused on the micro over the macro, and for good reason. Even if the economy is in recovery, that doesn’t bring in revenue right now.
Similarly, while the job cut statistics seem scary, the job cut rate was down nearly 13% December-over-December.
For another data point, tech is often a leading indicator of a pullback, and as we have all read by now there are massive layoffs in tech. But again, comparing year-over-year numbers, tech brands are still overall employing more people than before.
According to Insider Intelligence, Amazon is laying off about 18,000 employees; but currently has nearly double the amount of workers today as they did in 2019. 18,000 layoffs may seem like a lot in the microview, but compared to the 798,000 employees they hired over two years, it’s only a tiny fraction.
Similarly, retail brands over-hired to accommodate both the remote shopping and the grand reopening of physical stores. Now, it seems similar to tech where it’s about recalibrating staff to optimize revenue and spend.
All retailers can benefit from a moment of reflection, reassessment, and recalibration. Let’s examine where your brand can intelligently reduce expenses and increase revenue with this framework in mind.
3 Ways Your Retail Brand can Recalibrate
Reduce the Overgrowth
The most obvious move that should be on your agenda is to optimize your current setup. Take the time to see if some of your tasks can be automated with the right software. Most of the tech layoffs at Microsoft and Meta were in HR and talent sourcing. It’s logical that when there is less recruitment going on, companies need less recruiters; but companies are also starting to rely on automation for their hiring processes in general.
Similarly, your retail team should also consider automation for certain sales. For example clienteling with the right CRM software can return $8 for every $1 spent. That ROI not only improves your bottom line, but saves on additional payroll expenses. When your CRM platform can create, automate, and manage mass email and SMS campaigns, you can expand the production of your sales or marketing team without needing more players on the field.
Focus on Quick Wins and Results
No matter what the macro-view is, in the current day-to-day we all feel that customers are spending less still due to inflationary fears. For corporate cash flow, your brand should recalibrate to focus on quick wins.
The NYC article linked earlier referenced many retailers focusing on less risky projects, recalibrating to tried-and-true methods that have worked, and that can show fast results. Dive into your CRM data to see what initiatives have seen the greatest ROI and redouble your efforts on that channel.
Apparel brands that Endear has worked with saw huge ROI from their investment into mobile clienteling, leveraging SMS to engage with customers on a 1-on-1 basis. This helped Psycho Bunny drive $1 million in sales that were directly attributed to customer engagement in the CRM.
When times are tough, catering to your core customer base with elevated service is one of the most effective levers to pull for retail brands.
During the pandemic, small retailers saw their community rally around them by spending and supporting. Because smaller brands have a more loyal base, we saw the power that comes from having a strong relationship with customers by being transparent and honest about economic struggles.
Furthermore, Gen Z craves authenticity from brands as well. They tend to support brands with values that are real, and that they vibe with. That’s why ‘lo-fi’ videos of Influencers their age resonate so well with Gen Z, and help drive traffic and sales on TikTok.
While we see a (hopefully short) downturn in retail overall, a point of recalibration for brands is to take cues from the authenticity inherent to smaller brands, and make it a part of their own brand identity. This can motivate core consumers as well as court more new Gen Z shoppers.
Apparel brands have seen success by touting their sustainable products, engaging in social activism, and showcasing realistic body types. Sportswear such as Nike and Adidas are among the best at showcasing their authenticity in these ways, and sure enough, Gen Z rated sporting brands as some of the most authentic-feeling brands on the market.
Consider ways for your brand to feel more authentic. It’s a trend that isn’t going away any time soon, and now is a great time to recalibrate your brand’s messaging in this way.
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