It's a hard time to own a retail small business. With ever increasing competition from online businesses, it can feel impossible to keep up with consumer demands. And with so much information readily available online about any product under the sun, even the most knowledgeable of retailers can easily get schooled by their own customers! Add to that financing pressures and marketing challenges, and it's a wonder small retailers ever manage to stay in business.
If you're struggling to keep your retail small business afloat, know that you're not alone. Here are five of the top challenges your fellow retail small business owners are consistently facing, along with some encouragement to make your business the best it can be.
1. Finding Financing
While financing is an issue for small businesses across the board--and by no means a new one--the recent economic climate has made getting financing particularly difficult. The Small Business Credit Survey reported that although 22% of its business owner respondents applied for business credit in 2014, 54% of those applicants were denied. 20% of survey takers said they were "too discouraged" to apply for loans! The process is also stressful and time-consuming, with the average application taking a full 24 hours.
There is a bright side: regional banks and online lenders were found to have higher rates of approval for small business owners--as well as a faster turnaround time for approval and receiving funds.
2. Managing Inventory
Maintaining a good sense of what products you have in stock, where your inventory is low, and how it is accessible across your various locations (whether physical or online) is crucial to maximizing sales. Disorganization in your inventory tracking process or storage can lead to lost sales or delays in fulfilling orders. With limited space and funds, keeping inventory well-stocked and well-organized can be difficult for indie retailers.
Invest in a robust tracking program (either software or cloud-based) like SOS Inventory or Scout topShelf to help you easily manage your inventory from your purchase for resale, through stocking and point of sale, to packing and shipping customers' orders.
3. Creating and Maintaining an Online Presence
Online marketing is crucial to a retailer's success. Social media marketing and a strong, user-friendly web presence help your company reach a wide audience for your products. But many small business owners lack the experience or the time to run effective marketing campaigns online.
If you're not confident in your social media marketing savvy, check out an online resource such as Lynda.com to learn more. Dashboard tools like HubSpot and HootSuite can also help you easily create and pre-schedule marketing campaigns across several different social media platforms.
4. Balancing Online and Brick-and-Mortar Sales
Many consumers now expect 24/7 shopping access and a very fast turnaround on delivery. Smaller retailers may not have the staff or the web functionality to make this possible, and may lose customers to big retailers who can.
Add to that issue the rise of omni-channel or multi-channel retail--the concept of providing an integrated shopping experience, whether customers are shopping in-store or online. An omni-channel approach can lead to more online sales, increased branding opportunities, and better customer satisfaction.
While omni-channel retail is an obvious and ubiquitous strategy for big-box retailers, for the smaller guys it can be a big challenge. How do you set up an online store? How do you keep your branding and shopping experience consistent across your platforms? How do you distribute your time, energy, and products between your physical location and your online storefront? E-commerce solutions like Stitch and Vend can help you to integrate and manage your points of sale, whether real-world or online.
5. Meeting the Expectations of Highly Informed Customers
The rise of mobile shopping has resulted in more and more savvy customers. As Sarah Halzack at the Washington Post notes in her report on the 2015 US Total Retail Survey by PricewaterhouseCoopers, consumers can compare prices and look up product reviews and ratings at any point during their shopping--and many do lots of research before even heading to the store. While this behavior has always been common for big-ticket items such as electronics or appliances, customers are now doing plenty of online research on smaller products like toys, books, and clothing.
"This dynamic is creating major challenges for retailers, who must now figure out how to thrive in an era when the consumer is ultra-knowledgeable--in many cases, more knowledgeable than the store's own sales staff," explains Halzack. These customers are on a mission to find the best bargain and are unlikely to make impulse purchases or be swayed by a convincing sales pitch.
While this shift in shopping behavior can be a problematic one for retailers, it doesn't have to be. If your prices are competitive, consumers' comparison shopping can actually benefit you. Despite fears that customers will "showroom" (i.e., test items in-store and then purchase online), the opposite has actually proven to be true: customers frequently research online, then buy in person. And you can harness the ever-presence of mobile technology to enhance customers' in-store experience; Jeremy Bogaisky offers some tips on how.
While all small businesses face their own challenges, retailers face their own set of obstacles, and those obstacles are only getting more complex as e-commerce expands and as customers rely ever more on internet research before committing to purchases. But by staying informed and making educated decisions, small business retailers can meet these challenges head-on.