Even the best in the world make mistakes. And so did the second-largest in the world Swedish multinational clothing retailer known for fast-fashion lines for the up and coming generations. A world-class by any measure, yet, H&M commited unforgivable mistakes that caused once effective systems to become irrelevant, thus, unmangeable inventory with global expansion. On the flip side, H&M’s lessons learned are unsurprisingly similar with the abilities required to survive.
The crash of many H&M stores continues to be thrashed out among subject matter experts whenever strategic failure is discussed. It makes people wonder how could such a renowned world class favored by massive numbers of shoppers go under. To be specific, over 160 stores had to be withdrawn from the market for the company to remain solvent. H&M revealed that the whole thing was a result of inadequate management that created over US$4 billion worth of surplus inventory. The lessons learned from problamatic retail are remarkably similar on the flip side from the perspective of businesses that survived and are thriving today.
As retail faces numerous modernization challenges that have emerged in the age of the IoT, ranging from digital transformation to marketing channels and ever changing competition, a number of businesses were forced to shut down in 2017 while the trends were actually pointing upwards in a positive way. Businesses needed to adapt and adjust to survive. Nonetheless, amidst a slew of forced shut downs, a lot that embraced the certainty of change were able to come up with solutions, whether the storm as well as prosper and effectively cope with change afterwards. In a nutshell, they have the following abilities:
1. The ability to satisty customers’ variable needs
Customer preference and needs vary admittedly so swiftly. As retailers, we must be able to timely adjust ourselves. For instance, given customers’ seasonal shopping behavior, we do not need to completely change the products we are carrying but may have to modify certain elements in keeping with the existing trends. In the area of sales channels, customers who previosly preferred to shop at the stores may now prefer online shopping and/or the presently popular online-to-offline (O2O) model. Keeping abreast of customer behavior, being able to timely adjust and putting innovations to good use are the means to better boost business competitiveness.
2. The ability to retain customer loyalty
Positive brand experience is the key to brand loyalty. One of many retailers’ common mistakes is to fail to give top priority to existing customers because they are convinced that new customers can easily be won. This kind of mindset – if persisting – will definitely affect business sustainability.
While promotions and special offers continue to play a key role in customer retention, there is another crucial factor that should not in any way be overlooked. That is personalized or individual marketing. For example, we can opt for customer relations management (CRM) strategy that involves e-mail messages being sent directly to individual customers, promotions that squarely address each individual customer’s need or even greetings or congratulations being sent on various occasions. All these can effectively retain cordial customer relations and loyalty.
3. Internal Communications Management
Given a difficult and complicated work process within a retail business, to thoroughly communicate working procedures or various information to all internal sectors is admittedly very difficult, particularly in the case of large-sized retail businesses with numerous branches and offices. Inadequate inter-communications can bear directly on the work process.
Retailers should select a system that enables broad internal communication such as the Enterprise Resource Planning (ERP)(https://www.sundae.co.th/article/?cmd=article&id=121) to tackle internal problems. By integrating various systems starting from procurement, employment, production, sales, accounting, finance to human resource management, each internal unit will be interrelated while work distribution to each party concerned can be automatically done and a proper work process assured.
4. Retention and enhancement of employee participation
Retail business has the highest employee resignation rate. Retention of quality work-force is one of the most challenging issues facing retail businesses as recruiting and hiring new employees are quite capital-intensive in terms of finance, time and physical effort.
What can be done – with fruitful results – is to encourage more employeee participation in the business such that employees feel that they are a part of it. This can be done through activities such as training and self-development enhancement as a means to demonstrate to them the employer’s genuine recognition of their importance and value. Besides, tools and devices such as the introduction of various technologies could be provided to ease their work. These would instill in them the true sense of belonging as well as stimulate their utmost willingness and preparedness to work.
5. Arrival of technologies
Given the very rapid change in customer behavior pattern coupled with the undeniable growth of e-Commerce, customers enjoy a wide range of options before deciding to buy. Despite the change in customer behavior influenced by e-Commerce, according to many institutions’ research findings, the majority of shoppers still prefer to shop at the stores while using the internet to search for product detail and information, compare prices and so on.
At any rate, the growth of e-Commerce should not be regarded as a business hindrance. Instead, it should be taken as an opportunity or a plus for online-to-offline (O2O) business operations. According to Deloitte’s report, 56%of retail stores having websites and using them to promote their products as well as to implement the so-called omnichannel marketing strategy have been able to more broadly access customer groups while a fivefold increase in sales volume has been achieved as a result.
6. Locating suitable technologies
While large numbers of business technologies have come into existence nowadays, each and every one of them carries different costs and is used for diffirent beneficial effects. It is therefore necessary for business operators to be able to locate the ones that best satisfy their needs and make various types of work or work processes easier. Certain technologies come ready-made and have a low price but cannot meet all our business needs. We, on our part, must first understand what our problems are and then be clear about the true nature of our needs. This would enable us to customize the systems to effectively suit the business and our available budget.
The above are the 6 main abilities that could quickly become lessons learned instead should they not be facilitated, as H&M has demonstrated. In fact, a slew of factors are more likely to disrupt the business sector than not at any given time. So, be mindful to check out technologies and processes that look positive to you and find out for yourself whether what is considered favorable by others would be suitable in your case.
Compiled by SCG-L