Archives April 2022

Trade occupies an important place in the organization of human life. The first markets began to appear long before our era. Sales technologies are constantly evolving and becoming more complex. Today, trade has become an independent sphere of market relations and represents a system of commodity-money relations.

Retail today: a buyer for the market or a market for the buyer?

Modern retail  is not just retail on a wholesale scale. This is a whole system of trade turnover, based on certain principles of work organization. The concept itself has an English origin (“retail” – “retail trade”); some sources point to a borrowing from the old French language (“tailer” – “cut off, cut off in terms of clothing design”).

The retail market today is the process of selling goods and services from individual entrepreneurs or companies to the final consumer. Retailers thus become part of an integrated system called the “supply chain”.

Retail trade has been subject to certain laws throughout its existence from the formation of the first market areas in ancient societies, which are considered to be classical market places (market place).

Retail technologies: to attract attention

There are a number of technologies on the basis of which the process of selling goods and services is built:

• using a location approach to organizing outlets
• effective assortment grouping
• use of specialized trading equipment
• application of trade marketing technologies
• minimal presence of sales personnel
• self-service
• automation of accounting, procurement and storage of goods (or the procurement department as a whole)
• optimization of the logistics department

This is not a complete list of technologies used, however, the above points demonstrate that it is incorrect to consider retail only trade: rather, it is a whole organizational system of working with many customers at the same time. This includes banking structures (credit products, plastic cards, transfers), large retailers that are engaged exclusively in wholesale.

Retail: sources of efficiency

The key principle on which retail trade is based is general availability, that is, the organization of unlimited access for consumers to use (purchase) goods and services. In addition, the success of a business is determined by the purchasing power of the population. The efficiency of retail is due to the fact that consumers are not accustomed to creating large cash reserves, since inflation does not allow creating the necessary base for income capitalization. At the same time, purchasing power is growing, therefore, retail profitability is also growing with the proper use of technology.

Tasks of modern retailing

The key goal of retailing is to reduce the cost of serving an individual client, which allows minimizing the costs of economic activity, maintaining attractive prices for goods and services, and, therefore, attracting new customers. As a rule, special divisions are created to develop marketing strategies, which are led by a purchasing director. Therefore, there are certain features of doing business online and offline.

Retail online and offline: difference of approaches

It is generally accepted that online and offline retail is divided according to the principle of organizing a platform for trading operations. The difference lies in determining the degree of direct interaction between the buyer and the seller. Naturally, this requires different approaches to the organization of trade operations.

The factors by which the specifics of business processes in retail are determined are as follows:

• Price. Online stores need to be able to correctly and correctly argue it. For example, the high price, compared to offline stores, can be explained by more reliable guarantees. This is important because otherwise the customer will move to another store;
• Range. The online sphere deprives the consumer of the opportunity to “touch the product with his hands”, so the main element is the catalog and information card. The seller’s ability to motivate a purchase depends on its content and content. Traditional stores in this regard allow you to evaluate the technical characteristics on the spot, directly interacting with the product;
• Laying out. If offline stores perform zoning and follow the principle of product display priority, then sites should have intuitive and easy navigation. Of course, the presentation of the goods (visualization) is also taken into account;
• Communications. In offline stores, the elements of effective communication include a sign, window dressing, price tags, flyers, catalogs (POS). Online environment — banners, teasers, cross-links, price tags, postcards, expert advice (POSM);
• Stock. They work in a similar way both online and offline. All that is required is a difference in approaches to organizing advertising campaigns.

The future of retail

Retail news testifies to the constant growth of the online segment, which is far ahead of the growth of the traditional sector and is, according to various estimates, from 30 to 40% per year. In 2010, the volume of the Internet retail market reached 240 billion rubles. At the same time, in the overall structure of retail trade turnover it amounted to only 1.6%. This is less than in the UK (10%), Germany (8%) and the US (6.5%), but more than in Italy (1.2%) and Spain (1.3%).

The high growth rate and low share in the turnover structure is explained by the fact that Internet technologies are spreading across the country quite quickly, but in the regions, however, traditional stores are more trusted. There are a number of reasons for this, the main of which is the low level of service in regional branches. Therefore, the key task of online retail in the next few years, according to experts, is to create a unique shopping experience in the regions.

At the present stage of development of retail trade, the extensive development of the market ends and passes into an intensive stage. Retailers now have to offer not only a wide range of quality products, but also create systems of services and services in order to retain old and attract new customers.

According to McKinsey & Company , in 2021, 80% of US retail sales will still come from physical stores.

Pure Play online stores (retailers who sell only through their online store) are starting to make a name for themselves in traditional retail. Many of the biggest online brands have gone offline by opening showrooms and stores, from French fashion retailer Spartoo to socially conscious eyewear brand Warby Parker to menswear retailer Bonobos.

The real acceleration of this trend came when Amazon opened its first physical store. The Amazon bookstore in Seattle, USA may look like a simple store, but it’s actually a very important first step into an omnichannel for the world’s largest online retailer.

Online + offline = more profit

The transition to opening offline stores does not mean that online trading is dying. On the contrary, online and offline synergy will be the key to retail success in the near future. Experts agree that online stores that open outlets will be more successful than their purely online competitors. We have selected the 7 most important reasons for success.

If people can evaluate your product in person, they are more likely to buy it.

According to the State of Retail Report published by TimeTrade, 85% of consumers prefer to shop in physical stores because they like to see, touch and test products in person before buying them. Touching the product can also dispel doubts and convince the person that it is the right product.

Customers who pick up or exchange goods in a physical store are prone to additional purchases

Click & Collect (buy online and pick up in store) is very popular with both buyers and sellers. People like the convenience of choosing an item in an online store at any time and the ability to pick it up themselves. Retailers love it because it’s good for business: According to UPS Pulse of the Online Shopper , 45% of shoppers who use Click & Collect end up buying additional items when they pick up an order in store.

Return to store is also popular with customers and retailers. A UPS study shows that 3 out of 5 shoppers would rather return to a store than mail or courier back an item. At the same time, 70% of shoppers who return items in a physical store end up buying something else instead.

Personal customer service increases sales

It is difficult to offer a personalized user experience online; at least that’s what buyers agree with. The TimeTrade State of Retail Report shows that a third of shoppers prefer to get advice from real consultants, and 90% of shoppers are more likely to buy a product after receiving help from experienced in-store staff.

Despite the popularity of online shopping, human attention and communication are still important to businesses.

An offline store will help create a brand atmosphere

There are many competitors in retail, and the brand is difficult to distinguish, especially online. By switching to offline mode, online stores get this opportunity. Promising retailers are not opening physical stores just to sell. Their showrooms and concept stores are primarily places where customers can immerse themselves in the brand’s culture. In-store ambiance is a key differentiator for a brand, and if done right, it can be a great way to make a lasting impression and engage shoppers.

A physical store improves logistics – it saves time and money

Online retailers use physical stores as part of their supply chain to reduce inventory management costs and speed up shipping. Logistics costs are the Achilles’ heel of e-commerce retailers as they tend to drive down profits significantly. By using stores as warehouses and distribution centers, online retailers can improve their supply chains and deliver goods faster and more efficiently to more regions.

Possibility of free research of preferences and habits of your customers

While data collected from an online store can be useful in understanding shoppers, retailers have the ability to learn a lot about their customers simply by observing their purchases and product interactions. The amount of market research you get just by watching people is equivalent to 100 focus groups.

Real stores will help increase traffic to your online site

As L2 reports in their Death of Pureplay Retail report , when retailers open physical stores, traffic to their online stores skyrockets. As stores open, online traffic grows, and the number of people mentioning the brand and searching for it on the Internet increases. According to L2, this online buzz is accompanied by an increase in financial returns, making the physical store a good investment in terms of both popularity and profitability.

Single-channel retail is doomed to disappear, whether it’s pure e-commerce or pure offline. Retailers who keep an eye on their customers and aren’t afraid to innovate will thrive. Retailers stuck in their “good old ways” will slowly but surely disappear from the scene.

“Every evening, 95% of all my company’s assets are driven home by car. My task is to create such working conditions that the next morning all these people have a desire to return back. The creativity they bring to a company creates a competitive advantage,” said James Goodnight, who in 2010 was named “Top Employer” by Fortune magazine.

Do you think that your company has problems with personnel? Frequent conflicts, layoffs, lack of discipline? Or maybe customers started complaining more or even worse, they just leave forever? Business does not tolerate mistakes. If you really want to identify existing problems, and not get “excellent” for a tick, then you need to be prepared for the fact that an HR audit can point to problems that you do not want to believe. If it turns out that the HR strategy has not worked, you need to accept this fact without panic and find ways to correct the mistakes. An HR audit is not a way to embarrass yourself, but a tool for an objective assessment of a company’s human resources potential, which is a normal practice, especially in large companies. This information will help improve the atmosphere in the company, and as a result, take your business to a new level.

HR audit will show not only hidden errors, but also potential

In finance and accounting, auditing is commonplace. However, in personnel management this is a relatively new process and therefore undeservedly overlooked by many companies. When we invest in something, we want to see results immediately. However, effectively conducting such an audit will still take time, but the results of the work done will certainly open your eyes to the bottom of the iceberg.

A couple of years ago, you hired a human resource specialist because business trends demanded it. The specialist began his work. At first, you tried to follow his actions, but soon the busyness took over and the field of personnel management was left to chance. Then there were problems. Employees and their managers do not interact properly, disagreements break out between employees every now and then. Perhaps the HR strategy implemented by your specialist is not working?

HR audit, as a tool for measuring performance, examines the processes in the field of personnel management. These studies cover not only the verification of regulatory documents required by law, they also address all questions regarding who implements the personnel management processes, to what extent they are developed, what is worth paying attention to.

The main goal of an HR audit is to identify the strengths and weaknesses of the HR department, it will also help you find out where improvements are needed and how to achieve them in the shortest possible time and with the maximum result. For example, by analyzing reports and making a selection of documents, you can make recommendations for changing business processes, and by observing how meetings or reviews are going, you can evaluate whether time is spent efficiently and how productive the results are.

To give an objective assessment of the unit, a thorough review of the personnel, budget, and whether the expected results correspond to reality is carried out. For example, in the process of HR audit, it is analyzed how the search for employees takes place, how they are trained and how much it costs; whether it is possible to reduce or vice versa, whether it is necessary to increase the cost of training; what motivates employees? The processes of personnel office work are also studied.

Results depend on your goals

An audit may have several objectives, but all of them must be clearly defined. For example, specific objectives may sound like this:

1. Determine whether established rules and company policies are in practice.
2. Learn how best to meet the needs of departments and employees.
3. Streamline work processes (recruiting, training, compensation, etc.).
4. Establish an “early warning system” to identify problems before they turn into a crisis.
5. Measure the effectiveness of improvements – to understand whether it became better or worse as a result of changes.

You may have other goals, but they must have a clear framework and the expected result, otherwise you risk wasting time and money.

Depending on the purpose, the process and methodology for performing an audit will be different. For example, if goal number 1 from our list involves only checking existing rules, then for goal number 4 this will not be enough, you need to create a completely new system. And this is a more laborious process.

With a high-quality implementation of an HR audit and the elimination of problems identified as a result of its implementation, you can achieve the following results:

• improvement of the recruitment procedure system;
• reduction of staff turnover;
• reducing the level of job dissatisfaction;
• continuous training and effective motivation of employees;
• increase in sales due to improved relations in the team and much more, depending on which direction you consider it necessary to make maximum efforts.