For a successful business, the retailer needs to offer its customer more than discounts or competitive prices. As we are well aware of the trends in the retail market, we will have to continuously develop our business services to stay in the market. The expansion of business services is determined by the customerâ€™s buying patterns and customer-oriented policies. It would require a retailer to install the right business approach.
The retail industry is one of the fastest-growing sectors of the economy. The industry provides excellent business opportunities for retailers. It enables them to offer consumers everything they need at the right time and the best competitive prices. Thus, to become an essential part of the economy, you need to open a retail store. Opening a retail store requires more careful planning. You need to keep track of trends by conducting regular market research so that you are no longer faces the challenges to run a successful business. It establishes the root of the long business run, resulting in better conversion rates and a higher ROI.
Thus, knowing the common challenges faced by retailers while opening retail stores is a necessity. Once you understand the challenges of opening a retail store, you will be able to plan your business accordingly.
Letâ€™s Explore the Problem Faced by Retailers in a New Retail Store Opening
- Keeping up with the market trend
- Finding the best technology solutions
- Executing the right approach to store opening
- Proper marketing infrastructure
- Hiring efficient employees and staff
- Execution of stock management
- Managing multi-location outlets
- Build vendor relationships
- Cover Legal basics, Licensing, and Permits
- Selecting the right logistics provider for retail logistics process
- Overcoming the challenges of distribution management
- Cash flow and financial management
- A robust billing system
- Creating a personalized experience and establishing loyalty programs
Challenge 1: Keeping up with the market trend
While advances in technology are on the rise, many businesses end up with major losses. The reason behind this failure is still the use of traditional methods in conducting its business. Whether you are a startup or well established in the retail industry, keeping up with trends is a need that shows customers you are flexible.
Frequent shifts with trends can be a tedious task. But not going with the trend, invites losses in business, as happened with Nokia. There was a time when Nokia was a pioneer in mobile manufacturing and made its own featured phones. But when the Android operating system entered the market, Nokia remained on its particular phone rather than switching to the Android trend. But later, looking at its consumer demand, they started making Windows-based smartphones. Which in a few days, could not run in the market, due to being less user-friendly than Android. As a result, Nokia soon got out of the trend, and a large group of market stopped buying it. It happened because Nokia did not plan to move its business with market trends. And, other mobile manufacturers that adopted Android replaced Nokia. Thus, to get into the trend, at last Nokia had to adopt Android and now it is growing again in the market. The same happened with BlackBerry as it stayed with the tag of the business phone.
Thus, if the store does not follow the market trend, you will have to face the following results.
- You may not be able to discover new opportunities and emerging technology that hits the market. In this way, you are not aware of the buying patterns of changing consumers. These discoveries include artificial intelligence, voice recognition, software updates, and new feature additions.
- You may not be able to know your customers and their preference according to their buying patterns. In this way, you are not able to make future business decisions.
- You may not be able to know your competitors and your position in the market. In this way, you lack the opportunity to develop your products and services.
Challenge 2: Finding the best technology solutions
Speed, agility, and efficiency are essential for todayâ€™s retail business. Without using the right technology, you cannot expect your business to produce 100 percent positive results. For retail shops, it is essential to take advantage of software solutions in the retail store system. It not only automates their daily tasks but also provides a competitive edge in this e-commerce shopping era. If the retail store is not integrated with technology, then you will face the following problems in your store operation.
- You may not be able to provide a fast and secure checkout to your customer. It will create boredom for them.
- You may not be able to get real-time stock information. It indicates inaccuracy in maintaining the inventory level.
- You may not be able to track your employeeâ€™s data and handle payroll management.
- You may not be prepare sales/purchase reports to plan more business opportunities.
- You may not be able to analyze your complex stocks and forecast efficiently.
- Your store may not be able to offer customers multiple payment options.
Challenge 3: Executing the right approach to store opening
When opening a retail store, business owners must come up with the right approach and business present and future plans. For this, you have to find out â€“
- What type of store do you want to open?
- What is your budget?
- Do you have to be limited to single stores or open more stores in the future?
- What items will your business sell?
- Who will be your target customer?
- How will your business set prices to benefit all types of customers?
- Which competitors do you have to face in your local area as per your business type?
- What will your team do to overcome all business challenges?
You have to think according to the above questionnaire. If you do not execute the right approach to the store opening, then you will have to face the following results.
- You may not be able to run your business for long.
- You may not be able to attract valuable customers. This way, you will have poor customer retention.
- You may not be able to utilize your skills and resources fully.
- You may face some big financial loss in coming future.
Challenge 4: Proper marketing infrastructure
Marketing is a crucial aspect of any early-stage business. An effective marketing strategy must have a detailed understanding of budget usage, marketing channels, linkage, and their functions. Also, it is necessary to know how to get the maximum benefit from it. You should include a well-organized infrastructure for smooth marketing store operations. But, if the store does not have proper marketing infrastructure, you will have to face the following results.
- You are not able to show your customers the best services available to them. In this way, you face the wrong marketing of your store products.
- You may fail to formulate the companyâ€™s marketing needs, in terms of required capital, prospect reach, and accurate conversion-ratio estimates.
- You may lack an understanding of the changes in the pattern of product delivery.
- You cannot get increased value for your products. In this way, gradually, you lose product value and store reputation.
- You may not be able to identify new statutory retail store requirements.
Challenge 5: Hiring efficient employees and staff
Over time, it becomes difficult for the entrepreneur to run the business alone. Retailers need to find employees who do well and train them for their business to carry out the functions of the retail store to achieve the organizational goal. A skilled worker gives additional help to the retailers, which reduces the workload in the management of the store. Incorrect selection of employees can make or break your business. If you do not have skilled employees in your business, here are some results you will have to face.
- Your staff is the first person who interacts with the customer and explains your product. Being an unskilled employee adversely affects your valued customer. In this way, you give your customer a chance to visit another retail shop.
- You may face a loss in sales because your employee is less aware of your products and services.
- A wrong employee hiring leads to poor customer retention.
Challenge 6: Execution of stock management
It is always a challenge for the retail store owner to evaluate the store stocks correctly. It sometimes leads to incorrect item calculations resulting in customer dissatisfaction. Without management, a retail inventory is like a mess. It shows mismanagement, and you donâ€™t get the right information about which item is in stock or which is out of stock. If you do not have the right stock management system in your business, here are some results you will have to face.
- You receive incorrect data about your purchased products, misplaced products, returns, and stolen goods. Thus, you cannot track or update your inventory items correctly.
- You cannot identify inventory shrinkage. It leads to clerical errors, shoplifting, employee theft, supplier fraud, and unhappy customers.
- You are not able to organize the product on the shelves, which forces your stock to be placed in the wrong aisle, shelf, or bin.
- You do not get prior notice of expiry products. In this way, retailers are not able to make future purchase decisions, face human errors, and you lose the trust of customers.
Challenge 7: Managing multi-location outlets
Managing two or more store outlets of multiple locations involves a lot more than just selecting a retail location and getting a new set of keys. You have many things to do, such as expanding staff, increasing inventory levels, and making your customers aware of your new expansion. Thus, the right preparation is required to overcome the challenges faced at other store locations. If you do not have management procedures for multi-location outlets, your dream of becoming a successful businessman may suffer. If you do not have a proper solution for multi-stores, then you will have to face the following adverse situations.
- You may not be able to get centralized control over all your store chains. Thus, you are not properly aware of your sales, purchases, and financial condition.
- You cannot communicate properly with your employees. It will take you towards employee deception.
- Your valued customers may not get the same services they always expect from you.
Challenge 8: Build vendor relationships
In todayâ€™s competitive business environment, retailers need to maintain a positive relationship with their vendors. It helps the business owners to get more awareness of building customer relationships. And also, it helps the retailer to get the right trend information. If you do not have a strong relationship with your vendor, then you will face the following problems in your store management.
- You may not be able to advertise your new product category and related offers and discounts.
- You may not be able to ensure the time and date of your purchased product delivery. It can ruin the trust of your customers from you.
- You may face difficulty in reorder management or return management.
Challenge 9: Cover Legal basics, Licensing, and Permits
Knowing which licenses and permissions are necessary to open a retail store is a tedious task, but it is equally important. It requires appropriate work based on government rules and regulations. To avoid any kind of legal risk in opening a store, you need to map all the legal grounds. If you do not include legal basics, licenses, and permits in your business, here are some adverse consequences you will have to face.
- You risk your business if you do not have a proper legal plan. Thus, your business is prone to shut down before it starts completely.
- Operating your business without a proper license becomes a criminal offense.
- You do not have a business certificate to run your business, which reduces customersâ€™ trust in your product and services.
Challenge 10: Selecting the right logistics provider for retail logistics process
To meet the growing consumer demand, it is paramount to include the right strategies when opening retail stores. It is almost impossible for a person to take care of everything, from buying and selling goods to transportation. For this, as a retailer, you have to choose logistics providers for such critical times and speed up store processes. The final delivery to the store cannot be considered the last step of the retail logistics process. It ends with the point of use. Thus, if you do not have a proper solution for retail logistics, you will face the following negative consequences.
- It becomes a reason for retail store failure when you are unable to execute logistics processes properly.
- You may not be able to meet business goals.
- You may not be able to gain and provide chain efficiency.
- You may not be able to handle ongoing retail challenges. In this way, you are not able to present a consistent customer experience to the consumer.
Challenge 11: Overcoming the challenges of distribution management
For the retail store chain owner, it is critical to get the right goods, at the right stores, at the right time, and in the right quantity. Also, it is a challenge to obtain space to receive, examine, and display a limited amount of merchandise in most retail stores. Thus, a robust distribution management system is required by the store owner to efficiently move goods to the sales floor. If you do not have a solution to overcome the challenges of distribution management, you will face the following negative consequences.
- You may not be able to plan for strategy belongs to packaging, inventory, warehousing, supply chain, and logistics.
- You may not be able to ensure about companyâ€™s financial success and corporate longevity.
- You may not be able to keep things organized. It cannot keep customers satisfied.
- You may not be able to decide the right product price. Thus, you will not be able to support your marketing strategy and maximize profits.
Challenge 12: Cash flow and financial management
Finance is the backbone of any retail business. It ensures business consistent profits that essential for long business run. Thus, financial management and cash flow is a key factor for any business to grow. The financial aspects of retail store management cover budgeting, forecasting, profit planning, leverage management, asset management, and optimum resource allocation. If you do not have financial and cash flow management in your business, then you will have to face the following results.
- You may not be able to track, adjust, and analyze the financial data of your store.
- You may not be able to maintain the balance between cash inflows and cash outflows. It impacts your overall business management, your purchasing capability, and your employeeâ€™s satisfaction.
- You may not be able to pay your store bills on time. It decreases your store credibility.
Challenge 13: A robust billing system
Incorrect billing can often be a nightmare for the retail business. Without a billing system, this can be a time-consuming process. But, it is an essential part of any business. Thus, an efficient billing system is essential for retail businesses to handle multiple store chains, enhance efficiency level, keep track of stocks, and maintaining customer satisfaction. But, if the retail store does not have a proper billing system, you will have to face the following negative result.
- You cannot facilitate your customers by offering flexible payment options.
- You may not be able to estimate or measure your revenue. It reduces your confidence towards your vendors or customers that on a specific date, payment will be released.
- You cannot bill different types of products in a few seconds.
- You cannot provide a secure payment platform for customers. In this way, retailers fail to facilitate an optimal experience during the customer journey.
- You cannot easily make changes to recurring billing cycles.
Challenge 14: Creating a personalized experience and establishing loyalty programs and discount management
Todayâ€™s retail industry faces challenges in every aspect. To avoid market disruptions, most stores are advised to provide personalized experiences to customers. But even then, the retail store owners do not take the appropriate steps to define customer personalization. It attracts customers towards other stores that have more ways of providing personalization. So, stores need to know what abilities to build to create a personal touch with users. If you do not establish the right loyalty programs and discount management in your business, here are some results you will have to face.
- You are not able to build a good relationship with your valued customers. As a result, you are unable to improve your level of customer satisfaction.
- You are not able to create transparency in your retail store. Thus, customers hesitate to shop with you.
- You are not able to make a unique offer for your valuable customers.
The Bottom Line
The above are some of the challenges commonly faced by retail businesses when opening new stores. Through this blog, you will be able to understand your business properly, and relate them to your business and make the right plan. To get the solution to overcome the above challenges and a deeper insight into it, you have to go through our next blog. It will summarize you efficiently and offer you the right direction to handle the retail store challenges.
Efficient Software Solutions for Retail Industry