By Dan Edelman, below, Vice President & UK General Manager, Merchant Services at American Express
The past few years have seen the UK’s small retailers confronted with a seemingly unrelenting stream of challenges. The lasting effects of the pandemic, rising inflation and costs, labour market shortages and supply chain disruption are continuing to present a tough trading environment.
But as we’ve seen countless times before, the UK’s small retailers are nimble, resilient and by no means shy to a challenge. When the pandemic hit, many pivoted almost overnight – and we know many continue to adapt at pace in order to grow. But retailers can’t afford to take their foot off the gas when it comes to finding ways to keep customers coming back for more. Here are three steps small retailers can take to ensure their business is in the best shape for any future challenges:
Tune into changing needs of customers
In tumultuous times, consumer preferences can change quickly – so it is crucial retailers don’t work on assumptions. Taking time to understand what is top of customers’ priority list means small businesses can continue to stay close to them in the months ahead. Recent American Express research[1] demonstrates just how much different shopper groups vary in their priorities and preferences as budgets tighten. For many, value for money is paramount.
Some 92% of consumers reported that cost is key when deciding where to shop, and about half (52%) say they’d like to see retailers offering more loyalty points. So, despite tightening budgets, there is a way to keep customers returning for more.
But value for money is not all that is front of mind of consumers. Four in 10 (41%) surveyed said they prefer to support their local high street rather than shopping online as a way of keeping their carbon footprint to a minimum. It’s clear not every method for fostering brand loyalty comes down to price points – strong environmental credentials are still important to many shoppers regardless of cost. So smaller retailers will do well to hone the environmental credentials of their business and products.
Periods of economic pressure bring with it more laser focused consumers, so small retailers need to understand what will make the biggest difference to the changing needs of their most loyal customer base. After all, it’s often more cost effective to retain existing customers than acquire new ones.
Invest in payments technology
It goes without saying that business leaders will be keeping a close eye on costs to protect their cashflow, invest and manage business expenditure effectively. But staying on top of finances shouldn’t be a daunting exercise – businesses reduce costs by automating their payments processes. This tech gives businesses greater oversight and control over their incomings and outgoings. It can also provide valuable insights on customer shopping behaviour to help inform future business strategy.
And the benefits go beyond the back office. For today’s consumers, especially younger ones, a seamless and secure payments experience is non-negotiable. Our research found that six in 10 (60%) of shoppers would abandon their basket at checkout if their preferred payment wasn’t available, with over four in 10 (42%) of 18–24-year-olds believing they shouldn’t have to enter card details when making an online purchase.
It’s clear that slicker payment solutions can lead to significant dividends for retailers – from repeat purchases to increased brand loyalty – not forgetting the time that can be saved on admin.
Think outside the box
Above all, now is not the time for businesses to batten down the hatches as that approach is unlikely to fuel growth. Those retailers who maintain confidence in their long-term view, look to remain flexible and open to new ideas will be in the strongest position during uncertain times.
For example, exploring new revenue opportunities, such as subscription services, that might offer a sustainable income stream. One in five (20%) consumers surveyed stated they prefer to pay for a regular subscription rather than repeat buying when shopping, showing the potential this model has.
And those with bricks and mortar sites should think about ways to optimise the in-store experience. Our research found that four in 10 (40%) consumers believe in-store shopping is an enjoyable experience that forms a key part of their leisure time. So small retailers should consider what this means for their venue – whether it’s hosting exclusive supplier workshops or spotlighting new and special products.
By using this toolkit, small retailers can set themselves up for future success. There’s no doubt that the outlook is challenging, but equally there are opportunities for the ambitious and determined. Understanding where these opportunities lie and how best to connect with customers will be key.
[1] Data based on survey carried out by Opinium on behalf of American Express in July 2022, of a nationally representative sample of 2000 UK adults.
