Strategies for retailers to beat the cost-of-living crisis

Retailers are facing severe challenges in the current climate. The cost-of-living crisis has led to the vast majority of consumers cutting back on their discretionary spending, particularly for the kind of impulse and luxury items that many smaller retailers specialise in.

At the same time, with budgets so tight and concerns such as sustainability more prominent than ever, consumers have increasingly high expectations of the businesses they shop at and retailers that do not meet these standards or that do not seem to offer value for money are likely to lose out on their custom.

With these things in mind, small retailers need to think hard about what measures they can take to attract customers in such a tough environment. Here are just a few steps that retailers can take to attract and retain customers amid cost-of-living concerns and growing expectations.

Customer loyalty schemes
They may be a strategy nearly as old as retail itself, but customer loyalty schemes can still be highly effective ways of attracting and retaining customers, especially at a time when value for money is of paramount concern to many consumers.

As the name suggests, loyalty schemes reward customers for sticking with businesses and continuing to bring them their custom. As opposed to other value-driven schemes such as vouchers, loyalty schemes can have a personalised touch that makes customers feel that their connection with the business is truly appreciated.

Of course, with technology now integral to the shopping experience, retailers should also look to incorporate technology into their loyalty schemes. It doesn’t need to be cutting edge, but something as simple and easy to set up as a loyalty app can make the process seamless, enabling customers to easily unlock rewards and promotions, browse things that are on offer through the loyalty scheme and set preferences for things such as products they’re interested in and delivery methods or times that work for them.

Get the pricing right
Naturally, the main things customers are looking for at times like these are low prices (not that they’ll be willing to skimp too much on quality, of course). For that reason, retailers need to ensure they are pricing their goods competitively, otherwise customers will find rival businesses that are.

Competitive pricing, however, doesn’t just mean ruthlessly undercutting the competition at every available opportunity, as this will never be a sustainable long-term strategy. It instead requires intense focus on how goods are priced, bearing in mind factors such as the cost of making them and their overall value, what rival businesses are charging for similar products and wider consumer spending sentiment.

In a nutshell, competitive pricing means finding areas where prices can be lowered in a sustainable way that is attractive to customers and still reflects the value of the product. While many retailers will, understandably, be hesitant about lowering their prices, doing so diligently can deliver enormous value over time, particularly when customers are on the lookout for value for money.

Data-driven insights
As mentioned earlier, technology is integral to retail in the modern age and, in the current climate, businesses can scarcely afford not to use it to their advantage. Even utilising simple data science tools can help to drive incredibly valuable insights from data, which can then be used to drive more efficient decision making.

This may sound incredibly high-tech to some, but there are a wealth of third-party providers that can providing such tools, with many offering pricing structures that mean they are accessible even to smaller businesses.

When businesses begin utilising data to gain actionable, up-to-date insights on customer behaviour, they can become more agile and respond more effectively to emerging trends. Again, particularly during the cost-of-living crisis, businesses need to be ahead of the curve and spot customer behaviour trends as they begin to take shape.

Focus on ESG
It may not seem like ESG (Environmental, Social and Governance) would be a primary concern to smaller retailers struggling with dampened consumer confidence, but placing an emphasis on ESG-related concerns can be a highly valuable strategy.

Despite the rising cost-of-living, a growing number of customers are willing to pay more for products that are sustainable and to shop at businesses whose values reflect their own, so businesses that don’t prioritise these things could be losing out.

Some simple ESG-related steps that small retailers can take include paying fair wages to staff, performing supply chain due diligence to ensure suppliers are not operating unsustainably or unethically and near-sourcing supply chains to help reduce carbon footprint.

While some ESG-related measures may require investment on the part of the business, other things (such as a more slimmed-down, local supply chain) can in fact help to drastically reduce costs. These things, combined with the positive impact such measures will have on brand image in the eyes of consumers, mean that prioritising ESG can help to deliver significant value to any business.