The impact that the pandemic has had on the retail sector has been uneven. Supermarkets, for example, saw a rise in sales where brick-and-mortar clothing store sales dropped. Service-related businesses, such as your local hairdresser, are likely seeing different KPI trends than, say, your local chemist.
We know this not just on an observational level, but on a data processing level. This year, along with the Retail Thrive Guide, we revealed trends in New Zealand’s retail sector acknowledging that specific areas performed strongly in COVID, and others were severely impacted. These insights go hand-in-hand with the guide, which is now in its 3rd year of publication. Both resources provide a detailed look at the unique circumstances and challenges the retail sector faced in the past year and shares insights on the sector’s future as well as opportunities for growth.
Now that the dust is settling and we’re becoming more comfortable in the new normal, the financial year is also coming to an end and a new one is just around the corner. In other words, it’s the perfect time to take a step back, reflect, and plan so you can seize the year ahead. Whether your retail business saw sales sky-rocket, or you’re in want for growth opportunities to recover revenue, our specialist business advisers in the retail team have collected five top tips to help retail businesses excel post-COVID-disruption.
Create a Business Plan
Your business plan is heavily linked to your budget, KPIs, and goals, which makes it critical to the success of your business.
Many business owners feel intimidated by the process of creating one, and this is understandable, as it can take up valuable resources. Contrary to popular belief, however, a business plan doesn’t have to be a long-winded exercise or an intimidating 10-pager document! In fact, we encourage creating 1-page plans as a starting point to simplify and streamline the process.
When creating your business plan, make sure that it covers the following:
- goals for the year,
- important strategies to achieve set goals, and
- KPIs or set measurements that determine whether or not your goals have been achieved (measurable on daily, weekly, or monthly basis).
At BDO, we regularly provide business planning workshops for our clients. These tried-and-tested workshops focus on providing a straightforward business planning structure and is incredibly valuable for those who are unfamiliar with this process. If you would like to discuss a tailored business planning session for your business, please get in touch with our retail team.
Finally, it’s important to remember that a business plan is not a one-and-done task. In fact, planning is a cycle. It begins with (1) reflecting on what happened, then (2) reaching a conclusion on what did and didn’t work. (3) Plan creation can then begin after initial deliberation, and then once you’re happy with it, you can (4) put actions in place to achieve the plan. After some time, the cycle can begin again.
Treating business planning as a cycle instead of a static document ensures that you continuously refine your business to meet changing market demands or to adapt to external circumstances, such as a worldwide pandemic.
Do a SWOT Analysis
A SWOT analysis is an objective and detailed look at a retailer’s Strengths and Weaknesses (internal), and Opportunities and Threats (external). It will play a big role in crafting your business plan.
In this year’s Retail Thrive Guide, we’ve provided some retail-specific examples of potential SWOTs. Your strengths or weaknesses could lie in your product, purchasing system, or quality control. Opportunities are likely to lie in customer satisfaction and market share improvement, and an example of a threat would be a nationwide lockdown.
Read our Retail Thrive Guide for more.
Focus on Customer Experience
When it comes to improving customer experience, there are two key strategies for retailers to focus on:
- Recovering revenue. Study your customers. Look at how they’re buying from you and interacting with you, and then look for opportunities to do things differently.
- Re-tooling for a digital offering. Lockdowns are inevitable and unpredictable. Make sure your website, online shopping experience, social medial platforms, etc., are all optimised so your customers can continue to interact with your business digitally.
Excellent customer service, regardless of how your customer is interacting with your business, will ultimately lift and boost revenue. An example of providing great customer experience is sending out regular emails. It’s an easy way to keep in touch with your core customers and let them know what’s happening in case there’s a temporary or permanent change in the way you need to do business.
Set SMART Goals
SMART goals are Specific, Measurable, Achievable, Relevant, and Timely. These are not only applicable to performance goals, but for overall business plans as well. In fact, here at BDO, this is also something we use for our staff.
Setting SMART goals also means condensing your list to one to three goals for the year, not a hundred. Additionally, try to make room for flexibility in your goals, and to focus on ticking them off as the year progresses.
Goals don’t need to be hard and complicated. They can be simple and still be effective.
Minimise Risk
Lastly, make sure to look at the key risks in your business and evaluate whether there’s anything you can do to minimise those risks.
In this year’s Retail Guide, we highlight two prominent risks currently relevant to the sector:
- Supply chain risks. Where are your products coming from? Do you need to order stock earlier or order more at a time, and are you prepared for the cashflow impact? Is it possible to switch to alternative suppliers that are more local? How would your customers feel about that?
- COVID preparedness. This has been an ongoing theme in this article because it cannot be underestimated. Besides the fact that everything could change very quickly with a lockdown, the pandemic highlighted that we are an interlinked community, and we’ve all got a part to play. Consumers are more vigilant than ever about how businesses respond to the socio-political climate.
Conculsion
You may think: it’s all well and good to go with a plan, but what if things change?
As previously mentioned, your business plan is not a one-and-done document. Instead, treat it as a framework. Many things will change along the way, some of which you won’t expect, so anticipate making some tweaks or total revisions as you need to. You’ll find that you’re able to react much faster than if you don’t have a framework in place.
Last year, at the height of COVID-19, we worked with a lot of clients who did have plans in place, but not many of them prepared for total lockdown. However, with the base plan in hand, they were able to quickly make necessary tweaks and even some big changes to respond to the market.
Ultimately, your business plan is a good place to work from, so you don’t have to start from zero. The first quarter is the best time to plan the next financial year, so we encourage all our clients and others in the sector to start putting a business planning session in motion.
If you want more in-depth information, please download and read our 2021 Retail Thrive Guide, as it goes into much more detail. It is practical and easy to read and skim through so you can find the sections relevant to you. If you have further questions or want further help, don’t hesitate to get in touch with the BDO retail team.