By Nicole Leinbach
Inflation is rising, and both retailers and customers are feeling the pain. It’s become increasingly clear over the last six months that inflation could remain into next year, with some experts even thinking it may continue beyond that. As a result, retailers across all categories must acknowledge the realities of record inflation. This means developing solutions to retain customers, sustain their businesses, and even plan for long-term growth.
To help your store combat the frustrations and challenges of inflation, consider the following tips.
Make Bold Yet Deliberate Decisions to Adjust Inventory Categories
Change can be hard, particularly when you have historically found success in what you need to now consider changing. But as inflation continues and consumers adjust their spending patterns, it’s critical that you evaluate your current inventory assortment. You will likely need to pivot your budget to increase purchases in some categories, while cutting back in others. One valuable gauge is how long products are lingering on your shelves. Retail expert Cathy Wagner, founder of RetailMAVENS.com and a frequent speaker at a variety of independent retail events, said inventory should “never celebrate a birthday.” But are half birthdays or even monthly nods to aging inventory considered a problem?
“The length of time inventory should be in a store will vary considerably depending on what it is, but apparel, accessories, footwear, seasonal home goods, and trending gift items are all examples of inventory that needs to move, move, move at a quick pace from your store shelves,” Wagner explained. Keeping this in mind, retailers should adapt inventory assortment to keep merchandise moving out the door.
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Strategies to Curb Inflation Woes
• Consider private label or less expensive alternatives to major brands for your inventory assortment. Consumers are making these adjustments so, for some of your inventory, this may be a way to tackle inflation.
• Identify inventory categories facing the greatest inflation, then compare this data to your own store insight. React accordingly, introducing entirely new products and categories, and pausing or canceling orders of items that are no longer producing the profit margin they did in the past.
• Review customer preferences by communicating with your existing customers on what they want from your store. Through emails, social media polls, in-store conversations, and more, identify how your target customers are reacting to inflation and spending. Don’t forget to ask them what they’d like to see or not see in your store. Resilient retailers are those bold enough to make these changes, even when it tugs at their own heartstrings.
Offer Lower-Priced Luxury
With Americans still spending despite the frustrations of rising costs of goods, consider how offering higher-end goods at lower price points can benefit your business. Wagner suggests that perception is the key here.
“Customers know inflation is at a high right now, but what they don’t know is how much you have invested into your inventory. Leverage this to your advantage by promoting certain items or experiences as luxury or higher-end, but offer these same experiences or products at a rate that is presumed more affordable. Your choice of marketing, communication, and overall presentation of these items or experiences is what will be perceived as higher-valued, even if you know you have a lower investment and higher margin on these same offerings,” Wagner explained.
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