Five Ways to Boost Productivity of SME Retailers

Oh the woes of the SME retail sector in Singapore. I’m sure you’ve read or heard about them.

Demanding consumers. Price competition. Sky high rentals. Relentless staff turnover (up to 300% a year in extreme cases). Difficulty in hiring. Competition from big chains. Rising utility costs. Increasing costs of goods. Growing transportation costs.

The list of problems faced by SME retailers is seemingly endless.

In what could be the last straw that broke the camel’s back, we’ve just read news (3 Nov 2016) that e-commerce giant Amazon and Alibaba-backed Lazada are making huge moves to Singapore.

Amazon is likely to use Singapore as a springboard into the South East Asian region and may roll out “its Prime delivery service and AmazonFresh grocery service, perhaps as soon as early 2017. Meanwhile, the acquisition of online grocer RedMart by Lazada (which Alibaba has a controlling stake) showed that the China e-commerce giant is serious about expanding in SEA.

Without access to resources, small retailers find it difficult to “out-advertise” or “out-cool” foreign multi-national brands. Lacking the finances to create sufficient mindshare and heartshare, they depend heavily on their landlords to drive traffic to their premises.

Eliminated by E-Commerce

The last straw breaking traditional retailers’ backs is the tag-team of social media and online retailing. Here, the modus operandi of web-savvy shoppers goes like this:

1) Browse their friends’ Instagram, Facebook or Pinterest photos. Make mental note of how gorgeous that dress, cupcake, or holiday vacation looked.

2) Go window shopping at malls to see how the product looks like.

3) Use smartphone to take a photo of the desired product. This should include the price tag and barcodes if necessary. Try for the right size. Thereafter, politely and sweetly inform retail assistant that “its just not my style, so sorry”.

4) Once away from the shop, browse the web via “Google” to do a comparison of prices available at online retailers. If necessary use one of the multiple useful apps to check.

5) Purchase the product online at sites like Amazon, Lazada, Qoo10, Zalora, vividoll or many others;

6) Wait expectantly for the delivery to arrive with a gleeful smile on one’s face, knowing how much one has saved.

(While the above scenario may sound far-fetched, reality may be more shocking than fiction.)

What can small retailers do to arrest these alarming trends?

Social Storytelling

First and foremost, you need to create your own story. What was the purpose of your business? What drove you to throw caution to the winds and strike it out? Was there a dream or goal which moved you? Were you inspired by a personality or a childhood hero?

Think too about your product or service. How can it help make your customer’s lives better? Where can your customers use this product? How does it fit into the broader overall contexts of their lives?

Once you’ve nailed down these narratives, create social properties – a blog, Facebook fanpage, Twitter account, YouTube channel, Instagram or Pinterest account – to share them in their multi-media glory. Listen to what others are saying, participate in their conversations and gently nudge them towards your social platforms.

Don’t languish in self pity while online retailers steal your lunch. If you can’t beat them, join them – at least in creating an online presence.

Compelling Culture

While money (or the lack thereof) has often been cited as a reason for retail staff to leave in a hurry, renowned psychologist Daniel Pink has shown that the top three motivators are autonomy, mastery and purpose. Instead of barking at your staff (or yourself) to move faster, smile more, or clean up more quickly, tap into the deeper drivers of human motivation.

Position yourself more as a mentor or coach rather than a boss. Instead of telling your crew how to do it, show them by demonstrating how it should be done. Give your employees some flexibility and empower them to exercise initiative. Use humour – rather than intimidation – to get a point across.

The best example of a great company culture probably comes from Zappos. Their core values like “Deliver WOW through Service” and “Build Open and Honest Relationships with Communication” are worthy to emulate amongst businesses of any size. And no, they don’t operate with tightly worded robotic scripts.

Surprising Service

Next, consider ways to provide outstanding customer service which amazes and amuses – in a positive way. Pour your heart and soul into your business (ala Howard Schultz of Starbucks). Be attentive without overwhelming your customer (or scaring the wits out of him/her).

Make every effort to remember your customers – their names, stuff that they like, family members, and so on. Small shops are great for small talk, especially on quieter days. Instead of wearing a scowl because you’ve got so few customers, wear a big smile and show the customer how appreciative you are of him or her.

Ban all smartphone usage whenever you’re “on the floor”. Nothing peeves a customer more than seeing a disinterested service personnel peering into a phone instead of looking at him/her!

Optimise Supply, Demand and Fulfillment

Where possible, find ways to optimise your supply and demand chains. Use technology like Enterprise Resource Planning (ERP) systems to link customer purchases directly to your inventory management system while automating the buying process.

In a similar fashion, Purchase Orders (POs), invoices, goods receipt, and payments can be integrated automatically without the need for painful (and manual) paperwork. Hopefully, this can help your staff to focus on serving and selling.

Major retailers in the US like Wal-Mart, Target, and Office Depot have such well-oiled supply chains that their Point Of Sales (POS) systems are integrated all the way backwards to their warehouses, distributors, and even manufacturers. Naturally, cost would be a major concern here. While SAP and Oracle systems may cost a bomb, there are cheaper cloud-based “subscription” options available.

Form Alliances to Share Resources

Finally, and perhaps most significantly, band together with other SMEs – retailers, suppliers, partners and so on. While a single wooden chop stick can be easily broken, a bunch of them are nearly impossible to break.

There are numerous partnership models you can consider – from the more tightly integrated joint ventures to franchises, groupings and shared services that undertake joint activities. This can be anything from the purchase of supplies and goods to HR and training, finance, IT, marketing to estates and security services. Doing so may help you to achieve greater economies of scale while leveraging on the strengths of a network of like-minded businesses.

Do you have other ideas on boosting productivity for SME retailers?

If only the crowds will come without a sale!