Life as a retailer can be thrilling and rewarding, but it also comes with its share of curveballs. According to data from more than 13,000 retail business owners on Shopify, including over 800 from Australia, these obstacles range from fluctuating consumer spending, rising overhead costs, supply chain disruptions and employee turnover.
But with the right tools and strategies, these obstacles can also become opportunities for growth and innovation. Here is how you can tackle four of today’s biggest retail challenges:
One in three Australian retailers are optimistic about consumer spending
Retail is often described as an industry of peaks and troughs, with the most sustainable businesses finding ways to maximise the peaks while minimising the troughs. Just like a holiday resort that spends the off-season making renovations, retailers should consider what they can focus on right now to maximise the next peak.
Review customer-facing properties to identify where the experience is strong and where it could use a little improvement. Areas to focus attention on include search functionality, site navigation and checkout speed.
It’s important shoppers can easily find the products they want to buy on your site. This can mean checking that your website’s search function is easy to use and returns relevant results. Shopify’s AI-powered semantic search feature can help in this regard, accurately interpreting shopper intent even if their query doesn’t match exact keywords. Advanced search functionality can also show them relevant recommendations that complement that particular item.
A high-performing checkout that minimises friction is also important. Ideally, customers should be able to review their order, add shipping information and make payment on a single page. Fast checkout is critical – in fact, BCG research found offering accelerated payment options like Apple Pay, Google Pay or Shop Pay can increase conversion rates by up to 50%.
Access to funding is an issue for 40% of Australian retail entrepreneurs, while 66% are concerned about interest rates
Financial pressures and funding challenges complicate efforts to maintain liquidity, which is why staying on top of cash flow is vital. It ensures you can identify potential gaps early and budget for growth initiatives. It also means you have more options at your disposal if you need to borrow money.
Effective cash flow management starts with forecasting your business’s inflows and outflows. Retailers should regularly review their inventory to determine which items are in demand and discount slow-moving stock. Instead of buying equipment outright, leasing can free up needed cash, while prompt invoicing can speed up receivables. Negotiating better supplier terms and early payment discounts can also be beneficial.
When it comes to securing additional funding, make sure to do your research and carefully evaluate the fine print. Financing programs like Shopify Capital, which process funds in a matter of days, don’t involve credit checks and don’t take in equity from the business, can be a more flexible option. Shopify Capital also allows for automatic payments that are set as a percentage of daily sales so you don’t fall into the risk of paying back more than you earn.
46% of retail entrepreneurs are concerned about supply chain disruptions
Supply chain challenges can be a result of conflict, climate issues, budget cuts, labour shortages and financial downturns, which combine to create an unpredictable landscape. One way to adapt to the risk of delays is to hold more inventory—but this requires constant balance. Overstocking can drive up storage costs, so it’s important to track sales data and forecast your inventory based on customer demand.
Diversifying product sources is another way to manage supply chain issues. Sourcing from multiple suppliers across geographies can help minimise disruptions caused by global events. Keeping up with news related to regions where your products are made means you can pivot early if there is a potential disruption to the manufacturing timeline – you can even create a Google Alert for daily updates if disruption seems likely.
Digitising supply chains can also help streamline operations. Radio-frequency identification (RFID) tags, barcode systems and inventory management software can make it easier to track stock levels, movements and locations in real time. Automatic reordering helps to ensure a steady influx of products while AI-driven analytics can help you predict product demand.
Access to skilled personnel is an issue for 22% of retail entrepreneurs
When it comes to plugging talent gaps and creating a satisfying work environment, technology can be a great way to empower employees and make their jobs easier. Shopify Sidekick, a first-of-its-kind AI-enabled commerce assistant, can support teams with everything from setting up shipping to keeping track of inventory. Other solutions like Media Editor, Product Descriptions or Product Taxonomy help with generating images, copy or product categorisation in a few simple steps.
There are tasks that need attention from a real person – working with partners or consultants can be a good way to plug skills gaps in situations like those. Shopify has over 100,000 partners globally that help businesses handle everything from store setups and custom integrations to full-scale business transformation.
Ultimately, in the ever-evolving world of retail, entrepreneurs face many challenges that demand adaptability. However, these obstacles present opportunities for creativity and innovation. By remaining nimble and leveraging the right tools, you can not only weather the storms but thrive.
Shaun Broughton is managing director of APAC at Shopify.