Challenges in the retail industry and how to overcome them

The Swiss retail sector is one of the most advanced in Europe and is therefore very competitive and broadly positioned in terms of products and services.

According to the Swiss Business Register (Damn it!At the end of 2020, there were approximately 580,000 registered companies in Switzerland. Of these, 99% are small and medium-sized enterprises (SMEs) with fewer than 250 employees. It should be noted that many businesses are not registered, such as self-employed individuals or owners of small trades.

In general, SMEs are a significant part of the Swiss economy. They represent the vast majority of companies in the country and generate a large share of jobs and prosperity.

Like many SMEs in the rest of the world, e-commerce has arrived in Switzerland in recent years and is here to stay. Competition in this sector is fiercer than ever, and retailers are constantly struggling to adapt to changing consumer preferences and new market trends.

As a specialized retail service provider, we are committed to informing our customers about how they can prepare and develop strategies to overcome these challenges.

Furthermore, by understanding the challenges in the retail industry, retailers can identify opportunities for innovation and growth to remain competitive and relevant in the market.

Below, we present the five most common problems and show how to overcome them. Read to the end, because we’ll also tell you why ERP is your best partner in these situations.

Challenge 1: High competition and market saturation

Switzerland is a relatively small country, so retailers compete for the same customers. Besides the large number of SMEs, there are also international retail chains that can offer competitive prices.

Competition and market saturation make it difficult for smaller companies to stand out from the crowd and attract new customers. This, in turn, makes it difficult for companies to set prices, expand, and grow.

To successfully counter competition and market saturation, we recommend a creative and strategic approach based on three measures:

1. Strive for excellent customer service. Before acquiring new customers, get to know your existing customers as well as possible and win them over. This will help build a loyal customer base. Satisfied customers will gradually become brand ambassadors and attract new contacts.
2. Digitize and innovate every day. Implementing digital technologies to improve your online presence is essential, as is innovating products or services and internal processes. Otherwise, it’s impossible to improve your competitiveness and position yourself in the market.
3. Try differentiating your offering and/or focusing on a niche. As an SME, you can try offering unique or specialized products or services that aren’t readily available elsewhere. Concentrating on specific niche markets to appeal to customers with particular needs is also a good alternative.

Challenge 2: Changing consumption habits

The internet and the online retail revolution have significantly changed consumer behavior in Switzerland as well.

Today’s consumers take things like fast and flexible delivery or price reductions for granted. Therefore, these companies must improve their workflows and adapt to these new demands in order to remain competitive.

To constantly adapt to changing consumption patterns and customer experiences, companies should:

1. Offer a multi-channel experience, meaning a seamless shopping experience without having to jump from one sales channel to another.
2. Make every customer feel special. Personalization at every stage of the buying process is key to getting customers to return.
3. Define goals and stick to them as a sign of commitment to the mission and vision of the company.

Challenge 3: Progressive digitalization

Digitalization also presents a challenge for the retail sector. This is primarily because it’s a marathon race that demands time and resources. This applies not only to competition (digitalization has removed many of the barriers to entry for any business) and the need for constant updates, but also to the risks and dangers associated with data protection and cybersecurity.

In our case, we meet this challenge with the following strategies:

• Invest in training and education. Regular professional development not only helps us understand the technology and use it effectively, but also keeps us up to date with new developments and threats.
• Implement security and data protection measures. To protect the privacy and security of employees and customers, guidelines for measures and protection against potential attacks and cyber threats must be established.
• Collaboration with other companies and organizations to tackle the challenges of digitalization as a community.

Challenge 4: The complexity of logistics and supply chains

More specific requirements and greater logistical complexity have increased pressure on the supply chain. This makes management and control more difficult, as tracking and tracing become more challenging and require more flexibility. Furthermore, costs and risks increase, including those resulting from delays or losses.

To meet this challenge, we recommend:

• Supply chain optimization: Technologies and processes can be used to improve the efficiency of the supply chain and reduce costs.
• The use of efficient technologies to improve transparency. After all, transparency in the supply chain is essential for identifying and resolving problems.
• Implementation of environmentally friendly practices. Sustainable approaches can not only reduce negative environmental impacts but also increase efficiency and contribute to cost reduction.
• Take a proactive approach to anticipate potential supply chain disruptions and seek alternatives before serious problems arise.

Challenge 5: Personalization and Customer Loyalty

The challenge of customer personalization and retention stems from the fact that today’s consumers demand products and services tailored to their individual preferences.

Global competition has increased the need to differentiate oneself and build lasting customer relationships. A lack of personalization and loyalty can lead to losing customers to competitors who offer tailored experiences, which is why it would be advisable to address this challenge with the following measures:

• Collect customer information to get to know your customers as well as possible and tailor the customer experience. Modern technologies such as machine learning and artificial intelligence can help with data analysis and pattern recognition.
• Keep an eye on customer service. Excellent customer service that exceeds all expectations can be a decisive factor in customer loyalty.
• Offer incentives: Incentives such as loyalty programs and discounts promote loyalty and bind the customer to a certain degree.

Why ERP is the best ally of retailers in overcoming their challenges

In most parts of the world, retailers are superheroes who keep the economy going, but they’re also human, and they get tired. And believe it or not, they almost never take vacations. We know this because we work closely with our customers at Data Unit.

We wanted to lend you a hand. And as you know, we partnered with Smartera to tackle many of these challenges once and for all.

If you’ve made it this far and are disappointed to find that renting a tool is the solution, we’re sorry. Anyone who tells you it’s possible to make money without investing resources is lying. Yes, it might be possible to make money if you’re an expert in a particular field, but if you run an e-commerce business, you’ll need to invest time and money to see any return.

An ERP system is the tool to overcome these challenges by providing an integrated and centralized platform that enables process automation, improved visibility, optimized inventory management, fewer errors and inconsistencies, and informed decision-making and analysis.

With an ERP system like SAP Business One from DATA UNIT, you can centralize and automate all your business processes on a single platform. You’ll be able to develop a connected strategy to mitigate the impact of competition and market saturation, changing consumer patterns, constant digitalization, the complexity of logistics and supply chains, and the need for personalization and customer loyalty. We’ve already done this and have experts in various fields who can adapt to your specific needs. This will help you more easily overcome the challenges of the retail industry.