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Where Do the Growth Opportunities Lie for Independent Retailers in 2024?

Written by Rob Stott

March 4, 2024

You’d be hard pressed to find a more confusing time to be involved in the world of Independent retail — let alone economics — than what we’re currently living in and through. The past 12-18 months have taken everyone in this industry on an incredible roller coaster ride that’s seen a number of highs, plenty of downward twists and even a few loop-de-loops.

On paper, 2023 was a year that most would like to turn the page on and forget. Across the board, the industry was somewhere between flat and down in many major economic indicators. But here’s the thing — we’re comparing last year to a period that saw some pretty historic consumer spending. So, while the books might look red year-over-year, it’s important to keep that perspective in place and understand that we’re really returning to normal.

Of course, interest rates were on a record-setting streak of their own, and consumer savings continued to tighten over the course of the year. Meanwhile, demand for housing has remained elevated, and consumer non-housing debt continues to rise. The mixed signals the economy is sending are worse than a love-story arc in a high school romcom.

Regardless, what’s been inspiring to watch is the fact that both the consumer and the Independent retailer have powered through all of the noise that’s out there and the doomsday-like reports on the economy. While it feels like the “R-word” has been brought up at every possible turn, consumers are still spending, and Independent retailers are proving to still be as resilient as ever.

With that said, what’s the outlook for 2024, and what areas of the business should you be focusing on as you look to continue to grow? Let’s look at a few areas.

BACK TO BASICS

Getting “back to the basics” is a refrain that’s been used plenty in the Independent retail channel, especially during the height of the pandemic in late 2020. But it’s one that will continue to ring true when the times seem to be a little more difficult than normal.

But what does that mean? What are the basics of running an Independent retail operation?

Simply put, it means investing in the areas of business that are proven traffic drivers. Big Box stores have ramped up their efforts to drive foot traffic by slashing prices, which means the Independent channel needs to do its part to fight for those same consumers. Here are some ideas to help get you started.

1. MARKETING

The biggest and most effective tool that you have in your arsenal is marketing and advertising.

“When business is tough, foot traffic isn’t coming through the door and consumers aren’t buying premium product, it’s easy to go, ‘Hey, you know what? I’m not going to advertise. I’m going to save my way out of this thing,’” says Patrick Maloney, executive vice president of Membership for Nationwide Marketing Group. “However, the retailers who were successful over the past year and those who will continue to see success into 2024 and beyond are those who did the exact opposite. They leaned into advertising.”

You have to be out there in the market talking about not only your business but the reasons why your customers should trust you over that Big Box store down the street.

“One of the biggest challenges Independent retailers face is the perception that they can’t buy as great as the big guys, so they’re going to be more expensive or less of a selection. And that simply isn’t the case,” Maloney says. “But you have to tell consumers that. Successful Independents are out in the market every day, addressing the needs of that consumer who could be walking through their door, and showing that not only do they have the product, but they can match that price tag as well.”

But in-stock availability and price — which you can certainly compete on today — are only a portion of the story that you should be telling.

“When you start comparing apples to apples with Big Box, not only can you hit the same price point, but you can deliver so much more value throughout the entire experience,” Maloney says. “But you have to lean into that. Tell the customer how you’ll be able to get that old appliance out for them and then install the new one. Tell them how you’ll be available to them for any future service calls, should they be needed. Lean into the fact that your business is local and has been supporting their neighbors for over 50 years. These are all the advantages you have over that Big Box store, and you should leverage that in every bit of marketing and messaging to potential customers.

2. DIGITAL

Beyond the marketing, there’s no better time than the present to explore ways to improve your online experience. Arguably your most important storefront, your website will be the initial point of contact for over 90 percent of consumers. Are you utilizing all of the digital tools available to you to ensure those customers are left with a great first impression of your business?

At a high level, a top-notch retail website experience today includes:

    • Live inventory and availability information
    • Accurate pricing
    • The option to chat with a representative
    • Ability to purchase product on your site
    • Flexible and alternative payment options

Today’s consumer expects these types of features. Think about your own online shopping habits. You want a seamless experience, free of friction at any point in the purchasing process. That’s the standard. And if you happen to run into any roadblocks as an online shopper, your next action is to go back to square one.

If your website is missing any of those features listed above, you could be missing out on potential new customers.

3. MERCHANDISING

Whether you’re looking at your physical store or your website, having the proper selection of product is just about the furthest back you can go when looking at the basics of retail. We don’t need to tell you why it’s important to understand and recognize what types of products your customers are typically coming in for so that you have those at the ready. That’s Retail 101.

But dive a little deeper into the ins and outs of your merchandising and use this time to develop a plan to sell.

“We know, from the data we’re seeing in our PriMetrix platform, that our Members are buying right,” Maloney says. “They’re focusing on the categories that those consumers are coming in for. But we’ve also had a lot of throughputs on our Assortment Rationalization Tool (ART), which Members have used to take the guesswork out of merchandising. That SKU-level detail can inform them about the types of product moving and price bands that they’re seeing the most success with — and they can use that information to not only stock more efficiently but to also train their frontline sales folks to be more effective.”

And, at a time when it seems like you’re getting fewer at-bats with customers, it’s more important than ever to convert on those opportunities.

BEYOND THE PRODUCTS

But here’s the thing. Members of Nationwide Marketing Group have a number of programs and resources available to help not only improve their “swing” per se, but also convert some of those base hits into grand slams.

The retailers who leaned into these services are the same retailers who saw success over the past year, and they’ll likely be the same retailers who, a year from now, will look back positively on 2024. Here’s how they did it.

1. CONSUMER FINANCING

We mentioned earlier that consumers are saving less while also relying on credit at a higher rate. Nationwide’s data showed, as well, that consumer financing was up in a major way in 2023. It was an area that saw double-digit growth, according to Chris Kirk, senior vice president of business and financial services for the group.

“It’s not too surprising that those zero-interest finance offers resonate right now,” Kirk said in a recent interview on the Independent Thinking Podcast. “If you look at your car rate or your home rate, everything’s gone up. So, if you have a 0 percent offer at 18-24 months, customers are naturally going to be attracted to that. As such, we’ve seen an increase in applications and dollars, and the Members that have leaned into consumer financing by promoting it on their website and offering it in store are having tremendous success with those programs.”

Leveraging the size and scale of the Membership, Nationwide has been able to negotiate some of the strongest rates possible for Independent retailers, ensuring that swipe fees remain low while putting more money back in their pockets. Kirk notes, as well, that strong relationships with the group’s bank partners also play a big role in efforts to build an industry-leading consumer finance program.

“The power of the group is really just aggregating all of the Members and their volume and collectively going as one voice to our bank partners. And they truly are partners,” he says. “Synchrony and Wells Fargo do a great job with us in figuring out what’s best for the Members when it comes to handling these rates. No one likes to give rate hikes, no one likes to receive rate hikes, but we mitigate those as much as possible, and we’re able to use our billions of dollars in finance power to negotiate and hold out those rates as long as we possibly can.”

2. WATERFALL PROGRAMS

One of the challenges with credit usage rates being at a pretty historic level is that consumers are carrying significantly more debt than ever before. And that means approval rates will take a hit. Nationwide has worked with its bank partners to ensure that those customers who have difficulty getting qualified can still get that replacement washer or refrigerator. These waterfall programs are frictionless for the customer — and the retailer — and enable that individual to get approval in a dignified, stress-free manor.

We’ve worked hard with Synchrony and Wells to set up programs that will automatically give the customer an option to kick to a secondary or tertiary lender, if don’t qualify with a primary lender,” Kirk explains. “There’s a stigma out there around secondary and tertiary lending, but it’s going to become more and more important that Members consider having this option available for customers who need to make a purchase.”

3. PRODUCT PROTECTION

If warranty programs are an area that you haven’t previously leaned into, there’s no better time than the present to explore these programs. While they might feel like a difficult pitch to make to a customer who’s working with a tight budget, there’s a way to turn the conversation into one that actually improves that customer’s experience and increases their trust in you as a business partner.

“Still not too far removed from COVID, I’m concerned, and I think the industry’s concerned, about the parts and labor that built some of those products,” Kirk says. “Manufacturers will tell you that they got whatever part they could get, whatever switchboard they had, anybody they could on working on the line, putting those pieces together, and they got the products out.

But knowing all that feels like a great opportunity to increase your product protection attachment rate, and there’s a huge margin opportunity for Members who really embrace product protection and offer an extended warranties on all their products.”

Not to mention, you’re offering the customer the assurance that if something were to happen to that expensive new appliance or piece of furniture they just purchased — most likely under duress — they’d be covered from having to make another major purchase.

FILL UP YOUR TOOLBOX

While we’ve highlighted a number of business and financial services programs that are available to Nationwide Members, we truly only scratched the surface. There are over 100 different programs and offerings at your disposal, ready to help you save money, drive new revenue and streamline the way you run your business in 2024 and beyond. Some others include:

  • Digital price tags: A great way to save money and time involved with printing paper tags, and a phenomenal tool that improves the omnichannel experience between your website and physical location.
  • Service Leaders Network: Similar to product protection, consumers are increasingly turning to appliance service repair teams to get their product fixed. Explore possibly expanding into the service category or lean on SLN to find ways to make your existing service department run more smoothly.
  • Connected Services: Are you overpaying for phone and internet at your store? Is your business protected from potential hacking? Nationwide’s Connected Services team can help you answer those questions and more.

The list goes on.

Whatever the approach you take to evolving your business in 2024, what remains clear and obvious is that change is necessary. It’s one of the biggest advantages Independent retailers have always had over Big Box competitors — the ability to evolve and pivot on a dime.

Don’t stand still for the next 12 months and wait for what economists have been predicting and expect to just weather the storm. Do what you’ve always done. Fight like hell to not only survive but THRIVE this year — and well into the future.

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