Q&A: How retailers can tackle the cost-of-living crisis
Businesses need to find ways to offer consumers lower costs while saving on their own operations, says Lars Veul, CEO and co-founder of Pargo.
As the economy continues to feel the pinch, businesses need to find ways to offer consumers lower costs while saving on their own operations, says Lars Veul, CEO and co-founder of Pargo, a smart logistics platform that simplifies online delivery through its tech-enabled network of Pargo access points.
The financial pinch of disrupted global supply chains is also hurting consumers’ pockets. While analysts predict inflation may drop slightly from 2022 levels, citizens are still having to pay high fuel and energy prices, with the National Energy Regulator of South Africa announcing in January it had approved an 18.65% electricity tariff hike for Eskom, Veul says.
How are online retailers supporting consumers?
It stands to reason that retailers are feeling the effects of people’s reduced spending power, yet even in these difficult trading conditions many are managing to weather the storm. Successful businesses are doing so by understanding exactly what their customers want and doing whatever it takes to ensure they get it – at a price they can afford. Online retail provides plenty of scope to achieve this, particularly so for smaller businesses able to access internet marketplaces and e-commerce platforms easily and cost-effectively.
Among other reasons such as convenience and accessibility, online retail has become popular for consumers because discounts and savings abound. In fact, studies have shown that more than 64% of online customers wait to buy items until they go on sale. Some 30% sign up for email notifications for when item prices drop. But in order for retailers to pass on lower prices to their customers, they also need to make sure that costs are kept down in their own businesses without sacrificing on any of quality offered to consumers.
What business efficiencies are being deployed by online traders?
Those ecommerce traders that are doing well amid the crunch tend to follow a few basic rules. One of them is to get rid of old stock. Old stock is a noose around any business’s neck. It ties up money that could be invested elsewhere, but also depreciates rapidly, particularly as newer and better items swamp the market constantly. They also know what their customers want. It’s no good ordering and warehousing items that sit there for months like some sad old bag of potting soil in the garage that never gets used. Too many retailers think they know what customers want, instead of knowing what they want. Researching desired items is non-negotiable.
Thirdly, they optimise the delivery process. It is well known that last-mile delivery of goods is costly. It also frequently does not go according to plan, with couriers getting lost or breaking down, necessitating repeat deliveries which add to expenses and leave customers seething. One of the great ways to save on last-mile delivery is by going the click & collect route. Customers simply order an item online and then pick it up from a designated pickup point.
What is the impact of tech smart first?
Technology has opened so many doors to so many. One of the big impacts has been the ability for businesses to collaborate effectively through these innovations. For example, many mobile networks are now offering credit to customers thanks to partnerships with online finance specialists. By doing so they are accessing entirely new markets, particularly those whose spending power may not be as great.
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