Sales, Customers and Employees: More of the Same? Definitely Not.

Month of July

While sales in China could slow down in the coming months as a result of the tariff war between that country and the United States, in Spain the situation seems to be the reverse, sales are growing, even more than the EU average. The discussion of whether or not all customers are equal, when it comes to how the company treats them, is interesting, and although it has always been said that they (customers) are always right, there are already those who believe that there has to be differentiation in order to define a better target among them. The same goes for employees, but the other way around. Here the argument is that all employees are important and that, without investment in them, the business can be negatively impacted by poor productivity and lack of motivation to improve their sales strategy.


Even as Western importers and wholesalers are dealing with the bizarre world of tariffs and duties, their counterparts on the retail side are continuing to find China an inhospitable world in which to set up shop.


Big box stores like Sears and Kmart have been closing in Minnesota and around the country. According to Coresight Research, U.S. retailers have announced more than 7,150 store closures so far in 2019 — well above the number at this time last year.


China’s retail sales are expected to grow at a slower than anticipated pace and would now overtake the United States only in 2021 as the trade war between Beijing and Washington takes a toll on demand in the Asian country, according to market researcher eMarketer.


Since the mid-2000s, I have made the argument that retailers must stop thinking in terms of their stores and, instead, embrace the concept of an ecosystem. I first wrote about the concept in this 2013 research paper. Fast-forward to 2016, and Jack Ma, chairman of Alibaba, coined the term “the New Retail” to express how he and Alibaba CEO Daniel Zhang and his team, would build the Alibaba Group ecosystem by first integrating online and offline through technology.


Overstock is making a bold transformation into a blockchain company, but its plans hit a snag last year. Efforts to sell the retail business have recently heated up, CEO Patrick Byrne told CNN Business. A sale of the retail business, which is rapidly returning to profitability, would leave the e-commerce pioneer as a blockchain-focused company and with a new name.


Many retailers have been operating in mediocrity for decades. Their focus on minimizing labor costs has led to bad jobs, high employee turnover, and unreliable attendance. This labor instability — combined with out-of-touch decisions from the silos at headquarters — leads to poorly run stores. 


There has been a visible decline in the health of Britain’s high streets over the past few years. Fewer shoppers are spending money at shops, instead using the internet to buy goods. Online sales count for around a fifth of all retail sales in the UK, according to the Office for National Statistics, a proportion that is growing every year. Ten years ago, online made up just one-twentieth of all retail sales.


In 2019, physical retail sales will grow by 2.4% in Spain. This is mainly due to the increase in the Interprofessional Minimum Wage (SMI) to 900 euros and the rise in inflation to 1.2%. These two factors will boost retail sales of Spanish stores.


It wasn’t so long ago that Amazon’s “Prime” two-day delivery benefit was a real game changer. Once a consumer paid the annual fee, the incremental cost of getting what (at the time) seemed like pretty fast delivery became zero. This is a “wow” for the customer, but it also creates adverse selection that’s not necessarily so good for Amazon’s marginal economics as evidenced by Amazon’s growing fulfillment costs as a percentage of sales. 


 “The customer is always Queen/King” is an often used saying in the retail world, but is a position that today feels outdated and ineffective. In reality, not all customers are royalty and, as we’ve seen with many companies, if you try to appeal to them all then you’re more than likely to quickly become a pauper. You should only be treating your core customers like royalty.


As retail evolves to keep up with Millennial expectations, now Gen-Z consumers are impacting the market. This generation craves both experiences and authenticity, complicating what brands need to do to keep up and stand out. 


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