How retailers can tackle the cost-of-living crisis in 2023

As the economy continues to feel the pinch, businesses need to find ways to offer consumers lower costs while saving on their own operations. Here’s how:

Most South Africans are having to tighten their belts amid the cost-of-living crisis.

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.

The financial pinch of disrupted global supply chains is also hurting consumers’ pockets.

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.

Those e-commerce traders that are doing well amid the crunch tend to follow a few basic rules. Let’s take a look at some of them:

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.

Know what your 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.

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. South African smart logistics platform and click & collect specialist Pargo enjoys a 100% delivery rate with no additional costs resulting from repeat deliveries or returns. The myPargo platform also easily integrates with any online store, no matter the size of the business or how the store is built.

Work tech smart, not hard

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.

A new world

Covid-19 was horrendous, but it did highlight the capabilities of working remotely. Not only do employees save money on their daily commute to and from the office, but energy and other costs associated with work in an office are significantly reduced, allowing for the savings to be put into other parts of the business.