Retail is a vast sector, ranging from a roadside boutique in a village to a large department store in a city centre to an online platform that is responsible for the process of selling finished products to consumers. It is primarily the bridge between the manufacturer and end consumers.
Modern brick and mortar retailers exploit multiple channels and platforms, apart from the traditional brick-and-mortar operations. The retail industry perhaps has the simplest revenue calculation, with profits made by the difference in costs and the selling price.
Most often, the retail sector is said to be one of the most valuable contributors to a country’s economy. In Sri Lanka, even in the current crucial economic situation, the retail industry plays a pivotal role in the economy’s well being by allowing customers to access a wide variety of products needed for everyday life.
Modern brick-and-mortar retail businesses are developing in response to changing consumer needs and market competition. Brick-and-mortar businesses may flourish in today’s retail environment by using sophisticated technology, creating distinctive and engaging experiences, providing outstanding customer service, committing to sustainability, and carefully selecting sites.
The small-scale brick-and-mortar retail industry in Sri Lanka is a vital component of both urban and rural economies and communities. Despite the challenges posed by the dominance of large retail chains and e-commerce, small-scale retailers offer unique value through personalised service, niche products, and a strong community presence.
Despite the meteoric rise of online retail sales, small physical stores remain an extremely important part of the retail industry. They can offer unique services to consumers, such as instant product access, tangible shopping experiences, and personal customer experiences that cannot be substituted by online shopping.
Millennials and Gen Z
Experiential retail is about a customer visiting a physical space to experience tangible goods or services. Despite the popularity of e-commerce, where convenience is the primary feature, contemporary consumers, particularly the millennials and Generation Z segment, seem to enjoy physical retailing. According to research, they prefer to be engaged, entertained, and emotionally connected with products. Creating a stimulating and outstanding experience can encourage them to stay longer in the store.
Particularly, research also reveals that the younger generation values the overall experience as much as the products they choose to buy. Hence, retailers today tend to invest in store designs, staff training, and promotional events to produce a more appealing shopping experience for customers.
Retailers must concentrate on omnichannel engagement to deliver a more personalised service. Such a service looks more like a customer-centric approach by the retailer to incoming foot traffic. Hence, providing opportunities for repeat purchases through different channels may seem fuller and more efficient. Hence, retailers must leverage new technologies to provide all possible additional services to confront the fierce competition in retail.
For Sri Lankan small-scale brick-and-mortar retailers, advertising through conventional media is not a viable possibility due to the high costs involved in print, television, or magazines. Most often, until the emergence of social media platforms, the customary method was to advertise through point-of-sale material. Today, social media has become the most efficient and cost-effective medium for physical stores to obtain a convenient and seamless reach in their geographical locations.
Advertising on low-cost social media platforms such as Facebook or Instagram has plenty of advantages for local physical stores. It is a great way to raise awareness of the products available in the store, even before they visit it. There is also an option for brick-and-mortar retailers to use Facebook to target customer segments who regularly or routinely walk past your shop or spend time in the local neighbourhood.
Catchy messages
The local retailer is usually well aware of the general behavioural patterns and subjective needs of the community. Therefore, to be more successful, local retailers can develop catchy messages to deepen the relationship with their regulars more intimately.
Customer feedback is the information customers provide to a business about whether they are satisfied with the products, services, and their experience. This can be a decisive factor that plays a critical role in the retail business.
In this context, small-scale retailers can be more susceptible and responsive to customer feedback because of their direct interactions. They are typically in a better position to instantly scale the real need and adjust their offerings accordingly in a short time. This can help build a strong, loyal customer base that feels valued and heard.
Modern small-scale retailers must focus on quality over quantity. Customers who walk into a local store know that the selections available to them are somewhat limited. Yet, they invariably expect the product quality to be of a higher standard and tend to prioritise high-quality merchandise. This emphasis on quality can help establish a stronger reputation that can encourage repeat business.
Hiring and retaining skilled staff is a consistent and long-lasting challenge for brick-and-mortar retailers. Even with the current unemployment issues in Sri Lanka, recruiting staff has become a challenge as retail jobs are often seen as low-paying with limited career advancement opportunities. Hence, the turnover rate is higher in this job category in Sri Lanka.
The rise of automation and self-service facilities available to customers at larger retail stores also complicates the staffing landscape. Hence, a balance between human interaction and technological efficiency must be carefully considered by retailers. Attracting candidates for retail jobs with technological knowledge is a challenge for retailers currently.
Interaction
Modern brick-and-mortar stores often aim to build a sense of community to meet the competition from e-commerce by providing better interaction. Therefore, retailers can consider creating spaces for social interaction, such as cafes, lounges, or other entertainment within the store, when possible.
They can also host local events and collaborations with businesses in the same locality, as building a community around the store helps foster customer loyalty and encourages repeat visits.
Even with the daunting challenge posed by e-commerce and other market elements, modern physical retail stores are rapidly evolving to meet changing customer behaviour. Retailers are fast learning that they must not only survive but also surpass businesses moving away due to online platforms. They must integrate technologies with the inimitable experience that can be provided inside a physical store.
Although e-commerce has transformed the modern retail business landscape, the advantage of human connection with physical engagement still remains with brick-and-mortar stores. Particularly, the modern trend exists with generation Z and millennials, the largest consumer group in Sri Lanka, where impulse buying is predominant.
Physical experience is a key reason for retailers to outperform online retailing. Physical stores will continue to play a crucial role in the retail ecosystem, providing valuable touchpoints for customer interaction.
