On Wednesday 20th April we were lucky enough to be joined by David Kohn, Customer & eCommerce Director at Heals, who talked about  the challenges that face niche retailers and how they can effectively overcome them.

First of all we focused on the key challenges that every retailer faces: how to ensure that the business has the capability to effectively manage an ecommerce precence; the capacity of the business to manage the change in workload, new processes, logistics and sales; the marketing budget (or more usually the lack thereof); the investment budget (which is usually in the same state as the marketing budget; SEO; and, of course, the need to make money.

This is exacerbated by the fact that customers visit sites and while we can see that they leave without buying, we need to be able to do something about that.

The main issues for a small retailer are people and money. There is only so much you can do with a limited number. as you are up against companies that have masses of money and a large mass of employees. So David shared the key steps you need to take to ensure success:

• Proposition
• Prioritisation
• Personalisation
• People
• Partners

Proposition/position: that means asking what purpose do you serve and to whom? Have a clear idea of what you are and where you stand. Where do you map against the competition.? Knowing this allows you to know what to sell/ put in the store. If it is something niche you are at you can use that as an advantage, enabling you to focus on advertising your unique products. Focus on SEOs.

Prioritisation: you must constantly evaluate against the effort/reward matrix.  What matters is being able to judge what is high reward and what is a lot of effort for little return.

Figure 1: the risk/reward matrix

Personalisation:  if you’re effective at prioritisation, then you should be bringing personalisation to your online platform, providing an excellent experience no matter what channel you’re selling on. With regard to Heal’s David explains how people in the stores are very important, as it is an opportunity to speak with real people, and gain feedback… Live chat is also useful & generates around 15 per cent of Heal’s sales.

People: there can never be too much said about the importance of the right people in terms of success. Skills and ability to work together are as necessary to success as investment, technology and the right product.

Partners:  The size of your partner company is important. Do not go with a partner who has bigger partners. You need to make sure that your size and ambitions are aligned.

The company said that the weather had affected sales but continued to lower expectations for the full year, as it warned that there might be a wider slow-down in consumer spending ahead.

Full-price sales between January 31 and May 2 fell by 0.9%, with store sales down by 4.7% while its primarily-online Next Directory sales rose by 4.2%. The figures, said Nextwere “at the lower end” of its full-year sales guidance, which envisaged growth of between 4% and -1%.

The fashion-to-homewares retailer said sales had suffered by comparison with a much warmer Easter period in 2015. “We believe it is unlikely (but possible) that sales will deteriorate further, and we have seen a significant improvement over the last few days as temperatures have risen,” it said in a trading statement.

“However, the poor performance of the last six weeks may be indicative of weaker underlying demand for clothing and a potentially wider slow-down in consumer spending. Given this uncertainty, we think it is prudent to widen and lower our full price sales guidance range to -3.5% to +3.5%. The lower end of this range is based on sales for the rest of the year continuing to run at the rate of the last six weeks.”

Next set out at the time of its full-year results how it would develop its business in an increasing competitive market. It said that would see it improve and differentiate its directory business in particular, in areas from mobile apps to collection from third-party stores.

At the time, Next said it was acting as growth in its directory business inevitably slowed as the market matured. “Partly,” it said at the time, “this is as a result of competitors catching up with our delivery and warehousing capabilities; partly as a result of changes in the ways customers are shopping online. It is this last point that provides us with the opportunity to improve the business going forward.”