Consumers and retailers want products cheaper and with no risk to themselves, whilst manufacturers demand high prices – how do you survive and remain profitable?

We live in an increasingly connected world and it is not just phones, computers and tablets – it’s cars, household appliances and wearable devices. Advancements are constantly changing the way we live, how we interact and how we experience the world. A key tenant of this connected world is the speed and ease at which things now happen  – travel which could previously have taken months, communication which could previously have taken weeks – now happens at pace and quite often, through a simple touch of a button; retail is no exception. So what changes has this driven in traditional retail and as a supplier of the retail industry, how can we remain relevant in the face of these changes?

The way we shop has changed with more and more people buying online as opposed to bricks and mortar stores. And in this new retail landscape, the consumer is king. Consumers expect more for less and who wouldn’t with the ability to shop around online for the cheapest offer and have the goods delivered to our door at no extra cost?

With companies like Alibaba supplying direct from manufacture to the end-user (potentially skipping 3 or 4 steps in the supply chain) simple, mass produced phone cases which would have cost £20 in store can now be found online for 10% of that cost. Furthermore, with the proliferation of shopping comparison sites like Google Shopping or Amazon that show lists of retailers selling like items all sorted by price, retailers increasingly feel the pressure to compete on price.

Inevitably, this drives prices down and in order to remain profitable, retailers costs must go down in-line. This is either achieved through putting pressure back up the supply chain with payment term increases, required buying of space in store, sale or return so no risk sits with the retailer etc. Or by sourcing products direct from the manufacturer themselves. This has the double effect of not only taking value out of the supply chain, but leading to a lower expectation of buy-price. To compound this issue, supply costs are going up. Workers wages in manufacturing countries are increasing (and rightly so) in addition to raw materials costs increasing, playing true to the economic principle of supply and demand.

These factors lead to what I call the “squeezed middle”. Consumers and retailers want products cheaper and with no risk to themselves, whilst manufacturers demand high prices. So how can the middle survive and remain profitable themselves?

1) Be the expert at what you do. Know your industry inside out. Know what has happened before, and have a view on what will happen next. Look for trends. Understand your target market, what they want and how they listen. Understand what is important to them and why. And ensure everything is focussed on this and that every action you take is driven to support this.

2) Differentiate through your products. Business direct with the manufacturer (for either the retailer or the consumer) will only ever deliver mass market products so do things differently. Innovate, look for gaps in the market or problems to be solved – and offer something different.

3) Add value: Help and educate. Advise and guide. Be proactive. Provide sales data for forecasting or collateral to facilitate sales. They will know their business inside out, but what lessons learnt can you bring or ideas can you suggest from your wider industry view?

4) Be flexible and reactive. Bricks and mortar retailers are often restricted and slow to move. If you are agile and can respond quickly to demand and market pressures – then your services will always be required.

5) Be professional and make it easy. Be excellent at everything you do. Have quality products which customers trust. Be easy to work with and ensure every interaction with you is effortless and responsive. Differentiate yourself on your service and delivery. Know that every customer review given or solicited would be of the highest standard.

Nothing ever stands still. Those who cannot keep up will be left behind. Be good at what you do, overachieve expectations, be proactive and rapidly responsive… And above all act with integrity and passion. If you don’t, someone else will.