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Inflation is a major concern for businesses across the UK. For retailers, its impacting margins, meaning many are pivoting to eCommerce – just as they did during the pandemic.
So how can retailers use the lessons learnt from Covid to drive online sales?
In this blog, we’ll cover:
– What inflation is, and how retailers can overcome the challenges presented by it.
– The benefits of creating an online store and how to do it.
– Why implementing a POS finance solution is essential during the cost of living crisis.
The UK’s inflation rate fell for a second consecutive month in December. But the price of electricity, gas and other fuels still pose a significant threat to UK retailers – not to mention reduced consumer spending.
Although inflation rates have peaked, they still sit at 10.1%.
What does this mean for retailers in practical terms? And how can you support your customers through this challenging period?
What is inflation?
Inflation refers to the rise in prices of goods and services. The rate of inflation, therefore, determines how quickly prices are rising.
Let’s take a weekly food shop as an example. If the full shop cost £100 in January, but £110 in February (despite paying for the same items), then the monthly inflation rate would equal 10%. In other words, your money didn’t go as far as it did in January.
As UK inflation rates rise, every pound a consumer has is stretched further, leading to changing habits and more cautious spending.
Now more than ever, retailers need to adapt and change with the times, choosing more innovative ways to generate sales.
Why is there inflation in the UK?
The rising cost of energy is one of the key reasons for current UK inflation.
Greater demand for oil and gas, coupled with a decline in available resources such as grain due to Russia’s ongoing war in Ukraine, has put even more pressure on already soaring prices.
As UK inflation rises, consumers across the UK are being more cautious with how they spend their hard-earned money.
Rising inflation brings new and diverse challenges for retailers. Wallets are stretched and consumer spending decreases – so it’s essential to adapt your strategies accordingly.
How to generate sales during a cost of living crisis
The Covid-19 pandemic triggered a shift in consumer behaviour. eCommerce received a massive boost in popularity, as many consumers had no choice but to shop online.
Fast-forward to 2023 – and there’s a lot we can learn from Covid. Shifting your retail business online can bring a whole host of benefits – not just for you, but for your customers.
Pivoting to eCommerce and creating an online store is a sure-fire way to boost sales during the ongoing cost of living crisis. Let’s take a closer look at why.
The benefits of creating an online store
With online shopping accounting for 35.9% of UK retail sales in 2022, here’s why going digital is a great idea:
Increase sales with 24/7 shopping capabilities.
Thanks to the automation that eCommerce provides, your customers will be able to shop when they want, where they want – significantly increasing the time they spend browsing and buying from your store. Plus, you can manage your online store from anywhere in the world.
Reduced overheads.
A physical store requires staff, security and maintenance, amongst other costly services. Creating an online store can significantly reduce or even eliminate these overheads – giving you more revenue to invest back into the business.
Improved customer insights.
All good eCommerce platforms should be able to give you detailed insights into your customers. This includes their demographics, spending habits and user experience. You can then use these insights to boost sales and reduce cart abandonment.
Greater flexibility at checkout.
Shifting your business online means you can implement finance options at checkout, giving your customer base greater flexibility in how they pay – generating sales as spending is tightened. Providing multiple retail finance options offers an alternative and more affordable way to pay, reducing cart abandonment and generating sales.
How to create an online store
Once you’ve decided to create an online store, here’s what happens next:
1. Choose your eCommerce platform
2. Define your target audience
3. Pick your products
4. Design your online store
5. Introduce payment options
6. Launch your online store
For more details, check out this handy video from our partners at Shopify:
If you’re planning on downsizing, or even shutting your bricks and mortar store, it’s essential to communicate your plan with all staff involved as early as possible – and be as transparent as you can.
The same goes for your customers. Let them know when you’ll be closing any physical stores and signpost them to your new website – so they know where and how to find you.
Implement a POS finance solution
Rising inflation and the ongoing cost of living crisis have no doubt had an effect on UK consumer spending. Brits are tightening their purse strings as they try to make each pound go further.
POS finance solutions can help support UK consumers, offering greater flexibility in how they pay. For example: DivideBuy’s interest free finance product lets customers spread the cost of items – helping make purchases more affordable.
Implementing flexible finance is an essential step when creating your online store. It helps to reduce cart abandonment, increase basket size and boost sales.
By using our POS finance solution, UK retailers have seen an average increase in sales of 50%.
Book a demo today and unlock the benefits of POS finance.
