Running a business has not been for the faint-hearted over the past couple of years: from pandemic-related trading restrictions and supply chain pressures to rising inflation and employee shortages.
Through it all, Aussie business owners have shown great resilience, but as cost of living pressures increase, new challenges are on the horizon. The ABS shows consumer prices rose 7.3 per cent in the year to November, up from a 6.9 per cent rate in October, with housing (+9.6 per cent), food and non-alcoholic beverages (+9.4 per cent) and transport (+9 per cent) seeing the biggest price bumps.
And while spending was still strong across the holiday period, economists and analysts are predicting that consumers may look to tighten their purse strings over the coming months.
Businesses need to plan for this: those that don’t adapt leave themselves vulnerable. Fortunately, there are a number of simple ways they can adapt in order to give themselves a better chance at navigating the potentially choppy waters ahead.
Finding efficiencies through automation
At a time when the labour market is tight and businesses are being forced to do more with less, efficiency is key to keeping costs down. No matter the size or industry, business owners need to ensure they can focus their efforts on activities that will grow the business and let technology take on more of the administrative burden.
Our recent Future of Retail report found that 90 per cent of retailers have already made investments in technologies like POS-integrated inventory systems that automatically make new orders before stock runs out; or marketing automation to send welcome emails to new subscribers, abandoned cart emails to customers who have left items in their online shopping cart, or birthday offers to exist customers. For restaurants, ordering is an area ripe for automation.
Point of sale technologies — like mobile apps, QR codes and registers — are gaining popularity as they streamline orders from multiple sources and help teams save time and reduce the risk of human error. Automation technology can help reduce costs while improving operational efficiency, which will ultimately lead to higher customer satisfaction and free up your workers to spend time on tasks that are more meaningful to the business.
Diversifying revenue streams
The time gained from automating and finding operational efficiencies can be spent on finding new ways for your business to make money. We’ve observed recently that more businesses are building resilience by turning to new revenue streams – cafes starting dinner services, restaurants offering cooking classes, and hair salons supplementing service with retail.
Building multiple revenue streams not only creates new ways to increase a business’s overall revenue, it also helps reduce risk by diversifying its income sources. If a business relies on only one revenue stream and it dries up, that creates vulnerabilities.
However, if a business has multiple revenue streams, it can still generate income even if one stream is not performing well. In our Future of Restaurants report released last year, Michael Bascetta, owner of Madewell Group, which runs Capitano, Falco Bakery and Bar Liberty in Melbourne, summed it up best: “A retail revenue stream within restaurants is the future. Offering a product alongside a service is scalable and helps restaurants reach a broader audience.”
Selling where your customers are
As retail spending potentially tightens over the coming months, businesses need to make it simpler for consumers to shop at their stores. And that means they have to reduce friction and make their stores available wherever their customers are.
During the pandemic, e-commerce was the saviour for many businesses as in-person commerce came grinding to a halt. However, as shopping habits have shifted back toward pre-pandemic norms, there’s an even greater need to offer an omnichannel commerce experience where businesses can be successful in-store, online, and on social media.
Australian Retailers Association CEO Paul Zahra says those not set up as omnichannel retailers will struggle to compete: “The pandemic highlighted just how important it is for businesses to have an online presence and that they’re able to cater for customers whichever way they want to interact with their business – through a mobile phone, computer or in-store.”
Adding new sales channels to attract customers mustn’t take away from the buying experience. Savvy business owners will ensure their omnichannel presence is seamlessly integrated.
Two examples are automated inventory across all channels to prevent an item from selling out in-store and still being sold online – ruining a buyer’s experience; and reporting being unified so that all sales reports are presented in one dashboard to prevent unnecessary additional admin.
While the economic picture may be a cause for concern, it forces businesses to reflect on how they run and find operational efficiencies and improvements that will set them up for near- and long-term success.
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