For the past few years, traditional retail businesses have faced a tough battle against e-commerce. The shift in customer behavior has brought great challenges for retailers that can threaten their very survival.

The retail industry experiences declining foot traffic and the pressure of competitive pricing. They must wreck their brain to battle the rise of eCommerce and maintain loyal customers. What can be the best strategy?

Before exploring some possible strategies, retail companies must know the recent state of e-commerce growth. We’ve rounded up essential information on retail’s main challenges in the rise of e-commerce, along with strategies to address them.

Overview of eCommerce Growth

Retail has changed dramatically in recent years thanks to the rise of eCommerce. By 2024, global retail eCommerce sales are set to hit an impressive $6.3 trillion, and they’re expected to keep climbing to $6.5 trillion by 2029.

That’s a big slice of the shopping pie – roughly 20.1% of all retail sales will be made online. When we talk about eCommerce giants, names like Amazon, eBay, and AliExpress come to mind.

These sites are some of the most visited on the internet, with Amazon leading the pack, holding 37.6% of the eCommerce market. That’s a lot of online shopping happening on just one platform.

It’s not just about the big players, either. Customers will make most of their purchases online, with 34% of people shopping online at least once a week. Moreover, 91% of shoppers use their phones to buy things.

With eCommerce on the rise, traditional retail businesses must step up and adapt. The world is changing fast, and it’s clear that customers expect a seamless shopping experience, whether they’re browsing in-store or online.

Challenges Faced by Retail Businesses Today

While eCommerce continues to thrive, traditional retail businesses are navigating a series of challenges that can make it tough to keep up. Let’s break down five major hurdles of retail businesses in today’s eCommerce age.

Declining Foot Traffic

One of the most noticeable effects of the eCommerce boom is the decline in foot traffic to brick-and-mortar stores. More and more shoppers choose the convenience of browsing and purchasing from home.

This shift means that retailers see fewer customers walk through their doors, leading to lower sales and ultimately affecting their bottom line. Often, retailers rely on impulse buys that occur when customers are in-store.

With less foot traffic, opportunities to upsell or introduce customers to new products are significantly lost. If this happens in the long term, it can significantly damage the business.

Competitive Pricing

eCommerce companies, particularly giants like Amazon, can offer competitive pricing due to lower operational costs. They reduce overhead expenses associated with physical locations. So they can pass those savings on to customers.

Shoppers naturally begin to expect similar pricing in-store. This creates a dilemma for retailers. They must find a balance between maintaining profit margins and meeting customer expectations.

Many are turning to strategies such as price-matching guarantees or limited-time promotions to stay competitive. However, constantly slashing prices can be a slippery slope for retail businesses.

Changing Consumer Behavior

When we shop, we usually look for more than great products. We also want convenience, speed, and personalized experiences. Customers expect seamless online shopping experiences, from user-friendly websites to quick checkout processes and fast shipping.

This shift in behavior means that retailers need to rethink their strategies. They can no longer rely only on traditional marketing tactics. They must embrace digital channels to reach their audience effectively.

Retailers must ensure that they provide detailed product information, customer reviews, and engaging content that can help influence buying decisions. They must also leverage data and technology to better understand customers and create personalized experiences to keep them coming back.

Supply Chain & Inventory Issues

With the surge in online shopping, retail businesses experience heightened pressure on their supply chains and inventory management. They must accurately predict demand for both online and in-store sales, which can be tricky.

Overestimating demand can lead to excess stock that ties up valuable resources and space. Meanwhile, underestimating can result in stockouts, frustrating customers who may turn to competitors for their needs.

Another critical issue is the complexity of managing returns. Retailers need to have clear return policies and processes in place to minimize disruptions and ensure customer satisfaction.

Omnichannel Pressure

Shoppers today expect a seamless experience, whether they’re scrolling a website, using a mobile app, or visiting a physical store. This means retailers must integrate their online and offline operations to meet customer expectations.

However, the omnichannel approach requires a cohesive strategy. Retailers must synchronize and unify inventory systems, customer data, and branding across platforms. Achieving this level of integration, in fact, can be challenging.

At the same time, marketing strategies must also adapt to this omni-channel environment. Building one cohesive strategy often requires intensive resources and investment in technology, which may add up to their budget.

Strategies to Overcome eCommerce Challenges

Adopting effective strategies is crucial for retail businesses to overcome these challenges. For example, a retail store like MGK Asia, which primarily operates offline, must rethink its strategies to compete with the growing dominance of eCommerce.

Here are some key approaches retailers can implement to thrive in the digital age, from adopting omnichannel strategies to investing in sustainable practices.

Adopt Omnichannel Strategies

Retailers must integrate online and offline shopping experiences to compete with e-commerce. This integration creates a seamless journey for shoppers, allowing them to switch between channels effortlessly.

With this, customers can browse online and choose to pick up their purchases in-store or vice versa. This enhances convenience and fosters brand loyalty, as customers appreciate the flexibility and accessibility of their shopping options.

With an omnichannel strategy, retailers should invest in technology and leverage digital marketing. They need technology that synchronizes inventory and customer data across all platforms to ensure a cohesive experience.

Leverage In-Store Experiences

While eCommerce offers convenience, physical shopping still has a unique value. By enhancing the in-store experience, retailers can draw customers back into their physical locations.

Some strategies worth considering are offering exclusive in-store promotions and creating interactive displays that engage shoppers. For a grander project, retailers may host events that attract people.

Moreover, they can provide a personalized experience for customers. For instance, they can offer one-on-one consultations or product demonstrations to make visits to brick-and-mortar stores memorable.

Improve Online Presence

Today, a robust online presence is non-negotiable for businesses of all kinds, including retailers. They need to optimize their websites and apps for user experience to ensure smooth exploration.

Strong search engine optimization (SEO) practices like optimizing explainer videos will help drive traffic to their sites while engaging content can keep visitors interested and informed. Retailers should also leverage Google My Business (GMB) and social media platforms to reach their audience.

More and more stores are creating content on TikTok or Instagram for educational and entertainment purposes. Their content commonly features employees or even customers.

Focus on Niche Markets or Personalized Products

To stand out from the e-commerce competition, retailers must focus on niche markets and offer personalized products to potential buyers. By identifying specific customer segments or interests, they can tailor their offerings to meet unique needs.

Personalized products, such as customized gifts or bespoke services, resonate with consumers seeking meaningful purchases. Retailers should utilize customer data to understand preferences and trends.

Enhance Customer Loyalty Programs

Loyalty programs offer a proven way to keep customers returning by rewarding them for their continued patronage. However, today’s consumers expect more than just discounts or points.

In addition to discounts or points, retailers can offer value-driven programs. Such an example is offering exclusive early access to new products. Moreover, making loyalty programs accessible across online and in-store channels makes customers feel valued no matter where they shop.

Integrating loyalty programs with mobile apps or email marketing campaigns can also enhance engagement. Offer reminders of rewards and encourage repeat business, which can bring them back into stores.

Invest in Sustainable Practices

People have become more aware of environmental issues, which makes sustainability a key factor in consumer purchasing decisions. Retailers can prioritize sustainability to show that they are forward-thinking businesses.

Investing in sustainable practices can take many forms, from reducing plastic packaging to promoting recycling programs. Retailers can also highlight sustainability in their marketing campaigns, sharing their commitment to environmental responsibility.

Moreover, sustainable practices often result in cost savings over time, as reduced waste and energy consumption can lead to lower operational expenses. Investing in sustainability is both a responsible choice and a competitive advantage.

Utilize Data and Technology

Data is one of the most valuable assets retailers can leverage. Using data and technology helps retailers gain deeper insights into consumer behavior, preferences, and purchasing patterns.

Information gathered through tech tools can be used to create more personalized shopping experiences. They can also invest in advanced tools to improve inventory management and optimize marketing strategy.

Technologies with artificial intelligence (AI) and machine learning help retailers streamline their operations. Tools like chatbots can help enhance customer service. Ultimately, technology is important for achieving effectiveness in a fast-paced world.

Learning from Giant Retail Stores

While discussing this topic, why don’t we look at real-life examples? We can learn from Walmart and Target, giant retail stores that continue to thrive despite the rise of e-commerce like Amazon. How do their strategies work?

Walmart asone of the biggest retail shops in the world, knew it needed to enhance its digital presence while utilizing its vast network of physical stores. Walmart’s approach to omnichannel retail has been a game-changer for the company.

Walmart has invested heavily in its Buy Online, Pick Up In-Store (BOPIS) service. This service lets customers shop online and pick up items in a local store, often on the same day.

Walmart has also rolled out same-day delivery services and enhanced its mobile app to make online shopping more convenient for customers. Both approaches allow buyers to shop, pay, and track orders easily.

On the other hand, Target creates a differentiated in-store and online shopping experience. Target invested in its same-day delivery services by acquiring Shipt, a company that provides quick delivery services across the U.S.

Target has also been strategic about building a robust online presence. Through its Drive-Up and Order Pickup services, Target provides customers with multiple options to shop and collect purchases, which adds an extra layer of convenience.

Walmart and Target show that traditional retailers can absolutely thrive in the eCommerce age. Both harness their physical store advantages and invest in technology. They also have a great digital marketing strategy through email and social media.

Last Thoughts

With the rapid growth of eCommerce, traditional retail businesses are undoubtedly facing significant challenges that may seem overwhelming at first. Online shopping has changed consumer behavior, shifting how they connect with brands and make purchasing decisions.

Declining foot traffic, increased competition, and the demand for more personalized shopping experiences have pressured retailers to adapt. While these challenges are daunting, they also present unique opportunities for retailers to evolve. The above strategies, from adapting omnichannel to investing in advanced technology, can bridge the gap between online and offline experiences. Most importantly, modern tactics are necessary for retailers to stay competitive in today’s market.