The retail industry has been facing some tough quarters as a result of the recent recessionary period, but that doesn’t mean there isn’t still opportunity for minority firms. The most recent data (2009) from the U.S. Census Bureau puts the size of the U.S. retail sector at $4.13 trillion, and nine of the top 20 retail firms worldwide are U.S.-based. Retail is a market hungry for both products and services, offering minority and women-owned (MWBE) businesses many contract niches to explore.
Major Trends & Issues
When it comes to retailing, minority firms looking to compete have to be aware of both trending items and costs. More than most other industries, retailers compete on costs and make their profits at the margins. Minority firms have to be ready to come to the table with solutions that deliver quality at a profitable price point.
Staying abreast of key trends is also important for minority retailers, particularly those targeting apparel or gift segments of the market. Consumer desires shift quickly and accurate forecasting for leading seasonal items is critical. MWBEs have to be just as ready as their client partners to shift through the data for nuggets of insight.
On a brighter note, the retail industry is more receptive than other market segments to diverse suppliers, thanks to the very nature of the business. Sources for high quality merchandise are welcomed from any corner, and retailers have an established precedent of scouring the globe for exactly what their customers want, regardless of who makes it. Many retailers also have employee diversity policies to match their customer bases, and extend the same inclusion programming to their supply chain. In fact, thanks to consumer demand for fair-trade, ethical, and charitably-tied products, all retail sectors are looking for products and services with a story to go with the solution, giving minority firms more open and receptive ears when going to market.
Finding Winning Opportunities
Naturally, finding winning opportunities in the retail space goes beyond hoping for a sympathetic ear. The retail space is highly data driven, and minority firms that can target what the data indicates will sell will do better than their rivals. MWBEs also have to look at the non-traditional retail channels, such as online retailers, direct to consumer platforms, and private label programs.
Within each of these segments, there are opportunities for minority suppliers to break in and give their partners an edge. Retailers need to satisfy customers demanding extensive variety on multiple platforms, and, due to the variety of goods that must be sourced, a multitude of contracts under one roof isn’t necessarily a barrier. Minority firms that can work well in existing systems, have home-country contacts for expanded sourcing, or that offer uniquely manufactured goods have space to win.
Opportunities for wins also lie within small spaces. Single-store operations and small retail chains can provide sustainable business models for minority firms and many smaller operations are not wooed by major suppliers, as larger chains are. Minority businesses that can fulfill small contracts at competitive prices are welcomed enthusiastically by mom-and-pop retailers, specialty restaurants, and small businesses. Thus, minority firms looking to expand their retail contracts shouldn’t overlook smaller stores.
Understanding the Diversity Process For Retailers
The diversity process for retailers varies by the size of the organization. Smaller retail operations are not as likely to have any formal diversity supplier programs in place, though they may have informal initiatives to bring in suppliers with specific backgrounds. Larger retail operations with programs in place are generally organized along the four-step business diversity process.
• Recognizing the economic consequences to the business.
• Developing an effective strategy for managing diversity.
• Implementing an action plan for organizational change.
• Evaluating the diversity strategy
Certification requirements vary throughout the industry, but certified minority firms will be at an advantage when participating in formal program and diversity development efforts. One example of this is Macy’s newly announced “Workshop at Macys”, which aims to grow the next generation of diverse supplier talent for certified minority and women-owned businesses.
The process of gaining a toehold in the retail space for women and Asian owned businesses is, in some ways, slightly easier than for other minority businesses. Asia’s status as a top retail supply hub makes Asian businesses less “exotic” in a retail framework, and the male-female parity in the retail space on the employee side makes supplier diversity a natural extension. Further, since women make the majority of retail transactions, women’s voices are more welcomed in the retail space, according to RetailTraffic Magazine. Women in the supply chain often simultaneously represent the targeted end user demographic, giving women-owned businesses a leg up in pitching their products due to a better understanding of the core consumer.
Leveraging Emerging Technology
A final important consideration for minority businesses looking to participate in the retail space is the level of technological proficiency needed. The retail industry may not be very automated at the mom-and-pop level, but for larger firms, everything is tied to a computer ordering system. This enables not only just-in-time ordering for delivery, but also analysis of what’s moving in real time.
Industries that allow buying via social media are another emerging space. Even though iPhones and smartphones sales represent a small fraction of the market at the moment, their role in retail is increasing. Services and products related to this trend are a hot retail topic and a rising opportunity for minority business owners. Technologies linking consumers ever-more-directly with products have been identified as playing a critical role in the future of retail.
Both technology and social media aspects feed into on-demand retail systems. On-demand retail involves meeting customer needs in the moment, and requires flexibility in production to meet rapid demand shifts. This can make volume-based savings and cost control difficult, but it cuts costs associated with excess product. Minority suppliers prepared to be responsive and scalable can win ground in on-demand scenarios.
Retail has had some tough times in the current economic climate, but that doesn’t mean that retail opportunities for minority suppliers have disappeared. Instead, retail’s breadth and variety of opportunities welcome diverse suppliers that can be nimble, responsive, and up-to-date with emerging technological developments. While size will influence the sophistication of diversity programming in the retail space, retailers of all sizes, shapes, and backgrounds continue to be hungry for the solutions that minority firms provide.