Ricardo Lopez is the CEO of Bellwether Coffee.
getty
More than 52 million Americans rely on the retail sector for their livelihood, contributing a total of $3.9 trillion to the annual gross domestic product (GDP). As can be seen, this industry is a vital contributor to the U.S. economy, yet retailers face more challenges than ever, causing unprecedented strain on business owners.
Growing competition, rising costs of goods, skyrocketing real estate prices and increasing costs and scarcity of labor are all creating an excessive strain on controlling costs while increasing revenue.
Using the coffee industry as an example of opportunities for implementation, here are a few ways retailers can future-proof their businesses.
1. Establish new revenue streams.
Recent economic events have made it clear that businesses should not exclusively depend on a single source of income. I believe that businesses should expand their total available market by establishing new revenue streams and identifying gaps in the market that they can fill with a new product.
For coffee companies, this could be expanding their product line beyond retail coffee, creating new business lines by offering subscription services to customers, opening new wholesale customer accounts or creating an office distribution model. This diversification can allow you to be more nimble and absorb market price fluctuations without the need to constantly change the price for the end consumer.
2. Own more of your supply chain (and your margin).
As we so clearly saw during the Covid pandemic, businesses are extremely susceptible to fluctuations in their supply chains and increase their risk when their business hinges upon someone else’s. Anything you can do to own more of your supply chain can help inoculate your business against these supply chain shocks.
For a coffee retailer, bringing roasting in-house instead of buying from a wholesaler can not only increase your profit margins but can diminish potential business disruptions that a wholesaler is facing that you might not have insight into, like labor shortages, price increases, etc.
3. Market outside your four walls.
Don’t limit your business and brand to the physical location of your retail space. Create stickiness of your brand by going beyond the walls of your business and showing your values through your products.
For a coffee retailer who roasts its own brand of coffee, instead of just selling retail bags to your customers in your cafe, try selling your product to other cafes, restaurants, grocery stores, etc. This expansion not only increases sales but the exposure helps extend the power and visibility of your brand.
4. Become more sustainable.
Own your sustainability and impact. According to Bain & Company, consumers were willing to pay a 12% premium for sustainability-marketed products in 2023. Setting sustainability goals that can be measured and transparently shared with your consumers is key to avoiding greenwashing the products you are selling.
Deepening sustainability can range from paying workers along your supply chain fairer prices to sourcing more eco-friendly packaging options to reducing your carbon footprint by switching out core business appliances. For a coffee retailer, swapping your roasting equipment from natural gas to electric can significantly reduce the carbon footprint, in some cases by up to 87%.
While retailers face a myriad of challenges to become successful and sustainable, these four million businesses across the U.S. are vital contributors to the economy. The retail space is constantly evolving, but I believe that utilizing the above recommendations and remaining nimble enough to innovate and pivot your business can set you up for success.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
