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Strategies For a Changing Retail World!

Anytime there are significant changes in the economy, buying habits, and the consumer marketplace in general, it’s important to take a look at what you ARE doing as well as what you are NOT doing to improve, fine-tune, and grow your business. Rather than being reactionary to tough times, it is far more productive to challenge the status quo, evaluate all the costs associated with doing business in this new environment, and reposition your business for when the economy turns back around.

Five Things to STOP Doing Right Now!

#1 DON’T BELIEVE EVERYTHING YOU READ
Much of what is written about our industry in newspapers, online, and in trade publications is often baffling. One publication will write what a great month retailers had while another reports how tough things were for retailers that same month. If you were to believe what some in the media are saying these days about the state of retailing and the economy, you might very well become seriously depressed.

The business certainly is challenging, still there are retailers and areas of the country enjoying solid sales increases for the first two months of this year. Some retailers simply choose to ignore bad news. And others dwell on the negative, wringing their hands over all the doom and gloom they read and hear. It is far better not to take what the media reports as an accurate accounting of what’s going on in retailing.

#2 QUIT IGNORING THE OBVIOUS
If there are fewer customers coming through your doors today than there were last year, it’s time to reevaluate what you and your people are doing. If the average sale in your stores is decreasing, it’s time to reevaluate what you and your people are doing. If profits are down, it’s time to reevaluate what you and your people are doing.

Significant change in the marketplace, the economy, the competitive environment, consumer buying habits, or anything else that negatively impacts your business requires a thorough reevaluation of the factors that affect and shape these changes. This reevaluation process is an important part of keeping every business vital and successful. And it should be done early on, when the trend first becomes apparent.

I’m always troubled when I hear of retailers going out of business because too often they didn’t adjust their strategy when things first started to change. Is the bankruptcy of Sharper Image much of a surprise to anyone? They’ve been selling exactly the same merchandise the same way for at least the last five years. While I don’t have an inside look at the business, I suspect their problems began to surface several years ago yet they failed to pay attention and make appropriate adjustments.

#3 STOP LOOKING BACKWARD
Retailers often establish individual sales and store goals based on past year’s numbers. The usual way is to look at those numbers and then establish a goal that is some percentage above the previous sales results. What happens when the marketplace, economy, and consumers change? Is this method of goal setting still valid?

Establishing reachable and realistic goals for sales associates and stores should always be based on the business climate and situation at hand. This takes a more positive approach to the business and provides a motivational environment for associates and managers.

#4 DON’T BLAME THE ECONOMY AND THE COMPETITION
How is it that some retailers thrive and grow in a down economy? How is it that some retailers thrive and grow in the face of fierce competition? The answer to both these questions is that they don’t let the economy or competition dictate how they operate their businesses. In tough economic times, these retailers pay attention to what made them successful in the first place. They leverage their strengths and eliminate their weaknesses. And they take steps to enhance and improve the relationships with their customers.

In a fiercely competitive environment, savvy retailers take bold steps to distance themselves from the competition. Rather than sticking their heads in the sand, they pay close attention to the marketplace. They continue to identify and take advantage of the opportunities that are always there even in a competitive environment and tough economic times.

#5 STOP THINKING OF MARKETING AND PROMOTIONS AS AN EXPENSE
Marketing and promotions are a necessary investment in your business regardless of the economy or other outside influences. During the months following 9/11, retailers whose businesses rebounded the fastest modified their approach to marketing but did not cut back or make major reductions in their commitment to marketing and promotions. Such changes included finding media that delivered customers to their doors more cost effectively as well as making an investment in direct-to-the customer marketing such as email, postal mail, and special-events mailers.

Five Things to START Doing Right Now!

#1 BE TRUE TO YOUR PRINCIPLES
Businesses that thrive over a long period of time are committed to a core set of principles. If your pricing strategy and policies have served you well during a good economy, when there is an economic downturn, such as we have today, there’s no reason to abandon this approach.

Recently I had a conversation with a retailer who was thinking about cutting prices on a whole range of merchandise in his stores. He was hoping to attract a lot more customers with these lower prices. I asked him if offering low prices was a fundamental part of his competitive positioning. He said, “No, customers usually shop in our stores because of the breadth of our selection and the top-of-the-line brands we offer.” I encouraged him to look elsewhere for ways to get more customers into his stores rather than cutting prices.

#2 TAKE A CRITICAL LOOK AT EVERY EXPENSE
This is one of those things the best retailers constantly do. When times are good, it’s quite easy for expenses to creep up and get out of hand. Rather than cutting costs across the board, here’s a simple way to look at expenses.

Don’t spend money on anything that doesn’t do at least one of these four things:

1. Get more customers through your doors
2. Better serve your customers
3. Support your associates
4. Directly help grow and improve your business
   

Every other expense should be carefully scrutinized.

#3 SUPPORT YOUR PEOPLE
Contrary to the way many business people look at it, I have long believed that cutting jobs or reducing commissions and wages in a challenging economy is counter-productive. It is guaranteed to cause anguish among associates, greatly damaging morale. These kinds of cost savings frequently result in good people leaving to find better, more secure opportunities. Not filling jobs after people voluntarily leave, therefore reducing payrolls by attrition is significantly less-threatening to employees.

It is also important for your people to feel positive about the company, their work, and your customers regardless of the state of the economy. While I don’t advocate keeping associates in the dark by avoiding bad news, explain to them that economic and retail slowdowns are a part of doing business.

#4 GET CLOSER TO YOUR CUSTOMERS
If there ever is a time when it’s important to expend the effort and resources to enhance and build relationships with your customers, this is it! Your store’s most important asset is and always will be customers who know you, have bought from you in the past, and are expected to continue buying from you in the future.

What can you do to nurture, enhance, and continue to build these ongoing relationships?

#5 FIX WHAT’S BROKEN
Every business has some things that are broken, badly broken, or just a little broken, but nonetheless broken.

With anything that’s broken, the first step is to see if it is fixable and whether it can be fixed cost effectively. If not, eliminate the problem. In my work I see retailers ignore things that need and can be fixed for far too long. If you have some things that are broken, fix them now.

Editorial provided by Pilot Whalin Inc.