Specialty Retail Blog

Everywhere you look today you see retailers scrambling to turn excess
inventory into cash through heavy markdowns.  The definition of a  recession
is where there is an excess of capacity, inventory and labor in the
marketplace.  The danger for retailers, as it is with other businesses, is
slashing inventory, staff, marketing etc. without a plan. That uncontrolled
strategy will leave them struggling at best and without a business for many.

Retailers need three strategies now instead of just one. Strategy one is
the short term strategy that depends on an accurate sales forecast so you
can adjust the stock to sales ratio down to the new sales level.  Blowing
out merchandise through heavy markdows below that level will starve the
business of needed cash to buy into profitable sales later.

iA midterm strategy will guide buyers into the right levels of merchandise
to buy into as well as the right expense structure to retain in order to
maintain profitable business. There are many aspects to consider in this
crucial period. Negotiating tactics, the Margin Buying Service to provide a
greater margin, aggressive approaches to fixed expenses, aggressive
marketing and customer relationship management as well as a different
mindset for the entire staff are some of the considerations that are
important for success in this midterm approach.  Many shoppers are taking a
hiatus on shopping during this period of chaos and they will come back so
you must be ready.

The final strategy is the long term strategy that will grow your business to
new levels of profitability.  As many as 25% of the retailers will not
survive to join in this process but those that do stand to grow the business
to new levels.  Making that happen requires strategic planning, guidance
based on data and analysis and a team decision process that involves buyers,
sales, an accurate plan and an implementation process to make it work.

Your affiliate will be providing a break even analysis and plans that
reflect changes that serve as the foundation to this process.  Following
that plan is more important now than ever before.

Our Winning@Marketing team has been operating for 4 months now and working with these marketing experts has given me some real insights into many changes occurring all around us. I remember 45 years ago as a kid in my dad’s men’s store, most marketing was word of mouth and a weekly ad in the local paper. The strategy was to open a store, have merchandise available, put an ad in the local paper and wait on customers when they came in the shop. The world has turned upside down since then. Let’s look at a few of the changes that have affected or soon will affect your business future.

Advertising - THEN: Advertising used to be lofty claims and expensive fluff – jingles, sound bites or tag lines. NOW: Today information speaks to individuals. Successful businesses have a presence on the web. They engage in more cost effective marketing targeted to buyer personas and customized for their benefit. Blogs, article marketing, SEO, SEM and e-mail campaigns are replacing or at least augmenting traditional media advertising.

Promotion/Message Delivery - THEN: Retailers broadcasted their message by either advertisements in the newspaper or on radio or TV. Potential customers would see it, some of them would react and come into the store. NOW: With customers searching for everything on the internet, the broadcast has changed. It’s now the customers who broadcast what they want by searching the web, and it’s up to the retailers to “be there” when they are searching.

Wait on customers - THEN: People had limited choices and you knew your market and the competition. You got to know customers and you did not need a great effort to get them to come in; they came in anyway. Competition increased and businesses turned to direct mail and phone calls. NOW: Marketing is more about getting to know your customers than ever before. Getting to know them means what they do, what they like and who they really are. When they like you, they like your merchandise and like the buying process, they are loyal. People still buy from people who they like!

Hype - THEN: Marketing was about creating an external perception that was nirvana. “Drink our beer and the girls will flock to you!” “We offer the best service at the best price!” People have either become a lot smarter or are receiving a lot more choices. These ads don’t work. NOW: Reality matters. Teamwork and excellence are fundamental to your reputation and growing a business. Leadership needs to inspire staff and give direction. It’s all about what happens at the EAI (Employee Action Interface). When your marketing is about the truth, it creates buzz, word of mouth, loyalty and passion. The truth needs to be about creating partners of your customers and providing support as well as product.

Markdowns - THEN: Inventory that didn’t sell went on sale. What still remained was stored for next year. After three years if it didn’t sell, it went to the sidewalk sale. The bottom of the funnel was a charitable donation. NOW: Rising prices, expenses, competition and the internet have all put pressure on cash flow. Cash flow relies on not only buying the right goods but also the right amount. Measures and control of margins, maintained markup and sell through are critical. Budgeting, classification structure, inventory management and merchandise planning are fundamental to success today. Information, analysis and the right actions are no longer hallmarks of the best retailers, they are hallmarks of the survivors.

There are many other changes happening with the economy getting tougher every week. Winners will be the ones who move the market from people who shop with you to people who are passionate about your store. Winning@Business™ gets your team focused and effective, Winning@Retail™ increases cash flow and profits and Winning@Marketing™ drives new prospects to your door. Call Management One® to find out which processes work best for your business.