Specialty Retail Blog

By Jerry Kamhi, M1 Affiliate;

If you find yourself on unfamiliar ground and thinking it is next to impossible to succeed in this new and constantly changing retail marketplace you’re not alone. What’s going on is unprecedented, at least in my experience,” said Allen Questrom, former chief executive officer of J.C. Penney Co. Inc., Federated, Barneys New York and Neiman Marcus Inc.

“This is the deepest consumer retrenchment I have ever witnessed. It’s like someone turned out the lights and the world changed. ” We are experiencing an unprecedented Marketplace. It’s different than just months ago and one that we have not experienced in our own lifetime.

Says Ron Frasch, Saks Fifth Avenue Executive Vice President, “If
you’re off 1/30th of an inch, you have no chance.”

The Economy has forced consumers to rethink everyday purchases
and justify each one of them.

The Pop Culture in-vogue term “Fashionista” has quickly been replaced
with an appropriate play on words…“Recessionista”. Of course, there
is the ubiquitous blog to chronicle cheap and chic choices:
www.therecessionista.blogspot.com

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It has been estimated that up to 30% of retailers won’t make it through this recession in business. Almost every one of those failing retailers will have one characteristic in common. Prior to going out of business they will cut expenses. Some will cut more and faster than others but most, if not all of them, will cut expenses.

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Driving traffic is more important than ever before. There are fewer shoppers willing to spend as much as they did a year ago. One of the important actions is an aggressive marketing plan. That does not mean expensive but it does mean a concerted, sustained and constant effort to drive traffic. Some simple suggestions include:

• You must stay involved - you can no longer hire a marketing firm and walk away.
• Your staff must be involved - they must implement the plan.
• Your customers must be involved - they are what matters.
• Finally - measure, track and analyze your efforts to constantly learn in a changing environment.

The business is out there but only the aggressive will survive! Start with a weekly event calendar for the next six months. If you need some ideas for a boost, call your M1 affiliate for input.

Affiliate Alan Roseman (Los Angeles, CA) was asked to be a guest writer for Transworld Business, a trade magazine for the surf, skate and snow industry. His article “How to: Create a Merchandise Plan” was included in the May issue.

Also one of Alan’s clients was a shining star this past month as Clever on Main received a glowing review by LA Shopping Reviews.

The appointment was in 25 minutes. I was driving in Phoenix several years ago, looking for the store where I was to meet with the owners. Yet even though I was close, the more I drove the more confused I became. Fifteen minutes ticked away as I turned here and backtracked there, getting me no closer to my target. Admitting to myself that I was lost was really tough but then I did the toughest thing known to man: I asked for directions.

Pulling to the side of the road, I rolled down my window and asked a man strolling on the sidewalk if he knew how to get to my destination. He assured me that he did. With some hand waving and drawing on his palm, he laid out the specific instructions. Jotting the notes down on a pad I keep in the car, I thanked him and was off to my appointment.

After nearing the end of the instructed route, I realized that the directions were in no way taking me to where I wanted to go. The guy who mapped the way for me had either been mistaken, vindictive or just wanted to help and was too embarrassed to say that he couldn’t. In any scenario, I was now more lost than ever, ten minutes more behind schedule, frantic, mad and disgusted all at once.

The reason I relate this story to you is because it illustrates the importance of accuracy in the information that you use to guide your direction on any path. Just as I was more lost when I acted on information that was supposed to be accurate but was not, a retailer can miss opportunities and can find himself with more problems than when he started seeking guidance. Not every OTB budget number is based on the same input variables nor does each one use the same mathematics, statistics and modeling to generate sales forecasts for a classification. Even numbers that are generated with the technology differ greatly in their ability to provide the right information when the analysis and personal input differ.

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“Finance is the art of passing money from hand to hand until it finally disappears.” - Robert W. Sarnoff

NYT article about weaker trends in luxury items, but profit on items well adapted to sell in a downturn.

<a href=”http://www.nytimes.com/2009/05/20/business/20shop.html”>link</a>

If you’ve ever flown a major airline, you’ve probably been frustrated over the variations in the seat prices. How can the airlines sell basically the same seat on the same flight to a business traveler for $600 and a student for $200? Why should it matter if you stay over a Saturday night at your destination or if you fly there and back the same day?

One answer is marketing. Airline personnel spend a good deal of time and money figuring out who their customer is, how to market to him/her and what he/she will pay. They know whether the passenger is traveling for business or pleasure and they know who exactly is a frequent flier of theirs. What does this have to do with you if you are an owner of a small to mid-size business?

A lot! You should have as much similar information about your customers as possible. Does your database let you know if customers buy for business or leisure? Do you know if you are a preferred business for their needs or not? Have you ever figured out how much each customer spends at your store each year? When? And on what?

You should already know the easy stuff about your customers such as their birthday, size, color preference, family information and work information. If you are going to be more effective than competitors at attracting customers, you must know even more about them.

Turn your sales staff members into detectives and have them find out the key information about your customer base. Give them a way to record the data. Implement a strategy to use the information to improve your CRM and your personal marketing campaign. Armed with an arsenal of information on your individual clients, you should be able to customize the customer’s shopping experience at your store!

With the onset of The Great Depression of 2009, we are constantly hearing a lot about change but not nearly enough about balance. Whenever there is change, it brings an imbalance since the change affects different people, different departments and different customers in ways that are not equal. The scramble to balance the system again, or at least to find a new balance, is extremely important.

One example comes in our workforce where millions have now lost their jobs while others are still working. The imbalance in pay that ranges from unemployment compensation to the same old salary is huge. Many companies are trying to stabilize the system through furloughs and pay cuts to rebalance the pay structure and help people keep their jobs. Other companies are eliminating bonuses which has the effect of eliminating a source of incentives too. Some companies are doing surgical layoffs to raise the quality of the staff. With this approach, each worker is evaluated for performance and the lowest performers lose their jobs.

Another balancing act that is critical is that between revenue and expenses. As revenue has fallen in most businesses, there must be a rebalance on the expense side too. Every expense line is part of the rebalancing and some must be renegotiated while others must be eliminated. Expenses you could not live without a year ago now have a good chance of not surviving the new balancing process.

The new balance needed will extend beyond your business and extend into your personal life as well. Personal finances will need a new balance point. Even your other habits will find a new balance as we redefine ourselves for the “new normal” being established. As you go through this process, be aware that, as a store owner, your customers are also doing the same thing in their personal lives.

Your business will be affected in many ways that you may predict and others that will only become clear in the rearview mirror. For example, many vacations are being cancelled or curtailed. Will people buy less resort wear? Will they shop more with you because they are not shopping while on vacation? Will they shop less because they are not preparing to go on vacation? The responses will vary but the questions must be asked.

The new balance will make our old rules of thumb into myths. The faster you can find a new balance, establish new rules and move forward, the more successful you will be.

Every April ManagementOne® holds its annual meeting where many of the affiliates meet and share their experiences of success with their peers. Even a year ago, M1 could see the signs of impending tough economic times so the group discussed methods to help prepare their clients. With changing markets, everything changes. That means working to adjust budgets and infrastructure to match forecast sales and revenues. Businesses need to understand their financial statements and how they are changing. Now, more than ever, tight cash flow management is absolutely critical. How recent was your last break-even analysis? Who determines your weekly check run? Some changes will be difficult but necessary for success in the long run.

Another point that M1 has been stressing is to be careful about marketing cutbacks. Successful retailers are those who fight hardest to provide what their clients want. Not all the competitors will survive. The best marketing will attract those shoppers who would have shopped with competitors who didn’t make it. Since the last meeting, affiliates have been sharing creative client ads, events and marketing ideas.

Next month will be the 2009 ManagementOne® meeting. With the economy difficult to predict, more ideas will be discussed and analyzed to help our clients and keep them in business. Changing times call for changing measures!