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.

 Now is an excellent time to renegotiate your lease.

The November issue of Los Angeles Magazine lists Alan Roseman’s client, ZJ Boarding House, as the best athletic shoe shop for skateboarding shoes in Los Angeles. Congratulations Alan, on providing exceptional offerings to clientele!

Stay positive! In the quest for success, there is much to be said for the importance of a mindset that will not accept defeat and instead is committed to work proactively to make things work. The changing landscape of the marketplace can initially seem intimidating. The answer is to view what is happening through new eyes and to deal with the situations with new rules. When all of our affiliates met for the annual Management One® meeting in April, much of our decisions centered on how businesses will be able to weather what we saw as the impending economic uncertainty. We concluded that it can be done and we will share with you the new rules we developed.

RULE 1: Don’t cut back on marketing! Although customers may be watching their expenditures more closely, they still want what they always wanted. Successful retailers are those who can fight hardest to provide what their clientele wants. The best marketing will attract those shoppers who used to shop with competitive businesses that panicked and failed to follow through on the new rules.

RULE 2: Adapt! With changing markets, everything changes. That means working to adjust budgets and infra- structure to match planned sales and revenues. Make certain you understand your financial statements and how they are changing. Now, more than ever before, tight cash flow management is absolutely critical. How recent was your last break even? What determines your weekly check run?

RULE 3: Adjust! The biggest investment you make is in inventory. Now is the time to be sure you are getting the most from each class. Inventory planning is vital to identify what is happening in your local market with your customers. Sales plan accuracy of 90% should be the minimum acceptable. Even if revenues are falling, profits can go up with faster turns, higher markups and better buying.

RULE 4: Review! Your staff is your next largest expense and possibly the most important element to the success of your business. In good times, managing, motivating and training are often overlooked. When the going gets tough, the tough start creating more excitement and productivity from the staff. A revised organization chart may call for cutting back on staff prudently. Job descriptions and performance reviews may identify weaknesses that must be corrected. An analysis of compensation can create opportunities to enhance performance. There are hundreds of ways top managers garner more profits and achieve more successful both in good times and bad. Problem solving, sales training, buyer training, negotiation skills, hiring techniques, job descriptions performance reviews and marketing are but a few ways the best focus on continuous improvement.

RULE 5:Raise profits! It sounds obvious that if you can raise profits, everything else doesn’t matter. A few of you may be asking, “But how?” The answer we came up with is to buy more effectively. That means lowering your cost of goods. As the economy and market change, you have to change old habits and rules of thumb that you use to run your business. How long have you been talking about private label? Will your customer “only” buy name brands? There are many myths. Check into strategies and opportunities that afford you a higher margin.

Every change is an opportunity. When one door closes, another opens. Business owners must wear many hats successfully. If you see a threat to your future, do at least one new thing you have not done or you are not currently doing. No one knows it all, no one has it all, no one does it all. But everyone can do more!

“Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure or nothing.”-   Helen Keller

The November issue of Los Angele magazine lists ZJ boarding house as best
athletic shoe shop for skateboarding shoes in Los Angeles.

Errol Chavkin’s client, Olive and Bette’s (NY), was mentioned on the television show Entertainment Today. Alan Roseman’s client, ZJ Boarding House, celebrated its 20th anniversary with a wildly successful carnival in Santa Monica, CA; the proceeds were contributed to charity. In England, affiliate Thierry Bayle had a feature article printed in the publication Drapers.

Messengers of doom and gloom are dominating the air space and permeating conversations in businesses large and small. They say the economy is reeling and many business owners are in a state of panic. Change is occurring. Management One® has always professed that in order for businesses to flourish, management needs to respond to change by focusing on what you can control and utilizing your assets and resources to their fullest advantage.

True, the changes that are presently taking place are huge and sudden, but that just means that the measures to deal with them need to be well thought out and effective. Now, more than ever, it pays to not be buffeted about by circumstances but to take charge and grapple with the situation and the future with the help of the experts of change, the team of Management One® affiliates.

This situation promises to exist for years and as such, hunkering down to weather the storm won’t work.  You must take definitive action to position your store as the leader for the future.  For example, James Hallman has been sending out positive e-mails and ideas to his clients in addition to the challenges he presents to them at their monthly meetings to stay aggressive. A passage from one of James’s messages makes a poignant point:

“I know that, like me, you feel fortunate that none of our friends, neighbors and countrymen will ever be satisfied with a cave for shelter, an animal hide for clothing and a hunk of raw meat for food. As long as that is true — we will do business.”

Ed Cloeter (Detroit) also relays his years of experience and retail wisdom to his clients with continued messages. He recently relayed a tale to them that he recalled from when the country was undergoing a drastic economic downturn in the past:

A little fellow parked himself on a busy intersection and began selling hot dogs. Sales grew so he ordered more hot dogs and buns. The little man had a son who came home from college for a holiday break. The son was studying for his B.S. in Business. The bright lad saw all that his dad was ordering.

Astounded, he barked, ‘Dad, don’t you know how bad the economy is? You’d better cut back!’

The little old man hung his head and listened to his son. His son was, after all, echoing the gloom and doom of the day. The dad cut back his orders and, sure enough, sales dropped. Occasionally cars would stop but would pull away when they found there were no more hot dogs. The man scaled back more. Soon the man, the cart and the hot dog business were gone from the corner. The son was right.

It’s clear from the simple tale to see that faulty logic can lead to unacceptable conclusions. Instead of panic and retreat, business owners need to remember that there is still a market out there. Those who have the know-how to maintain the connection and the attraction to their business will be able to keep their heads above water. Your store, your customer and your situation may all change but you need the right strategy to succeed with the new dynamic!

The Management One® affiliation of consultants and clients has been sharing ideas and actions that have succeeded in overcoming the recent obstacles. In addition, M1 is armed with valuable knowledge of what is working through its giant network of hundreds of retail clients across the United States, Ireland, England and other countries. Information, motivation and accurate forecasts of the market are key elements to remain in today’s marketplace. Advantages available to M1 clients, such as Margin Buying Service, are a great help in providing an edge to success and even survival. For those who simply try to “ride out the storm”, there will be fallout and many carts and businesses may disappear from the corner.

What is your strategy? Remember — hope is not a strategy. Take control and take action! The strategy and subsequent tactics you employ today may mean the difference of whether you will survive this economic environment or be one of the casualties.

Discuss your situation with your Management One® affiliate. If you are not already a client, contact Management One® today for a no-obligation meeting with an affiliate in your area to see how your business can take action to survive and to thrive: www.management-one.com.

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.

 A great article about the strong performance of Urban Outfitters