This Era of Frugality: So What's New?

The general media is making such a big deal out of the stinginess of shoppers that it's become a self-fulfilling prophecy.  Frugality is presented as fashionable, something shoppers should take great pride in.

But, what's new about that?  Nothing!  

Retailers always have had to convince shopper to open their wallets.   In fact, for many shoppers, while NPR stands for National Public Radio, what NPR really means is "Never Pay Retail"!  

That's why every retail segment - from meat markets to autos, from women's apparel to sunglasses - has a "fashion" element.  Customers want whatever is new, or "in", and retailers provide it (some better than others.)

Here is our point: the retailers who moan and provide fodder for the moaning media (and its megaphone) are part of the problem.  Conversely, the 5-10% of all retailers who are true merchants see this era as simply another challenge, even an opportunity.  

Convincing shoppers to become buyers is why merchants love this business.  And love it now more than ever.

You're Focusing on What?! "Top Line Sales"?

"How are sales?"  

That's the international greeting of retailers.  And well it should be.  But if you watch only top line sales, you are not in control of your business.

For example, many retailers will lament, "Last week, sales were off 5% from L.Y. When are things going to get better?"  

But, consider these retailers: 

• "Last week, sales were off 5% from L.Y.  But, transactions were even with L.Y.  Ah ha! Maybe we should spiff our associates for add-on sales."  
  
• "Last week sales were off 5% from L.Y.  But transactions were off 15% from L.Y.  Ah ha! We need a Customer Appreciation Plan whereby our customers get 10% off future purchases each time they bring in a new customer."

See, targeted action steps to address the causes of sales declines, not just the symptoms. And look what it can do for you:

1. Reduce frustration!
2. Spend limited resources wisely
3. Involve sales associate in a positive way

All this just by looking at the free data you already have, and just using it!

Every retailer has access to the number of sales transactions they've had: daily, weekly, monthly.  (It's in your POS system or your cash register.) But too few actually take the next steps – to tally, analyze, identify trends - that can turn it into valuable management information.  

Few independent retailers can work harder.  But there are opportunities to work smarter!

Bigger Could Be (Much!) Better

As the current saying goes, "Why waste a good financial crisis?!"  We support that rationale!

Look, independent retail owners thrive on risk-taking.  They take risks every day.  Buying merchandise; running promotions; hiring new people; etc, etc.  These all are risks.  It's every day life for retailers.

So how about one more?  Right now the world is full of stores and service operations anxious to be sold.  For all the reasons we all know, thousands of owners either financially must sell or they have reached the "I give up" stage. Sad, but true.

What a great time to seize an opportunity!  Let it be known that you are looking to buy businesses that fit your business model.  And you should be, with one caveat: get seller financing.  Don't use much, if any, of your own cash.  Yes, those deals are out there.  So insist on them.

You and the right lawyer might build a much bigger business – fast! – right now.  Lots of low-hanging, distressed fruit available. (And frankly, those retailers who have reached the "I give up" stage will be glad to realize some value from their business, instead of just winding it down. And the seller financing could give them an income stream over time as well. It can be a win-win situation for all parties...including employees and customers.)  

Is "Bigger IS Better" appealing to you?

The Tell-Tale Signs of Retail Recovery

One of the constant major annoyances in life these days is the propensity of the media to dwell on – and bombard us! – with negativity.  And never more so than during this recession.  So how should a retailer cut through the flak?  Just bemoan the negativity, and wait for things to get better?

Not in our view.  The better approach: identify the best leading indicators for retailers, and focus on those.

A few days ago we were debating this topic with a very savvy industry person.  "Unemployment is rising, TARP money isn't helping, sales continue to be off, bankruptcies are escalating.  Is there no turnaround in sight?" he kept bellowing. 

When he finished, we bellowed back, "Well, you're referring to trailing indicators. You're focusing on what already has happened, or is happening. Retailers need to monitor and be riveted on what will happen.  That is, what are the leading indicators that 'normal' shopping is about to resume?"

We continued, somewhat more calmly: "The key leading indicator for retailers is known as 'consumer confidence'.  Watch for monthly reports on this from government and private researchers.  (It's been rising slowly for three consecutive months.)"

"And a major component of consumer confidence is the stock market.  Yes, the stock market, where over 2/3rds of Americans have at least some of their net worth involved.  And that's been rising since March 6!"

Most of all, recognize those trailing indicators for what they are: last week's news.  The tell-tale signs of retail recovery will be revealed first in the most important leading indicator for retailers: consumer confidence.

Where Is Retailing's Bold Management?

Fifty-eight Gottschalks stores, many being the economic heart of their town, being liquidated. Such a shame.  When is retailing going to be willing to take bold steps?  Are managements too wimpy?  Or is it too many "bean counters" and not enough merchants making the decisions today?

Before throwing in the sponge, did Gottschalks look at closing their stores on, say, the three slowest days of the week?  They could be open on whatever 4 days their own data shows their customers prefer to shop.  (And it may not be the same in every town.)  

What's outrageous about that?  Not only might they have reduced overhead by 25-35%, but their very best sales associates would have been available to customers almost all the hours the stores were open.  What a concept!  The best help on the best days for the best customers!

Instead, after 105 years of serving these smaller communities, Gottschalks is going dark full time.  And their towns are going even darker all the time.  Sad.  And maybe unnecessary.

Isn't there an organization bold enough to grab Gottschalks and try out this concept?