Don't Let The Sky Fall On You
You can’t pick up a trade magazine or the financial section of a newspaper without reading about another retail chain closing or going bankrupt; Linens N Things and Mervyns most recently. The stock market is up and down so wildly it could be a new ride at Disneyworld! With so much bad press about the economy and uncertainness caused by a presidential election, it is hard to keep my eye on the ball and run my business. But keep my eye on the ball I must.
The problem is: there is so much bad news every day it is hard to remember you came to empty the swamp when the alligators are snapping at your tail. Many years ago when we sold pool supplies, a customer came in complaining that he couldn’t get his pool to be blue and clear. It turns out he was testing his pool three times a day and adding chemicals every time. He never gave his pool enough time to reach equilibrium and he was driving himself crazy. The same philosophy goes when we are trying to understand where the economy is going. Don’t base your business model on a one-day stock drop of 700 points. Warren Buffet would never do that.
I am not saying I wear blinders and don’t pay any attention to the news. Nor am I Pollyanna whose unrelenting optimism drives me to do foolish things. Instead, my business model for 2009 is somewhat more conservative that it has been in the past few years.
I went to market with an almost empty warehouse; so, the lines that did well last year got reordered. But, this year, I am not ordering risky items. For example, last year I ordered a very expensive teak day bed. I did not expect it to sell quickly but created the “wow” factor right at my store’s entrance. If it didn’t sell, I was fully prepared to lower the price at the end of the season. I figured it was good advertising and set the mood for shoppers. This year the “wow” factor will the color story my store tells. Color adds a lot at no additional cost.
Nor am I ordering from factories that had delivery or quality problems in 2008. If I order for a certain level of sales and business is better than I expect, I will need to deal with factories that can turn out goods rapidly and with consistent quality. In fact, if the economy does start to improve, filling custom orders could be our biggest problem next year. Vendors who are cutting welders, painters and seamstresses right now won’t have the skilled labor to respond to a sharp up tick in custom orders.
My advertising is going to change a little, too. In another blog, I suggested the Internet and Google are giving the yellow pages a run for their money. Based on that, I am going to change my yellow page advertising. I will also emphasis more event driven advertising and less institutional ads.
In the most recent issue of one of the trade publications, there was an article about effective retail store advertising.
They suggest all specialty retailers include something in their advertising that we have kept hidden under a bushel basket for years. . . our staff’s ability to go to a location and design an entire outdoor room. We do this design work all of the time in our store with customers. Next year the big change will be our willingness to go to the job site and help the customer. This is a service they can’t get from anyone else. . . big boxes, warehouse clubs, department stores, or standard furniture stores. Not only does it differentiate us, it adds value to our customer’s shopping experience and my ads are going to talk about it.
One thing that customer’s will not see when they come into our store is an empty wagon. There will be no empty spots on our floor. Everything will still be accessorized as before. Consumers have a sixth sense about a store’s health based on what is on display and how they are treated. If a consumer senses a retailer is cutting corners, they will more than likely blame it on the economy. Then, they might start questioning whether it is wise for them to buy a luxury item at this time. We have to be positive to make our customers shop positive.
These are small steps that don’t take much effort and don’t change my basic business model. I am not going to start carrying lower priced goods because I will never be able to go as low as any big box. I am not going to replace experienced sales staff with cheaper less experienced people. My staff is my biggest asset and I want them to be here when the economy improves. I am trying to do something successful specialty retailers are very good at: treating change as a positive motivator instead of letting it panick us. Remember, even if the sky is falling, someone will be able to make money cleaning it up!
Yours in confused retailing, Bruce