The recession appears to finally be ending, but but for independent retailers, many changes that the economic downturn brought about are here to stay.
The recession is coming to an end. That is now clear. What comes after is also starting to come into focus as well. We’re not going back to the way things were. The things that have worked in the past for independent retailers are not likely to be good enough going forward. As we begin to recover, we’re likely to experience a sustained period of slow growth from the new baseline that’s been established. While we remain an aspirational society with a dynamic economy, success in the future will require skilled merchants with an entrepreneurial mindset, who are passionate, focused, aggressive, disciplined and committed to excellence. The biggest change is that consumers are now firmly in the driver’s seat.
For over a decade they spent relatively freely. Not anymore. They have become far more cautious, and their emphasis on intrinsic value is now far more than a rational response to economic realities, it’s become a cultural virtue.How can you expect things to be different? Here are a few thoughts:
You’ve got to have passion. You are the leader, you set the tone. Your passion is more essential than ever in differentiating your business from your competition. Your employees look to you for direction and purpose.
Without your guiding passion, they will be rudderless. Even more importantly, your customers also look to you for direction and purpose.
Without your animating passion, your store will feel flat, and your customers will go elsewhere. Customers are going to be far more selective about what they purchase.
They will be far less receptive to fringe categories and items. They are going to demand the best quality and features for the price, at each and every price point. Merchandise assortments will need to be more carefully considered and selected. Assortments will need to be narrower, more tightly focused, and skewed toward more moderate price points.There is going to need to be much greater attention paid to cash management. Greater focus will be required on planning cash and managing the business to hit cash targets. Cash will remain King, expense control will be essential. You must maintain maximum liquidity at all times.
Inventories must be kept lean, tighter, and must turn faster. There’s no longer room for excess inventories and the costs associated with them. Salespeople are going to have to be far more skilled in engaging customers in a relaxed and genuine way. Every salesperson must share in the animating passion of the business, and must exude that passion, each and every day. At the same time, customer facing payroll must be evaluated in terms of how much revenue each salesperson is generating. There’s no longer a margin for error. Every employee must contribute value to the business.
Your customer service must be exceptional, and worthy of your customers telling their friends about. You must excel at the basics. Customers will expect that they’ll be able to easily find what they’re looking for, without having to search. They will expect that you’ll be knowledgeable and have the answer if they have a questions or a problem. They will expect returns to be handled quickly, painlessly, and hassle-free, by empowered employees eager to help. They will expect to be able to get through checkout quickly, and will not tolerate long lines. You’re not going to be successful if you can’t execute these basics flawlessly. Your execution must be exceptional, day in and day out.
Stores are going to have to captivate customers. They are going to need to be unique and distinctive, warm and inviting, and stimulating to the senses. Each store will require an esthetic vision, and that vision must be executed in setting, layout, decor, lighting, and displays.
Merchandise must be fresh and exciting, and displayed to its best advantage, with merchandise always flowing in so there’s something new and current each time a customer visits.Marketing can no longer be passive. It’s no longer enough to merely turn on the lights, unlock the doors and wait for customers to come. You must reach out and become an active and engaged member of your community. You will need to join and be active in your local Chamber of Commerce, BNI, and other civic and business networking groups and organizations. The objective is to expand awareness of you and your business through sustained and committed community involvement.Price promotions will be increasingly counter-productive. All they do is make you seem like everyone else. There’s nothing unique and distinctive about a sale, anybody can drop their price. Price promotions do not generate loyalty; experiences and relationships do. Captivating experiences and enduring relationships cannot be replicated by others.
When you strengthen the relationships you have with your customers, you create not just loyal customers, but also very profitable customers. Your marketing focus now must be on building relationships with your existing customers, and creating viral marketing campaigns. You will need to get actively involved in email and social media like Facebook and Twitter.
The message will change as well. In the new media, customers don’t respond to price promotions and other messages that come across as a hard sell. The emphasis of every message must be on providing information, building community and generating buzz.
Think in terms of experience-based marketing. You will need to grow your business by building a community of interest around your existing customers. Think of yourself as a community organizer, bringing people together in fresh and stimulating ways. Trunk shows, off-site events, in-store events, after-hours events, speakers, appearances, receptions, exclusive showings, pre-season viewings, book signings, workshops, all are effective ways to add value for your customers and build those relationships. And with each event, you’ll need to encourage your customers to bring their friends with them, through a referral-reward program. That way, you’ll continually be drawing in your next tier of customers.
The world is changing, yet in many ways it remains as it was. If you’ve read through these things and thought to yourself that there’s nothing that’s particularly new here, you’d be right. These are the things that the very best independent retailers have been doing all along. The point is, however, that merely being good will no longer be good enough. Every independent retailer will need to raise their level of performance to this higher standard in order to survive and thrive in this new and more challenging economy. The competitive environment demands it. So does the consumer.