Recent McKinsey research indicates that during the last two recessions (1990–91 and 2000–01), growth slowed for nearly every retail subsector in the United States. Of the retailers that existed during both downturns, 93% experienced slowing revenue growth in one of the recessions, and 59% endured it in both. Unfortunately, when the economy goes on an upswing, the average retailer may still experience a lagging growth.
The question is: can you make it through? You can if you don't put your head in the sand and pretend things will be better. If you have money, take it and run. If you plan to stay around, this is the time to think positively and decide what to do as your market gets better.
Cutting overhead, doing less advertising and shutting off the heat may help get you through these times, but will you be in any better position when things are better? Cutting expenses is a more defensive than offensive move; it may not save you–it just may prolong the inevitable.
What you need is a combination of tactics.
The dynamics of a downturn—declining sales often followed by a sluggish recovery period – means some quick thinking is in order. In tough times should you cut staff and close stores? Even in times like these, there may be ways to improve your positioning in the market, but it might not be easy. This is the time to do some brainstorming with your team and an outside consultant.
Determine the overall health of your business; your team players, management commitment and your balance sheets. If your business is in good shape and you have cash, this may be the time to invest in other businesses or people that will improve your marketing position. This is something your weaker competitors can’t do. Many of them are just hanging on. Like monopoly, maybe this is the time to add some hotels to your property.
Do a market analysis. Where do you stand, what are your growth possibilities, what are the strengths and weaknesses of your competitors? What are your competitors doing to get business? Can you steal their market share or is it time to move out of the neighborhood? There may be some good real estate deals out there if you have the financing.
How about purchasing a business that complements the one you own? How about adding a product category, like kitchens or window treatments. What can you add that is natural for your existing business?
This is the time to look for good employees–but be careful hiring from your competitors. If you have a decent training program, hire people with good attitudes and enthusiasm from other industries. You need good positive people.
Maybe this is the time to move into another market; maybe someplace you’ve been eyeing that will help you take over your weaker competitors' market share. Can you expand your existing business and take over the market? It’s the Monopoly thing again. Can you negotiate a sweet deal for yourself?
Start analyzing your traffic. Was it decreasing before the slowdown, were you losing business? Has the neighborhood changed? How are other retailers doing in the area? Is it the economy or something else?
If you’ve got dough, how about going on an all-out push to drive customers into your stores? This will help get rid of some of your marginal competitors. Go into your “down and dirty mode” and offer deals to your customers that they can’t refuse.
Weathering the storm and going back to basics may help get you through it, the problem is, if you aren’t on the look out for growth during the bad times, where will you be when times are better? Can you afford to make improvements on your building, change your displays and look profitable? It’s times like these that customers get scared – if I order from you will you be in business long enough for me to get my order?
It actually may not be a bad idea to take out the Monopoly set and get your employees' competitive juices flowing.
Remember, "big shots are little shots that kept shooting."