Unseasonable weather, foreign exchange pressures, a port slowdown, a terrorist attack — the list of external and uncontrollable factors that could negatively impact a company’s sales is a lengthy one.
While there isn’t much that footwear-and-apparel companies can do to prevent or stop macroeconomic and geopolitical disrupters, that doesn’t mean owners, managers and top-level executives have to sit around and watch their businesses fold.
As the weather takes its time to shift to colder temps and companies find themselves grappling with inventory overages and a more frugal consumer-landscape, FN’s business editor offers three strategies to manage the slump.
Create An Experience
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Business and marketing consultants have been almost unanimous in their recommendation that more retailers should invest in creating “experiences” for customers. Whether it’s spicing up the in-store space with new décor and an expresso machine or redesigning the e-commerce site, aesthetics can create value.
Perhaps the last thing a business wants to do when sales are down is to spend more money on non-product assets. But, evidence shows that retailers have been losing customers to “experiences” such as dining, museums and excursions while those that can provide something more in their stores — or even in their product-packaging — are winning.
“Many retailers [are] likely losing share to consumers saving and/or spending on experiences, housing and “Instagram-worthy” goods and services,” Cowen and Co. analyst Oliver Chen wrote.
With the influence of social media at an all-time high, consumers want to visit stores and buy goods that, when photographed, can garner the most “likes.”
Nearly 60 percent of consumers surveyed by e-commerce logistics and research firm Dotcom Distribution indicated they shared images online to “show something off” (59 percent) and to recommend products to their family and friends (54 percent). And social sharing, the study suggests, encourages product purchases — 61 percent of online shoppers said they were convinced to buy a product after looking up images and videos on social media.
Reevaluate Pricing
During a retail-spending downturn, it is important that companies evaluate whether their current pricing model makes sense. While heavy discounting can drag margins, not selling any goods at all could be much worse.
It comes down to the simple rules of supply and demand. No snow? No need for snow boots.
New research suggests that today’s consumer is even more “buy now, wear now” minded than in prior years.
However, a discount, BOGO deal or other pricing incentive can make a customer consider purchasing something that he/she has no need for right away — simply because the deal is too good to walk away from.
Sure, discount selling doesn’t boost the bottom line as much as full-price selling does but the key it to be proactive and take the measures that are necessary to keep your business afloat so that you’re around against next year to do it all over again.
The odds are that one’s competitors are already engaging in heavy promotional activity during the slump. Striking a balance between being competitive and remaining profitable is key.
Tighten Up Money Management
Determine the areas in your business where you can save money.
Is Monday your slowest selling day? Find out exactly much it costs to operate your store(s) on Mondays — add up gas, light and heating expenses as well as employee wages — and if that number is above the average sales’ revenue on Mondays, it may be time to revise the open/close schedule. Similarly, if you find yourself nearly shoving customers out of your store to close on a Saturday afternoon, you could consider adding more hours to that day.
While a new schedule may be drastic — and, admittedly, creating a new or inconsistent schedule could put off existing customers — there are other cost-cutting strategies to enact. Are you wasting money on excess office supplies and stationery? Do you really need the cleaning service to come five days a week or would three weekly visits suffice? If you’re operating in the e-commerce space, do you need a website administrator on your staff or could you learn the ins and outs of the site yourself and only call in expert help when absolutely necessary?
Retail slowdowns can be the optimal time to assess a business’ money management strategies as expenditures become more obvious in the face of lackluster sales. So, retailers and brands should take advantage of the opportunity to learn new cost-saving methods.
