As we head into the recovery and adjust to the possibility of a levy to pay for the flood infrastructure restoration work so that Julia and Wayne can keep their surplus promises, smart companies need to prepare for a slow and steady return to growth.
In the US a small regional retailer named Sam Walton drove his truck around rural communities to find markets that were not being served by the big guys. His store “Greeters” made new customers into store advocates, staff into ambassadors and retail planners into systems leaders.
In the late ’70s Walmart was a successful mid-sized southern retailer. By the time the recession of the early ’80s was over, Walmart built the infrastructure to expand confidently from its southern base into every corner of the country and, ultimately, around the world. Today Walmart has 20% of total retail discount sales in the States.
There are lessons to be learnt from Ian Moir’s seven-year efforts as CEO at Country Road, as he managed the turn around of a retail business under highly competitive conditions. He has focused on his customers, built the skills base of his company, reduced inventory levels by taking less mark downs and survived a 20% slide in net profits following that GFC.
His path is an alternative to deep discounting and quality reductions based upon volume sales. Quality assurance and brand maintenance provide a longer-term orientation.
Many small enterprises are facing increasing competition from online sales that can compete on price but cannot compete on service and customer relationship management. When sales decline, assortments have to be adjusted to bring inventories back into line. If inventories remain higher than sales can support, precious cash becomes tied up in inventory that turns very slowly, if at all. And in this economic environment, nobody can afford to have cash tied up in excess inventory.
While consumer confidence remains high, this frugal and informed customer response demands focus and strategic planning from smart companies who manage to remain close to their customer base.
As Executive Director of the Australian Retail Association, Russell Zimmerman said, “Retailers are dealing with a new type of consumer who is frugal and holding onto spare cash for savings or to pay off debt, and a steady hand on interest rates is needed for the moment to ensure ongoing retail profitability in 2011.”
Independent retailers and suppliers will need to find ways to segment their markets and update their contact lists to achieve a greater degree of market focus. Every small business needs to see the current recovery and post flood drop in consumer confidence to take a fresh look at this year’s business and marketing plans. The cash is out there for those who maintain good email databases and update their offers as the market recovers confidence.
The key to success in the next year will be based upon a combination of quality assurance and innovation that builds customer loyalty and service performance. Confidence levels remain at very high historical levels and consumers are willing to make the effort to find either great bargains or very special pieces that are tailored to their interests.
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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.
Email dr.colinbenjamin@marshallplace.com.au
Phone +61 3 9640 0099
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
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