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Consider these front-page headlines and the accompanying chart (see above) from the June 6 Wall Street Journal* – "Surplus Inventory Piles Up", "Stores Are Stuck with the Wrong Items." Look at it carefully, and think of your operation in comparison. How do your numbers compare? Are you as shocked as we are? How did this happen?
Partly as responses to the unprecedented impacts of the pandemic.
In retrospect, these seem to be over-reactions.
But there are other unprecedented factors at play. There is no "getting back to normal," and the proven methods of anticipating consumer behavior don't seem as relevant today.
No one is immune to "being caught off-guard" by rapidly changing and disruptive events, whether worldwide inflation, war in Ukraine, gun violence in America, inability to hire or retain good employees, etc. They are unprecedented, after all. So, what to do? First, don't delay. Be ready to take action. Especially if your sales are below plan, take steps now to reduce your inventory levels. Get out in front of major markdowns by the chains. Next, look ahead. And adjust! Revisit your inventory buying plans, by department. (See The ROI's Multi-Department Open-to-Buy Calculator to make that happen quickly.) Benefit from seeing, in advance, how your purchasing plans would change with each change in sales, margins, and turns.
Then, your judgment comes to the fore. But, thanks to the power of "playing what if...?", of looking ahead, comparing outcomes, yours will be informed judgment. There is power in that. Unprecedented power! ----- * Surplus Inventory Piles Up in Stores as Spending Shifts, Suzanne Kapner, Wall Street Journal, June 6, 2022.
Throughout the pandemics, many independent retailers successfully shed their "technology laggards" label, as they pivoted to embrace an array of digital tools. Yet going forward, it is well to keep in mind what really matters to the customers. And it may not be more technology. A recent survey* of more than 2,000 customers provides some interesting insights as to who shops where, why, when and how. It especially highlighted the differences between "large stores" and "smaller stores" (or as we view them, "specialty stores.")
Hmm. This suggests to us that shoppers essentially are treating large stores the same way they treat the internet:
After months of doom-and-gloom headlines and hand-wringing about a recession in 2023, headlines last week (quietly) said this: "What Recession? Some Economists See Chances of a Growth Rebound." One economist, in fact, seemed a little chagrined to note "So far, the U.S. economy has proved unexpectedly resilient." *
Retailers must be mindful of all this as they make their business and buying decisions throughout the year. But the macro economy is simply interesting, but not significant. Your local economy is, of course, what really matters. In that context, every savvy owner uses these three steps.
What is the definition of "value" for customers? Pretty straightforward, actually.
Wait. What? "Benefits received?" "Burdens endured?" Turns out, the only single answer to "What is value?" is, "It depends." Don't just roll your eyes. What constitutes value for your customers increasingly is a make-or-break part of retailing.
Some thoughts from Nordstrom leadership that are spot on!
That's what Nordstrom President and Chief Brand Officer Pete Nordstrom told Puget Sound Business Journal columnist Patti Payne on April 23, 2020. And what he succinctly stated is exactly the challenge – and opportunity – that is confronting all retail owners. In order to answer whether you should re-open once you can, you first must be very confident in WHAT kind of retail operation you will be re-opening. The only certainty of the aftermath of the pandemic is that everything will be different. Given that, what better time to re-imagine your business?
The constant challenge for retailers is to anticipate what their customers really want. And this year, there seem to be plenty of choices available.
It is all part of the on-going challenge of retail; the art and craft of being a merchant. Then there are the customers who are reacting to the constant drumbeat of news about supply chain issues, merchandise shortages, and looming price increases by starting their shopping early.
Adding to this stampede, some major chains were launching their Black Friday specials before Halloween!
"They say there’s nothing quite like retail therapy, but what happens when online shopping just feels like it’s lost its spark?” asks Jeena Sharma in Retail Brew.
“Well, more than 3 in 4 consumers say that while e-commerce is ‘functional,’ it’s just not fun anymore, a new study by Criteo found."
According to "The Spark Of Discovery" report by global marketing and media company Criteo, who surveyed 6,000 consumers in six different countries, shoppers describe online shopping...
as a chore, 29%
as lonely, 79%
as overwhelming, 78%.
Ouch!
When do shoppers prefer ecommerce? No surprises there either:
Save time, 48%
Easier price comparison, 45%
Avoid crowds, 38%
Better discounts, 38%
Broader range of products, 34%
The report went on at some length to propose how ecommerce businesses could imitate the best practices of specialty retailers.
Incredible value! 👀
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