As Retailers Continue to Suffer is the ‘Feel-Bad Factor’ Inevitable?
It’s no big surprise to anyone that despite early sales and savage price cuts 2009 remains shaky for UK retailers. Despite the most aggressive pricing in decades sales continue to fall. The weather may turn and colder days retreat, however through spring and beyond, retailing will remain tough.
Huw Thomas, COO at retail systems experts PMC, believes that part of the problem is the desire by industry experts and pundits, in company with the media, to proclaim the ‘feel-bad factor’. This is a major contributing reason why consumer confidence is at an all-time low, and continuous bad news makes it non-existent. As a result, retailers who are always first to feel the pinch however deep the downturn, continue to suffer.
Thomas states: “Surely, the impetus should be to drive up confidence, not drive it down. That does not mean blind optimism it means assessing all options available to you and taking the right action. Many organisations are just turning everything off. And that’s not the right action.”
“Retailing is a good financial barometer only this time, if you believe the headlines, the fall appears endless. There are many retail winners in the current climate but for some reason this does not appear to be newsworthy. It’s not simply the recession reducing spending, it’s zero consumer confidence. Rate cuts and falling inflation may help but that essential lack of confidence translates into reluctance for people to part with their money despite attractive sales offers. And only talking about the problems rather than potential solutions does not help.”
Retailers are not alone. The process moves upstream and continues through the supply chain until everyone suffers. When consumers don’t spend, retailers can’t sell, if retailers don’t sell the distribution chain collapses, when the distribution chain does that, manufacturers don’t have work and people lose their jobs.
Thomas continues: “Take the actions that winning organisations take. Carefully consider discretionary spend such as business and staff costs, review projects, events and activities. Try to find opportunities to do less. This year is also about what you decide not to do and prime among those actions is stop cash flowing out the door. Once you’ve done that, the next part of the challenge is to make wise investments in the right place that give you the best return.”
The key is balance. Stop wasting cash and manage costs, but at the same time focus on where you can invest to position your business for when the economy turns. Interestingly, retailers with a strong multichannel presence and robust fulfilment systems are not experiencing the same pain as the high street. Of course, sales are flatter but the bottom hasn’t fallen out of the online world. Is this the high street not looking attractive enough? Or is it retailers making the wrong decisions?
Thomas closes: “Recession or not, the business case is simple. There are some actions you must take and some you should not. One of those is overcome the ‘feel bad factor’. The other is to make the right decisions. The retail world’s future is multichannel - if you want to succeed during the recession you must have a multichannel offering. Without an effective online multichannel presence, there’s every indication that pure bricks and mortar retailers will continue to suffer as customers shop with their mouse rather than their feet.”
“The recession will not vanish overnight so the answer is to manage it. No matter how much you may feel like keeping your head down, doing nothing is not an alternative. Getting IT right in tough times is critical but winners make it happen, losers let it happen.”
For further information please contact enquiries@paulmasonconsulting.co.uk |
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Iain Winskill, service improvement manager, WHSmith states: “Two years ago we looked at outsourcing management of our store environment and considered organisations to take on the responsibility. We wanted a third-party with the skills and partner network to handle every aspect of the service.”
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