My mission in this industry has been to unleash the potential of retailers. Some advice works in normal times. Some is better suited for times of distress. Most will work in any economy. For example, I speak and correspond with many floor covering storeowners who are proud they are personally responsible for the lion’s share of their company’s sales volume. I truly believe and let them know this is admirable, but for the business to reach its full potential, it’s critical for owners to develop programs that will have their salespeople’s skills approaching or even surpassing the level of their owner.
However, looking at current conditions, it seems that being an owner and the best salesperson would be a definite plus. In fact, the more sales an owner can make right now, the better. This economy seems to punish the achievers and certainly doesn’t reward responsibility. Living far beyond your means and accumulating debt is behavior that is being rewarded these days. That’s because having nothing to lose means you are pretty much immune to these downturns. So what’s right and what’s wrong--in our lives and our businesses--is being turned on its head.
Quick solutions to this particular economic crisis appear to be beyond the scope of even the best and brightest economic minds. This only feeds the fiscal insecurities of consumers. The only consensus among the experts is this tough business climate is going to last for an extended period. The prudent thing is to plan for a long stretch of economic distress. Still, one fact needs to be stressed: economic downturns are mostly psychological (I’d say 70%). Most people still have money, but they hear heart wrenching individual tragedies; people losing their jobs and the stock market losing 50% of its value. The media dwells on these stories and it frightens people.
But remember, 93% of Americans are fully employed, pay their bills and are up to date on their mortgages. The good news is history demonstrates the stock market always comes back. Today, the overwhelming majority of Americans still have spendable income. There is business to be had and there are a number of actions you can take immediately:
Lay off all nonessential personnel.Owners and managers should step up and make as large a percentage of sales as possible. One of the weaknesses of small business is we hold on to expendable employees far too long. Today, we may need to lay off even good people. It’s tough, but not as tough as having to close the doors. Good salespeople might be willing to work outside the showroom on straight commission bringing sales to the store. While I believe that installers are worth their money, they may be willing to work for less if you can keep them busy.
Do not run non-productive advertising.If you advertise, keep advertising, but be extra critical about where you spent your money. Ads under the banner of “The Colors of Spring” or “Fall Fashion Fling” are useless and come from the minds of non-retailers. Be especially aware of TV, radio or print ads conjured up by media advertising departments or wholesale suppliers. Consumers need a reason to part with their money now. Use phrases like “Buy Now! Prices Will Never Be Lower!” and explain why. Extended terms are more important than ever and know the “proven consumer buying periods.” Look back and run your “winners” again.
Extend your hours.A recent survey uncovered that 44% of flooring retailers are cutting their hours because of slowing sales. This is suicide. Stores that close at 6 p.m weekdays, Saturdays at noon and all of Sunday don’t want business. Retail hours are when customers aren’t working-after 6 p.m., and all day Saturday and Sunday.
Renegotiate your lease.My advice to always own your business property has never been more applicable than now. Remember this when things get better. My own state of Virginia is not one of the hardest hit places, but the empty retail locations are starting to outnumber the occupied ones. I can’t imagine what Ohio or Michigan malls look like. Your landlord would rather have something than nothing.
Remember: Cash is King!Every store I have ever visited has caches of merchandise that will never be sold because they have been forgotten. You can’t pay your bills with merchandise. Get rid of unproductive merchandise at any cost. Make remnants, bound area rugs and designer rugs out of unwanted merchandise and run a “Never Before Closeout Sale!” including 12 months no-interest through Shaw or Mohawk credit.
Stay in touch with your creditors.They know money is tight everywhere. If you fall behind, they want their money, but they will want it now if you don’t stay in touch. You may be successful renegotiating terms. If not, figure out what you can reasonably send each creditor on a regular basis. Keep them informed as to what you are doing to improve cash flow. Keep yourself informed as to coming government programs for which you may be eligible. There is a lot of craziness going on right now. You may be able to take advantage of situations in the coming months. Don’t give up on banks as a lost cause. You might qualify for a line of credit or expand your current line of credit.
Consumers do have money, but they are far more discriminating about how and where they will spend it. Also, as people become more homebound, they will want to make their home a refuge. That means that if given strong reasons, they will be more inclined to invest in their home over other purchases. No matter how dire the news, employment remains high and most will opt to ride out the market crunch.
And one last thought: consumers will be far more discriminating and will shop more stores for price. It is more important than ever to make your store environment a comfortable and enjoyable place to shop. That means a well-merchandised showroom and friendly, caring salespeople. People still buy from people they like.