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December 2008

CLICK HERE FOR AN INVALUABLE RESOURCE IN TOUGH ECONOMIC TIMES!

What Your Customers Want...NOW!

As we reach the final days of 2008, we know some things with absolute certainty. First, the consumer has changed. At every income level, consumer confidence has waned making them more cautious in their spending than at any time in recent history. A significant number of consumers have restricted their spending to only those things that are absolute necessitities.

This extremely cautious approach to spending resulted in significant declines in same-store sales among most of the largest national chains in September, October, and November. For many, these were double-digit decreases. When December sales are reported in January, it is very likely the results will be equally dismal. In the multibillion dollar retail industry, this will be the first major decline in same-store sales since comparisons began back in 1969.

Unlike economic slowdowns of the past, affluent consumers have become every bit as cautious in their spending as people of lesser income levels. The steep decline in housing values in many parts of the country along with a roller-coaster stock market caused significant drops in their investment portfolios and overall net worth.

The retail marketplace itself has also changed. A serious number of small and large retailers has declared bankruptcy either to reorganize or liquidate. According to the International Council of Shopping Centers, an estimated 6,100 store closings will occur in 2008 by the big chains along with thousands of smaller retailers. The number of store closings is expected to increase dramatically in 2009.

NO MORE BUSINESS AS USUAL

What can you do to respond to this changing retail environment? If it's business as usual, the prospect of a sales increase in 2009 is slim. In fact, just surviving the next year or two may be an insurmountable goal for some retailers.

In a desperate attempt to attract customers and move merchandise, some of the most respected names in luxury retailing have resorted to slashing prices on nearly every category and brand of merchandise in their stores. The week before Christmas, Neiman Marcus marked down lines from their top designers to 40 percent off. Designer goods put on sale include St. John Collection, Armani Collezione, Ralph Lauren Black Label, and Burberry. Yet sales at Neiman Marcus remain sluggish. It appears that slashing prices in today's economy is not enough to attract the attention of affluent consumers.

Rather than becoming reactionary to today's consumer and marketplace changes, there are some steps you can take to survive and thrive. Talk with and listen to your customers. Yes, I mean truly listen to your customers. Some retailers believe they listen to their customers but, in fact, ignore much of what they hear.

For many years Stew Leonard's, based in Norwalk, Connecticut, held regular focus groups. They invited customers in and asked questions about the merchandise, shopping experience, prices, service, and what they wanted from the store. I believe those sessions provided insights Stew Leonard's used to help build the company from a single store to the highly successful four-store operation it is today generating more than $300 million in annual sales.

Retailers who clearly understand what customers want, need, and expect from stores like theirs have a far better chance of success. To get to know how your customers really feel, invite a small group to participate in a round-table or focus-group discussion about your store, merchandise, service, and people.

Here are a few of the questions to ask: Why do you do business with our store? What merchandise should we be carrying that we don't currently offer? What stores similar to ours do you shop and why? What do you not buy from us and why? What can we do to better serve you and meet your needs? What are we doing right? What can we do better?

One of the questions you need to ask yourself is this. Are the reasons your business had for attracting customers in the past still valid today? You may discover the traditional ways of attracting and keeping customers no longer work. But it's not just knowing that what worked in the past may not work today, it's just as important to know where customers are spending their money today and why.

IS YOUR STORE COMPELLING?

We know some segments of the population will always be compelled to shop in stores that have "every-day-low-prices." The number of customers who fit into this group always grows during tough times, but there's considerable evidence that consumers rarely shop in a particular store only because of low prices. It's important to know and understand those other reasons. In my work I have found that customers are compelled to shop in stores that offer unique merchandise and selection, a truly memorable shopping experience, and, of course, great customer service.

I started my consulting firm more than twenty years ago. At that time, most of my work consisted of helping retailers improve customer service. In some stores, service has improved. In many, many more it has deteriorated to a point that it is truly awful. In this out-of-the-ordinary retail environment with extremely cautious consumers, providing outstanding customer service is crucial and may be one very effective way to capture attention and build customer loyalty.

A FINAL THOUGHT ON STEW LEONARD'S

In the early 1980s, Tom Peters and Bob Waterman wrote about Stew Leonard's store in their best-selling book In Search of Excellence. A few years later after Stew Leonard had to step down, his son, Stew Leonard Jr., took over. He has continued to build and improve this extraordinary company with innovative ideas and a passion for serving customers.

When I called to find out whether they still do in-house focus groups (they do), I was put on hold and listened to a great piece of music called "The Customer Is Always Right." You can listen to this piece of on-hold and in-store music along with several others by the company's "Farm Fresh Five" by visiting stewleonards.com. As always, Stew Leonard's continues to entertain and delight its customers.

RETAIL RETURN POLICIES!

To thwart the growing number of consumers abusing return policies, many retailers are tightening their policies or putting restrictions on certain categories. Changes have also been made in the length of time a customer has to return gift items purchased during the holidays.

Struggling Circuit City extended its holiday return period to January 31, 2009, compared to Best Buy that shortened its deadline to January 24 for most items. Computers purchased from Best Buy must be returned within 14-days from the date of purchase. Sears imposes a 15 percent restocking fee for many categories but has extended its return period to 120 days for holiday purchases. One of the things I find surprising is how few retailers post signs detailing return policies.

MORE SIGNS OF TROUBLE IN THE NEWSPAPER BUSINESS!

In mid-December, Detroit's newspapers, The Free Press and The Detroit News, announced the cutting of home delivery to three days a week. This means Thursday, Friday, and Sunday are the only days advertisers will be able to reach customers at home. These generally being the busiest advertising days is some consolation, I suppose. With newspapers becoming increasingly irrelevant in many people's lives, it may not really matter.

AN ETERNAL OPTIMIST!

Yes, I continue to be optimistic about consumers and the retail business. Although 2009 is expected to be a difficult year for many retailers, there will be those who look at this as an opportunity to refocus, refine, and reinvent their businesses.

As I do every year, I will be out speaking at conventions, trade shows, and corporate events on how to create a retail business that grows and prospers in every kind of economy or competitive environment. On February 17, I will be speaking at the International Toy Fair in New York. If you attend this annual show, I look forward to seeing you there.

Until next month...

An Invaluable Resource in Tough Economic Times!

George Whalin's book RETAIL SUCCESS! provides real-world solutions to the challenges retailers face in these troubling economic times. This book, filled with George Whalin's retail expertise, is written in the same easy-to-grasp style as his monthly newsletters.

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Seminars and Training Programs for Managers and Associates

Delivering performance-enhancing speeches and seminars for retailers since 1987, George jam-packs his presentations with practical, real-world information. His seminars for managers and associates teach store management skills, customer service improvement, and sales techniques. If you want to improve store productivity and profitability, we encourage you to call George Whalin. Don't wait, his calendar fills up quickly.

Topics for managers' meetings and corporate conferences:
(Click on a topic for details)

Great Store Managers Make Great Stores!

Customer Focused Selling

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

Speeches and Seminars for Retailers

As one of the nation's best-known and most popular retail speakers, George's speaking schedule includes events for retailers and consumer products manufacturers all across the country. He's added some exciting new convention and trade show topics. If you are a meeting planner or are involved with speaker selection and would like to book George for your next convention, we encourage you to call as early as possible. George's calendar fills up quickly.

Topics for conventions and trade shows:
(Click on a topic for details)

NEW! Strategies for a Changing Retail World

Into the Future! Powerful Trends Shaping the Future of Retailing

Retail Success! Increase Sales, Maximize Profits, and Wow Your Customers in the Most Competitive Marketplace in History

Stop, Look, Touch, and Buy: The Dynamics of Merchandising

12 Powerful Advertising Secrets Every Retailer Should Know

Power, Punch & Pizzazz! Create Advertising that Grabs Customer Attention and Sells More Merchandise

Customer-Direct Marketing: Increase Retail Sales with High-Impact Direct Mail & E-Mail

Double Your Sales and Triple Your Profits with High-Impact Marketing and Promotions!

Competition? What Competition! Standing Out in Today's Competitive Retail Marketplace

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

In addition to speeches and seminars, George also consults with retailers helping them improve the operation of their businesses. His consulting services include helping retailers with strategic planning issues, marketplace positioning, merchandising and store layouts, developing results-driven marketing and advertising programs, personnel management, and improving store performance. If you need solid, practical, proven insights and ideas to grow and improve your business, call us toll-free at (800) 766-1908.

We encourage you to pass this publication along to your associates and colleagues. If all or any portion of this newsletter is reproduced in another publication, attribution should read as follows: Copyright 2008. Reprinted with permission from George Whalin's Retail Management E-Letter. To occasionally reprint portions of this newsletter one time, no express permission is required. To reprint in more than one venue or multiple articles, please contact us at 800-766-1908 or info@whalinonretail.com.

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