---

To subscribe, click here. To return to list of past issues, click here.

February 2008

Strategies for a Changing Retail World!

Anytime there are significant changes in the economy, buying habits, and the consumer marketplace in general, it's important to take a look at what you ARE doing as well as what you are NOT doing to improve, fine-tune, and grow your business. Rather than being reactionary to tough times, it is far more productive to challenge the status quo, evaluate all the costs associated with doing business in this new environment, and reposition your business for when the economy turns back around.

---

5 Things to STOP Doing Right Now!

---

#1 DON'T BELIEVE EVERYTHING YOU READ
Much of what is written about our industry in newspapers, online, and in trade publications is often baffling. One publication will write what a great month retailers had while another reports how tough things were for retailers that same month. If you were to believe what some in the media are saying these days about the state of retailing and the economy, you might very well become seriously depressed.

The business certainly is challenging, still there are retailers and areas of the country enjoying solid sales increases for the first two months of this year. Some retailers simply choose to ignore bad news. And others dwell on the negative, wringing their hands over all the doom and gloom they read and hear. It is far better not to take what the media reports as an accurate accounting of what's going on in retailing.

#2 QUIT IGNORING THE OBVIOUS
If there are fewer customers coming through your doors today than there were last year, it's time to reevaluate what you and your people are doing. If the average sale in your stores is decreasing, it's time to reevaluate what you and your people are doing. If profits are down, it's time to reevaluate what you and your people are doing.

Significant change in the marketplace, the economy, the competitive environment, consumer buying habits, or anything else that negatively impacts your business requires a thorough reevaluation of the factors that affect and shape these changes. This reevaluation process is an important part of keeping every business vital and successful. And it should be done early on, when the trend first becomes apparent.

I'm always troubled when I hear of retailers going out of business because too often they didn't adjust their strategy when things first started to change. Is the bankruptcy of Sharper Image much of a surprise to anyone? They've been selling exactly the same merchandise the same way for at least the last five years. While I don't have an inside look at the business, I suspect their problems began to surface several years ago yet they failed to pay attention and make appropriate adjustments.

#3 STOP LOOKING BACKWARD
Retailers often establish individual sales and store goals based on past year's numbers. The usual way is to look at those numbers and then establish a goal that is some percentage above the previous sales results. What happens when the marketplace, economy, and consumers change? Is this method of goal setting still valid?

Establishing reachable and realistic goals for sales associates and stores should always be based on the business climate and situation at hand. This takes a more positive approach to the business and provides a motivational environment for associates and managers.

#4 DON'T BLAME THE ECONOMY AND THE COMPETITION
How is it that some retailers thrive and grow in a down economy? How is it that some retailers thrive and grow in the face of fierce competition? The answer to both these questions is that they don't let the economy or competition dictate how they operate their businesses. In tough economic times, these retailers pay attention to what made them successful in the first place. They leverage their strengths and eliminate their weaknesses. And they take steps to enhance and improve the relationships with their customers.

In a fiercely competitive environment, savvy retailers take bold steps to distance themselves from the competition. Rather than sticking their heads in the sand, they pay close attention to the marketplace. They continue to identify and take advantage of the opportunities that are always there even in a competitive environment and tough economic times.

#5 STOP THINKING OF MARKETING AND PROMOTIONS AS AN EXPENSE
Marketing and promotions are a necessary investment in your business regardless of the economy or other outside influences. During the months following 9/11, retailers whose businesses rebounded the fastest modified their approach to marketing but did not cut back or make major reductions in their commitment to marketing and promotions. Such changes included finding media that delivered customers to their doors more cost effectively as well as making an investment in direct-to-the customer marketing such as email, postal mail, and special-events mailers.

---

5 Things to START Doing Right Now!

---

#1 BE TRUE TO YOUR PRINCIPLES
Businesses that thrive over a long period of time are committed to a core set of principles. If your pricing strategy and policies have served you well during a good economy, when there is an economic downturn, such as we have today, there's no reason to abandon this approach.

Recently I had a conversation with a retailer who was thinking about cutting prices on a whole range of merchandise in his stores. He was hoping to attract a lot more customers with these lower prices. I asked him if offering low prices was a fundamental part of his competitive positioning. He said, "No, customers usually shop in our stores because of the breadth of our selection and the top-of-the-line brands we offer." I encouraged him to look elsewhere for ways to get more customers into his stores rather than cutting prices.

#2 TAKE A CRITICAL LOOK AT EVERY EXPENSE
This is one of those things the best retailers constantly do. When times are good, it's quite easy for expenses to creep up and get out of hand. Rather than cutting costs across the board, here's a simple way to look at expenses.

Don't spend money on anything that doesn't do at least one of these four things:

1. Get more customers through your doors
2. Better serve your customers
3. Support your associates
4. Directly help grow and improve your business

Every other expense should be carefully scrutinized.

#3 SUPPORT YOUR PEOPLE
Contrary to the way many business people look at it, I have long believed that cutting jobs or reducing commissions and wages in a challenging economy is counter-productive. It is guaranteed to cause anguish among associates, greatly damaging morale. These kinds of cost savings frequently result in good people leaving to find better, more secure opportunities. Not filling jobs after people voluntarily leave, therefore reducing payrolls by attrition is significantly less-threatening to employees.

It is also important for your people to feel positive about the company, their work, and your customers regardless of the state of the economy. While I don't advocate keeping associates in the dark by avoiding bad news, explain to them that economic and retail slowdowns are a part of doing business.

#4 GET CLOSER TO YOUR CUSTOMERS
If there ever is a time when it's important to expend the effort and resources to enhance and build relationships with your customers, this is it! Your store's most important asset is and always will be customers who know you, have bought from you in the past, and are expected to continue buying from you in the future.

What can you do to nurture, enhance, and continue to build these ongoing relationships?

#5 FIX WHAT'S BROKEN
Every business has some things that are broken. Some are badly broken. Some are just a little broken, but nonetheless broken. What's broken in your business? Do you have a policy or procedure that causes internal difficulties or negatively impacts your customers? Do you have an employee who is more detrimental than beneficial to the business? Do you have a merchandise category not producing the revenues or profits you expect? Do you have a supplier no longer responsive to your needs and expectations? Do you have a store in a community where the demographics have changed or the area is run down and no longer produces what you expect in the way of sales and profits? Do you have too much inventory to support today's sales volume?

With anything that's broken, the first step is to see if it is fixable and whether it can be fixed cost effectively. If not, eliminate the problem. In my work I see retailers ignore things that need and can be fixed for far too long. If you have some things that are broken, fix them now.

---

A Real Department Store!

Recently I had an opportunity to visit San Salvador, El Salvador, in Central America and speak to a group of retail marketing, buying, and management people. That trip also provided a wonderful opportunity to visit Centro Comercial Galerias, one of Central America's best shopping centers, along with Siman, the most successful department store.

In recent years, department stores here in the United States have abandoned the basic concept of a true department store that includes a wide variety of merchandise categories. They have, instead, chosen a more streamlined product assortment that generally includes little more than apparel, shoes, cosmetics, furniture, and some giftware. While Sears may be the exception with appliances and tools, other department stores generally have given up retail leadership to such giant discounters as Wal-Mart and big-box specialists as Best Buy. This is not what has happened at Siman. This is a true department store with a broad a range of merchandise.

The most impressive part of this store is the overall quality of the merchandise and presentation. In every department, the fixtures, signage, and lighting all do an extraordinary job of enhancing the merchandise. U.S. department stores have all but eliminated electronics departments. Siman has enhanced its electronics making it one of the key departments within the store.

Other excellent departments are home furnishings and accessories, toys and video games, musical instruments, fabrics and notions, cosmetics, appliances, and, certainly, shoes and apparel. The photographs better show off this great store. Click on any photo to see an enlarged image.

OVER-STORED!
For most retailers it isn't a surprise that we are over-stored, but Newsweek magazine columnist Daniel Gross wrote a column in the February 25th issue of the magazine detailing the situation. The opening paragraph of Mr. Gross's column spelled out some of the considerable number of store closing announcements in recent weeks. While retail space vacancy rates are rising to an estimated 159 million square feet this year, more retail space is being built and new stores are being opened. To make matters worse, researchers Reis Inc. estimates 34 million square feet of new retail space will be added this year.

CAN YOU BELIEVE WHAT YOU READ?
Two recent marketing studies are just a little suspect in their findings. First, a "comprehensive" study of jewelry shoppers determined that of the more than 4,000 listings in the Yellow Pages, jewelry ranked 88th by consumers, and 87 percent of those who searched the Yellow Pages for a jeweler resulted in a purchase. Here's a quote from the press release, "With nearly 30,000 jewelry stores nationwide, jewelers are finding that Yellow Pages are still an important and relevant resource when it comes to consumers and their buying habits." This study was conducted by who else? The Yellow Pages Association!

Another study determined that newspaper inserts and circulars are "among the most impactful advertising mediums for retailers." This study was conducted by Vertis Communications, whose business is selling retailers on using newspaper inserts and circulars.

Are you convinced? As always, retailers must carefully evaluate every advertising medium to determine whether it is the best, most cost-effective way to reach their prospective customers. A great Winston Churchill quote might be appropriate here, "The only statistics you can trust are those you falsified yourself."

THE CHANGING US POPULATION!
Pew Research Center, an organization without a vested interest in the results, reports that future immigrants and their descendents will account for most of the increase among working-age adults in the U.S. through 2050. But growth in the older population will outpace all other groups.

Pew also reports the U.S. population will to soar to 438 million from today's 303 million by 2050. The nation's Hispanic population will triple by that same year. Retailers who expect to grow their businesses over the next few years should pay attention to these demographic changes now.

STARBUCKS!
Some have criticized Starbucks for closing its stores for three hours this past Tuesday to conduct a training program for its 7,100 associates, but I thought it was an excellent way to have real impact on its people. As an industry, we continue to lag many other business segments in our investment in training employees. While a single three-hour training program will not solve all of Starbucks' problems, it is a bold step in the right direction. As a bonus, the event produced a lot of positive media coverage for the company.

Until next month...

---

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!

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

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)

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

Into the Future! Powerful Trends Shaping the Future of Retailing

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

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Every Customer Every Day!

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

---

Resources for Retailers

George Whalin's book RETAIL SUCCESS! is now in its ninth printing. A number of consumer products manufacturers have purchased the book for their retailer customers. Retailers have provided copies for their managers who regularly refer to portions of the book in their managers' meetings. And managers are referring to the book in their daily store meetings. If you haven't purchased a copy yet, what are you waiting for? For multiple copies, call us for volume pricing. For individual copies, there are also some very good deals to be had at amazon.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends. Check it out often, he keeps adding to the list.

---

If you have an opinion or thoughts about any of the topics posted, I invite you to comment at retailerblog.com It's easy to do. And if you have a topic you would like to see addressed on the blog, send me an e-mail at george@whalinonretail.com.

---

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.

---

To subscribe, click here. To return to list of past issues, click here.

---