---

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

September 2007

Today's Unsettled Economy?

In many areas of the country, consumers feel more than a little antsy about the unsettled economy, gasoline prices rising again, housing values decreasing, and the possibility of layoffs in a number of business segments. Major retailers including Target and Home Depot don't expect to hit projected numbers for September. And the National Retail Federation predicts a less-than-stellar holiday shopping season forecasting a mere four percent increase over last year.

No one really knows whether or not this is the beginning of a recession or just a small economic "bump in the road." Yet most of the retailers with whom I've spoken feel there are enough signs to cause concern about business growth over the next few months. Many of the larger chains are taking steps to ensure they keep inventories lean and don't over buy for the holidays.

As we've seen in past downturns, economic uncertainty does not mean every retailer will experience a drop in sales. Even during the terrible economic times of the early 1990s when thousands of retailers--from small independents to large national chains--went out of business, some savvy retailers opened new stores, increased sales in existing stores, and thrived.

One retailer I know told me he chose not to participate in the recession of the early '90s. When I asked how he intended to do that, he described his aggressive plan to improve everything in his stores. Rather than cut back on inventory, he instructed his buyers to look for and buy merchandise that represented the very best consumer values. He encouraged them to play hardball with vendors when it came to negotiating terms, securing extra co-op dollars, finding special buys, and obtaining closeout merchandise.

Instead of reducing his marketing budget, he increased the amount spent on advertising, special events, support of local charities and community activities, and in-store signage. His goal was to attract more customers to his stores than ever before.

He also set out to eliminate all non-essential expenditures. He brought together a group of people from throughout his organization whose sole task was to eliminate costs that didn't positively impact the company's ability to better serve customers and grow the business. Within a few months this group identified several areas of waste and then instigated measures to correct them. Through this exercise alone, the company saved more than $50,000.

One of the most interesting steps he took was to bring together each week several store managers in the same geographic area to share challenges and issues they faced in their stores. The process was designed to work like a mentoring or brainstorming group. These weekly sessions helped all the managers improve their stores by sharing experiences, insights, and ideas. While spawned from a difficult economic environment, the company continues such weekly gatherings to this day.

All of these initiatives helped this company weather the difficult years of the early 1990s. By focusing on what needed to be done to grow and prosper rather than adopting the pull-back and ride-out-the-storm attitude of so many retailers, this company today is stronger and more successful than ever.

By all indications, we are at the beginning of a downturn in the overall retail business that will likely impact the industry until after the 2008 elections. You can either sing the blues, complain about how bad business is, and contribute to the problems that will be, as usual, widely reported in the media. Or, you can take the steps necessary to sustain and grow your business regardless of what other retailers are doing or not doing. It's up to you.

---

When Smart Companies Do Dumb Things!

As you probably remember back in April, Circuit City announced the lay off 3,400 employees because, according to CEO Philip Schoonover, their wages were "well above" the market rate for such employees. Among the group slated to be laid off were the company's most experienced sales associates.

New employees were to be hired at wages of $8 to $9 an hour instead of the $12 to $18 an hour laid-off employees had been earning. Circuit City management estimated it would save in excess of $110 million the first year. Someone seemed to think this was a perfectly good way to cut costs.

So, what happened? In the first three months following the layoffs, Circuit City's sales came in far below plan and operating losses for the period amounted to more than $54 million. By the end of July, its stock price had sunk by 35 percent. The stock, which was valued at just under $20 a share in April, is now at about $8. Yes, but they saved $110 million by getting rid of those over-paid employees; the very same employees who actually knew how serve customers and sell lots of merchandise.

---

A 133-Year-Old Store Closes Its Doors

One of the great things about my business is that I get to meet and become friends with some exceptional people who own and manage retail businesses all across the country. Some years ago, I had the opportunity to meet Carol and Jim Baum, the owners of a 133-year-old store in Morris, Illinois. A couple of weeks ago, Jim and Carol announced it was time to close Baum's, the women's apparel store they had been running for the last 44 years.

The good news for consumers in Morris is that Jim and Carol aren't retiring. They will continue to operate their Hallmark Gold Crown store, and Jim will remain active in the many community organizations in which he's always been involved. Although it is sad to see a well-established store close, there comes a time when it is the right thing to do.

OPENINGS AND CLOSINGS
September has been an interesting month with the announcements of new growth plans for some leading chains and store closings for others. Lowe's announced plans to open as many as 145 stores next year and Walgreen's is planning to open 550. After several years of struggling, the Bombay Company filed for Chapter 11 bankruptcy. Timberland is closing 40 stores. Movie Gallery is closing 520 stores. And Home Depot announced plans to close its 11-store Landscape Supply chain.

A GREAT LOSS
During this time with so many similar stores selling similar merchandise, it's important to remember that our industry has also been the spawning ground for some truly unique stores started by merchants with a clear vision of innovation. This month retailing lost one such merchant to cancer--Anita Roddick, founder of the Body Shop.

In 1976 to support herself and her two children, Anita Roddick started selling nature-based cosmetics that neither used animal testing nor production methods that abused the earth and environment. Over the years she was able to grow the Body Shop from a single store in England into a 2,100-store international chain. In 2006, she sold the company to L'Oreal of France for $1.2 billion.

As a woman of strong convictions and a clear idea of what she wanted for her customers, Ms. Roddick was outspoken and opinionated. She wrote several books, my favorite of which is Business As Unusual: My Entrepreneurial Journey, Profits With Principles. It is an interesting read for anyone growing a business. Our industry lost a great merchant.

Until next month...

P.S. In today's challenging retail environment, retailers need to do everything they can to ensure every customer gets the information and help they need to make an informed buying decision. For the past 20 years, I've been training and developing sales associates and store managers so they sell more merchandise and better serve their customers. If you would like to know more about how I can help you maximize sales and better serve your customers during this upcoming holiday season, give me a call at (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.

---

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.

---

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 2007. 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.

---