Top Trends for Retailers in 2009

My head started spinning when the phone rang last week.
It was my Uncle Doc and I knew he was going to drill me if he had a chance. Last summer we had a conversation concerning my business and my upcoming wedding plans and I knew he was doing his normal follow-up. “Put some horses in the barn Connie… I’m telling you it’s time to put some horses in the barn,” he said with complete passion and, in his case, direct intensity. He was telling me “hard times are a coming and cash is king.” Today I have a newly found respect for him and boy was he right.

The sky has fallen and now what?
At the recent National Retail Foundation conference, I hear CEO after CEO talk about pulling the reigns in and weathering the storm. Deloitte in conjunction with Stores Magazine presented their latest study on Global Powers of Retailing which included the Top Trends for retailers 2009. Here are the highlights.

Cut Costs
Feeling the global squeeze will push us all to examine our companies under a microscope. This means getting back to our core competencies, closing stores that are draining or cannibalizing the mother ship, examining the mix of business and eliminating formats, fascia and merchandise that is under performing. Putting the knife to operating costs; consolidating; slashing payroll; negotiating better deals with suppliers, landlords, insurance providers and bank services will be the new normal. The winners will take advantage of the fact that, a recessionary environment creates more of a buyer’s market and leverage it with suppliers.

Think Risk Management
The present global meltdown has certainly proved that having all your eggs in one basket can be very risky. There isn’t a CEO today that hasn’t awakened to read an email informing them that one of their China-based factories shut down in the night or read that another retailer has bitten the dust.  Risk management involves a strategic thought process for worst-case scenarios. Diversification of sourcing, retail strategies will be critical.
Differentiation is the name of the game today! Build brand equity and increase store visits by focusing on the quality of the customer experience in your store by examining customer service, store layout and design, product information, ease and speed of finding merchandise and checkout. Hence, branding will require special attention from retailers who want to stand out in the crowd.

Think Human Capital Management
Managing human capital in a way that generates strong results may prove to be the most challenging. You can flawlessly manage the supply chain, logistics and cash management and drop the ball if you do not have or cannot keep the right people. Invest in training. Year ago, I Remember CEO of Bank One sharing his biggest mistakes at a Young President Organization (YPO) meeting. The one that really stuck out in my mind was him thinking that people would change, and eventually get it, this keeping under-performing employees too long. Subsequently, he annually eliminated the bottom 20 percent and brought in new people and services

Think Multi-Channel
Get your head out of the sand and realize that the Internet is the most powerful way to interact with your customer today. Give your cust0mers a way to tell stories about using your products and find the information they need. Social marketing is the latest hot ticket to get your customers emotionally engaged with your brand. Customers will visit new sites if the value proposition is strong. Success will be found by those who seamlessly deliver information and products to consumers in conjunction with the store experience.

Think Smaller Stores
Large store formats are simply too expensive to operate in today’s economy. While they will not go away, they will not play as significant a roll in retail growth as they have in the recent past. Smaller stores create fewer obstacles in the development process. Fragmentation of the consumer market means it will be more difficult to satisfy the needs of mass market. Smaller stores will do a better job of appealing to niche consumer segments by specializing in unique products offering and service. By developing new niche-oriented formats and fascias, big chains can eliminate the cookie-cutter approach leaving way to celebrate regional attributes.

In Conclusion
The most successful retailers today have on of two attributes: 1. The best supply chain contributing to the lowest possible prices or, 2. Those who do not attempt to match lowest price leaders and manage their brands to demonstrate to their customers why they are different. The Wall Street Journal just reported that constantly lowering your prices to promote traffic, while tempting could be the kiss of death to your brand profit, by doing so you educate your customers to wait for sales before they buy, i.e. department stores. Success will be found by selling high-value products that can’t be easily sourced by your customers and delivering flawless service. Find new useful extras or add-ons for purchases to increase the value your customers get for their money, bundle items together. This will prove to be better in the long run than smaller margins. Think bundling–and put some horses in the barn!