Inventrak Blog

The retail cloud and Small and Mid sized business

Economic Downturn

Mar 11

2009

Tips for Small Retailers in 2009

Posted by Donna Tang in retail cloud, Economic Downturn

Some analysts anticipated that recession would be over around the end of this year. Whenever the recovery would come, now, small business needs do something to survive.

Here are a few things to consider that can boost your profits this year and keep your store and your heart happy:

1. Good Money Management
A key factor of staying alive and well in a recession is to properly manage your money and income. Don't spend more than you make and don't spend money you don't have as much as you can help it. The less you put on a credit card and have it stack and pile up on you, the better!

2. Maintain Good Inventory Tracking
As we always talked about in the blog, you don't want to be overstocked or under stocked with any particular item because in times like these, it's important to be extra savvy about saving money by getting what you actually need. Having the right thing at the right time is absolutely vital!

3. Good Communication and Great Customer Service
Making customers happy is always the key to boost your business. This is why in many blog articles we emphasized customer-centric marketing strategies. Keeping in touch with your customers and keeping track of their purchases, birthdays, etc. is, though seemingly small and irrelevant to you, an extremely important factor in most cases to keep your customers loyal and wanting to come back for more.

4.Employment
Having good, hardworking, loyal and dedicated employees is probably what every store owner needs and wants above all in running his business. Of course finding such qualities can be hard to come by, but careful selection of each and every employee (no matter the post title) is extremely important as the whole foundation of the business and its success depends upon good workers, managers, etc.

5. Change
We've been promised change haven't we? Well, change can be bad or it can be good.

Successful businesses are those who can be causative in their changing environment. And while the popular belief is that one should adapt and adjust to his environment, it is notable that if one did that during these stressful times, one would be liable to fail along with the economy!

It is my strong belief that, although adjusting to change has its reasonable time and place; a successful company is that which thrives and flourishes despite the obstacles by being strong and smart about the way they do business. Following the actions which brought them success and researching thoroughly new actions before they try them; Acting on the right conditions for their business and holding a positive attitude.

The economic situation is what it is. And change is coming sooner or later for the economy. However, you don't have to wait to change your success. It is up to you to make this a much better year than last.

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Jan 28

2009

Survive the Economic Storm!

Posted by Donna Tang in Recession, Economic Downturn

The U.S. economy has put everyone on the edge of a storm. This economy has brought failures of countless companies from various industries. The economic environment seems to become worse and worse. If you own a retail business, you must have tasted it. What to expect next?

You've probably cut prices in order to attract those who do not want to spend as much as before on their clothing, shoes and so on. In order to survive through this tough time, you have probably also already laid off some employees or cut their work hours. What else can you do?

If you want to survive, keep making the effort and work smart. It is true that you cannot control the economy. However, you can still successfully control what you have power over.

Learn the current need of your customers. You have already discounted your items in order to keep the level of sales volume. What else can you do? If you own a clothing store, you should know what styles of clothing are the best sellers in your store. Read your weekly detailed sales report and you will be sensitive to what customers want! Concentrate on profitable products and cut other non-profitable ones.

Learn what your competitors do. What prices do they set? How do they design their show windows? How do they demonstrate their products in their stores? What are their featured products? This might give you some new ideas on how to win customers. Remember, further lowering prices on your products is not the best thing to do now, because other stores could choose to lower their prices as a response, which will lead to a vicious cycle.

Moreover, perform an inventory overhaul. Your inventory is your single biggest investment. In many cases, it's what defines you. The flow of merchandise in and out of your inventory determines your success. You should be evaluating your inventory as often as possible. You need to know what you have that isn't selling, and you need to know if you've overbought a certain item. Look at your inventory level in dollars as opposed to unit count, and then look at sales, what merchandise you have received, and what is on order. Make sure you have enough inventories to generate the sales you're projecting.

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Nov 06

2008

Retail Economics

Posted by Shaun Mooney in ROI Management, Retail Finances, Economic Downturn

All the drama going on in the world economy has thrown a whole heap of debate of what will happen next. Some of the dialogue has been confusing. Politicians and the media have not made it any easier with their fear campaigns, spin or just general lack of understanding of economic fundamentals.

I am here to give you an understanding of what has happened, and how all of this massive change will affect consumer spending - you know the people who shop in your stores.

Debt Levels got out of Hand in the US - Let's not too caught up in this sub prime thing. Basically debt is debt, and Americans have a lot of it. And don't waive your fingers at our American friends, the OECD average for personal debt 79.5%. Essentially when you borrow money, can't make the repayments and the house is worth less than what you paid for it, you are in a bit of bother. Top that with some credit card debt, and you get the picture.

The World is fuelled by American Consumerism - Over 60% of America's GDP is powered by consumer spending. No matter what the politicians promise to rectify over there, it's going to take some time for the world economy to turn around. I'll explain things as I go along.

Surely We Can't Rely on the US for Everything - When the US stop spending, poor old countries like China, India, and their Central/South American counterparts stop producing. No use making goods if no one is buying. China's growth is slowing and India has an issue with inflation (and some reported job losses). We need to hope and pray that they can be the growth engines of the world economy, whilst the original powers sought themselves out.

Yeah But What About These Countries With Commodities? Surely They've Got Money - When people stop spending money, factories stop producing items, which means they don't need the commodities to produce the products (or the fuel to ship them their). The markets know this, so they dump these commodity producing countries currencies. When their currency goes down, the price of imports (consumer products) goes up. The once cheap plasma screen TV, is not so cheap now.

The World Got Scared (Particularly Europe) - The number one selling car in the UK is BMW 3 Series (it alternates with the Ford Mondeo for the top spot), so you know they thought times were good. Also when a little known island called Iceland has businesses buying English Premier League soccer teams you know something is not quite right.

So when the US went under, Europe got cold feet, and all of the sudden the markets in Europe crashed. Banks, like all publicly listed companies, need shareholders money as capital for their business. When this capital gets pulled from under their feet, all of this debt that the banks had all along is being exposed. So the banks needed the governments money (new capital) to keep them running.

Why Bail Out the Banks - Because when people feel good they spend. When they feel scared they stop spending. For economies to grow they need people to spend money. It's a vicious cycle. So governments bailed the banks to make people feel safe and secure, so that they can spend their money again.

So what should you take from all of this. My advice - don't panic. You'll only do something stupid.

People are still buying things. It is estimated that 86% of purchases are emotional, so I don't think spending is going to go cold turkey. The people, who are tightening their spending, did not have the money to spend to begin with. It is just that when times were good, they got blinded and spent like crazy.

But here are some things you can do;

§ Increase prices on unique items, as this will protect you from inflation eating away at margins

§ Focus on converting the people coming through the doors into customers. There is going to be less people shopping, you need to maximise the all opportunities

§ Focus on building loyalty. It is proven that loyal customers spend more than people off the street, and come into your store(s) more times a year

§ Tighten you product range to focus on core categories. Excess stock ties up cash, and a lack of cash closes down businesses