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Retailers Can Provide Solutions And Increase Sales

In previous articles, I’ve outlined how consumer buying mentalities have changed throughout this recession. Back in 2006 I successfully predicted that during this period, consumers will be essentially driven by price as their top priority.

Here are five current trends that all retailers should consider when developing their brand and retail experience for their customers:

1) Consumers are now driven by Price in making decisions. Issues like selection, convenience and ambiance have taken a back seat to the almighty dollar as disposable income dwindles. Consumers as a secondary consideration still expect great customer service as they spend their hard earned dollars.

2) With higher unemployment, many people are “doubling up” with their accommodations. Young adults are moving back home and other singles are sharing apartments to reduce rental expenses. Some families are sharing homes with other families to make ends meet.

3) Consumers have migrated to a “needs-based” buying model from a “wants-based” one. Consumers are deferring items they want and “nice to have” merchandise for items that essentially provide solutions to their day to day requirements.

4) Most consumers are also thinking in shorter timeframes than in the past. Smaller, cheaper lower quality items satisfy the short term needs of the consumer during this recession. Durability and quality are less important if larger cash outlays are required.

5) Consumers are now adopting previously abandoned practices such as repairing and re-using items. Our highly disposable society has stepped back and thinks twice before disposing of items in need of slight repairs or may not be reflective of the latest trends. Tools, adhesives and other parts used in common repairs are selling well in our challenging economy.

With these current trends in mind, does your store offer solutions to today’s consumer and their evolved buying habits? Follow the checklist below and see if your organization can make improvements and fine tune your customer experience.

Take Action Today:

1) Examine your price points weekly and brand your store more towards a price driven position. Merchandise and use signs in your store that pivot around price points. Adopt a price driven advertising strategy as well during these times.

2) Classify your products into needs and wants based groups. Continually gear your store towards needs based items until we climb out of this recession. Wants based buying decisions as we all know are more prevalent when our economy is in a prosperous phase and unemployment is low.

3) Account for shorter timeframes and lower prices. Do you offer lower priced items that will do the job for 12 to 18 more months? Consumers will accept obsolescence or a breakdown in the future if they can get by at minimal cost today.

4) Can your store gear towards the trends of repairing and recycling? Many stores can do well to support this new trend, particularly in the hard goods sector.

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Retailers Need and Deserve a Break in Challenging Times

Many articles abound in the media about how as many
as 25% retailers will close their doors this year.
No one can accurately predict how 2009 will unfold
but it’s clear that within the supply chain, the retailer
at the end of the chain is bearing most of the burden
of our shrinking economy.

In spite of sagging sales, most retailers are paying the
same occupancy costs if not more, as they did in
more prosperous times.

Landlords fear high vacancy rates in shopping centers,
strip malls and just about any commercial location. Even
if you have a long term lease, now is the time to approach
your landlord and ask for a rent reduction. If a reduction
in rent will help you make it through these challenging
times, share this with your landlord and share your
plans to stay with them and get through this together.

A rent reduction makes your relationship a win-win
situation that’s far better than closing your doors and
generating a hard to fill vacancy for the landlord.

There’s a wrong way and a right way to negotiate a rent
reduction with your landlord. Don’t barge into the office
complaining about how tough things are and throw a
number at them off the top of your head. This will
throw any well meaning landlord off guard and stall
the negotiation process.

The right way to negotiation a rent reduction:

-Make an appointment with the landlord and
  explain in advance the purpose of your meeting
  (You wish to discuss your current occupancy
    lease/agreement)

-Do your homework. Put together a one page
   proposal that justifies your adjustment. If sales
   are down 20% for example from last year at
   this time, and you pay $3,000 a month in
   rent, an adjustment to $2400 is appropriate.

-Refer to the rent reduction as an adjustment,
  and do not talk in terms of a percent reduction.
  Talk in terms of a new absolute number. The
  landlord will see this number as rental income
  still coming in as opposed to a loss in revenue.

-Be flexible. Your landlord may offer you an
  adjusted rate that is not quite what you wanted.
  Think about their offer for a day or two and if
  you accept it, thank them for the concession and
  explain that it’s not quite what you needed and
  you would like to review the situation in 2
  months.

-Whatever you negotiate, confirm with the landlord
   that you’ll keep things quiet and confidential. The
  worse thing you can do is to broadcast to other
  tenants that you received a rent adjustment and
  put the landlord in a very difficult situation.

-Document and co-sign any amendments to your
  lease and retain a copy.

Remember that your landlord will be randomly
approached by other tenants for a rent adjustment.
Your proposal will not appear to the landlord as an
idea to come out of nowhere. However most of your
co-tenants will approach the landlord the wrong way
in getting a rent reduction. You can be more
calculating in your approach.

In my next article, I’ll talk about what you can do
when the landlord won’t budge on your rent…

Take Action Today:

1) Make an appointment and make sure your
landlord knows in advance the purpose of the
meeting.

2) Do your homework and propose a new rent
rate, and not a rent percentage reduction that
is justified by recent sales data.

3) Be flexible. Your landlord may not reduce your
rent but forgive a couple of months rent during
slow periods. Work out the numbers. On an annual
basis it may work out to the same thing for you.

Amateurs and Pros Help Themselves to
Merchandise in Challenging Times

In every economic downturn, cash strapped people will
often shoplift goods they can no longer afford. Retailers
must impress on sales employees that shoplifting attempts
will rise as unemployment increases and disposable income
also dries up through tightened consumer credit.

There’s another factor that will push unemployment higher.
Potential retirees who would have made room for new entry
employees in many companies need to keep working as a
result of reduced retirement nest eggs after the stock market
drop in the Fall of 2008.

A recent survey of malls in the Cherry Hill Area of New Jersey
have witnessed 80% increases in shoplifting incidents in the
past few months according to an article in The Courier Post.

These include amateurs who steal out of impulse or desperation,
or professionals who are caught with lengthy “shopping lists” of
requests from people who would not steal on their own. People
who know a professional are feeding them with requests to
procure stolen goods from stores and pay as little as ten cents
on the dollar.

Proactive retailers must remind staff that this rise in shoplifting
will occur in harder times. Start 2009 off right with a Loss
Prevention training session, which is particularly helpful for
new employees. You can order the Loss Prevention Workshop
Manual and conduct the workshop yourself in house. Give the
employees the training they need to safeguard your store from
rise in shoplifting you’ll be facing this year.

TAKE ACTION TODAY

Formally remind staff in a meeting environment that
shoplifting in challenging times will inevitably increase.
Stress that both professionals and amateur shoplifters
will take greater risks more frequently in your store.
Conduct a formal training program based on our
Loss Prevention Workshop or your own training
material.
Reinforce your Loss Prevention Program at least every
3 months through out the year.

Our Winning Retail Business Plans package will be released on Monday Octover 27th. It will be available at half price until the end of the month. This will give everyone an affordable package to create a Winning Retail Business Plan with particular focus on financing.