Wednesday, April 15, 2009

5 Rules For Retailing In A Recession

The crisis is hitting bad retailers, as consumption power drives sales to go down. Found on the Retail Art blog, the Harvard Business Review exposes 5 rules for retailing in recession.

Here they are:
1) Go where the headroom is
is defined by the market share you don't have minus the market share you won't get. In short : avoid to multiply the initiatives but rather focus on protecting your most loyal customers as #1 priority.

2) Close the Needs-Offer Gap
This approach favours to expand the average basket spending rather than convincing new customers to come in. Usually you analyse what you sell but seldom have a loser investigation on what you could sell.

3) Go after bad costs
Key point is to establish a link between retailer's costs and each aspect of the offer. Drop dead the classical ABC costing for a customer-benefit costing.

4) Cluster Store
A recession inevitably will lead you to differentiate your stores. Tailoring your offer and concept will help you to stick with your local customer base. Take care of no adding too much complexity in the process that could withdraw the benefits of the clusterisation.

5) Retool Core Process
To be consistent and gain efficiency it's important to change some key process : customer research, merchandise planning, performance management and strategic planning. When a retailer is usually asking for : who is our customer ? should switch to the "why are customers shopping our stores" and "what do they buy from other retailers" questions.