LET'S face it - this is the mother of all recessions. Every industry is affected, and the retail industry is probably the most vulnerable of them all.
Competitive decision-makers, retail owners and entrepreneurs should see this recession as an opportunity to create and implement strategies that are innovative yet sustainable now and for the future.
Initially, you will need to analyse quickly which are the areas to cut, save, grow and invest to create value during the economic recovery.
Taking action is not without risk, and times of uncertainty can create confusion and delays, and demoralise staff. It can often make staying the course seem like the best option. But staying the course may mean coming out of the recession at a competitive disadvantage.
Here are some key principles that can help you thrive in a downturn and make you stronger by the end of it:
1. Cut the right costs
Cutting costs across the board is generally not a good idea because money is better spent in some areas of the business over others, and sound investments make good sense, even in a recession.
Update your business records so that you always know how you are faring. Keep money aside in the event that the economy does worsen.
2. Go online
It is becoming more common for people to search for goods and services online and compare prices. Supplement your retail business profits during the recession by adding an online network marketing business.
3. Back up your key vendors
The choice of vendors is crucial to success. Apply the Pareto principle, which states that 80 per cent of your sales come from 20 per cent of your clients. This rule has been proven to be effective across many types of retail formats and in all types of economies.
Focus on your product lines. Make your business relevant by having a clear and thorough understanding of who your customers are and what they are looking for when they shop at your store.
5. Be customer-centric
Target marketing expenditure at the most profitable customers and change the nature of your relationships with them. Take this time to be consumer-centric - it is the key to unlocking the retail "code" of customer profiling, opportunity gaps, demand and supply, and execution excellence.
The more you know about your customers, the more you are able to understand their needs. The more you understand their needs, the easier it is for you to fill the gaps. This will help you give them what they want and outshine the competition.
6. Increase your marketing
This is the worst time to reduce your marketing budget. The aim is to keep and hopefully increase your market share, and the best time to do so is in a recession.
7. Invent the future
Get rid of dead stocks. Retailers should trim their range of non-core products and invest in defensive stocks that have been known to hold their value in a recession.
8. Cash is king
Across-the-board strategies rarely work, whether for cost-cutting or for investment. So, focus on strategies that can get you immediate liquidity. Negotiate longer credit terms with your suppliers. Establish higher rebates for fast payments. Create incentives for customers to shop with cash.
9. Provide fabulous customer service
Anything less than that will obliterate all other efforts and strategies.
10. Protect your most valuable asset
Tough times may call for tough measures, but open and fair communication is the key to having a well-motivated and productive workforce, which is your key asset.
This is a critical time where your highest operational expense should be re-evaluated. Excessive rental hikes should be readjusted according to the current trends. Being in the same situation, everybody should play their part.
12. Be prepared for change
Successful retailers are the ones that can adapt and change. A recession may give you an opportunity to review your business and to implement changes.
While some will not survive the rigours of this recession, many businesses will prosper in such times simply because measures have been taken to streamline the business, making it leaner and tougher.