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| If you can’t see a silver lining, get out of the business |
   
Posted Date: 09/03/2011
By Peter James Ryan
Economics is a fickle mistress. One moment she flatters you, perhaps even rewards you.
The next the claws are out and you are defending more than your honor –
often your livelihood. Retail exists within the universal economic
context with all it shifts and nuances, political and exploitative
maneuverings and the opening and closing of opportunity gaps.
It has always been and will always be thus.
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Anyone who enters retail with the thought that it will be easy, won’t
involve change and involves any concept of a protected franchise is ‘a
few sandwiches short of a picnic’.
Which is why second to Poms, the whingers society loves to hate the most
are moaning retailers. Retail is a dance between buyers (shoppers) and
sellers (retailers) and don’t for a minute think the buyers will have
any sympathy for the sellers once the music stops. The sellers want to
take as much of the buyers money as they can and the buyers want to part
with as little as possible. A few don’t even want to pay a cent!
You run a retail business – your only option for survival is to
out-think your competitors and find the opportunity in your specific
context that allows your business to be sustainable because shoppers
want to buy from you. Don’t whinge and whine to a shopping public that
isn’t interested. Get on with fixing your business and if you can’t find
a way to make it sustainable, get out. Nobody is going to change the
rules to protect you.
Retail businesses have only ever existed to add value to people’s lives.
The minute they no longer do or are perceived not to add value they are
in trouble.
The reality of the current context of retail is that a decade of process
engineering, supply chain efficiency gains and capital management
improvements have left many categories commoditized, standardized and
numb to the realities of the twenty first century sourcing and
distribution paradigm. The pendulum has swung too far into driving
retail businesses almost exclusively from an investment dimension rather
than a merchandise dimension.
At a time when Australian households are the wealthiest they have ever
been, are saving in record amounts and are consuming record volumes of
products, many retailers are struggling to make money. And this year –
with no currency gain buffer – it is going to get ugly.
Make no mistake. There is PLENTY of opportunity in retail to grow sales
and profit dollars. But it isn’t through playing by the same rules that
have so dominated the last ten years. The internet has re-drawn the
lines. The shifting sands of global sourcing have re-drawn the lines.
The well-armed shopper has re-drawn the lines.
There is a silver lining out there. If you can’t see it, don’t prolong
your inevitable fate by giving away profit in a desperate cry for
survival. You’ll only create un-necessary pain for everybody else. Get
out of the business and let the retail renaissance begin. It’s going to
be a very bright new world for retailers and shoppers but only after the
clouds clear away.
Peter James Ryan is Chief Executive Navigator of Red Communication Australia. Email: peter@redcommunication.com |
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