Tag: Harvard Business Review

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Retailing in a Recession: Part Four

Retailing in a recession

Many retailers closed their doors during the last recession and lately, the economic outlook has been uncertain. Although we have steered clear of another recession to date, we want to give you the tools to succeed in the event there is one. In the final part of our series Retailing in a Recession, we cover how to tailor customer research and merchandise planning to your customer’s needs.

Customer Research Strategies for Retailers in a Recession

Customer research is as easy as asking your clients questions at check out. Below are four questions you should train your employees to ask.

  • Did you find what you need?
  • Did you ask for help finding it?
  • Is there somewhere else you’d expect to find the item?
  • Is there something you want that we don’t ever carry?

These questions help establish different data points including if current offerings are in stock, shows the customers you care, and improves your offerings to better meet their needs.

Merchandise Planning

Customer research can also help determine merchandise planning. In all economic climates, merchandise selling well should stay, and merchandise not selling well should go.

During a recession, retailers should take extra care to plan their merchandise offerings to align with customer needs and preferences. Can merchandise be fixed, rather than shrunk, if productivity is low but headroom is high? And what about merchandise that has high productivity but low headroom? Should it remain?

In summary, some retailers will turn an economic downturn to their advantage. Consider starting with a customer survey using a mix of open- and closed-ended questions to gather both qualitative and quantitative data on preferences.

Inspiration for this post comes from the Harvard Business Review’s Five Rules for Retailing in a Recession. Check out Rule 5: Retool Core Processes for more information on customer research.

If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.

The post Retailing in a Recession: Part Four appeared first on American Quilt Retailer.

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Retailing in a Recession: Part Three

good vs. bad costs

Although we are not currently experiencing a recession, it’s important for retailers to have the tools to succeed in the event of one. In part three of our series, we will discuss what to do if you are faced with the choice of cutting costs or embracing declining margins. Most retailers will naturally look to cut costs, but it’s crucial to determine which ones to go after.

Good vs. Bad Costs

To begin, it’s important to differentiate between good and bad costs. Good costs are those that provide value to your customers, while bad costs add nothing to their experience. However, it’s important to keep in mind that costs are not always clear-cut; cutting costs, such as services, may help in the short term but hurt in the long run if customers choose to shop elsewhere where those services are provided.

Determining bad costs can be difficult, as customer needs are constantly changing, and looking at line items doesn’t necessarily link to what customers want and appreciate about your store. For example, while a clean store is a given for all retailers, one store found that its customers wanted better customer service. In response, the retailer cut its cleaning expenses by 20% and invested that money into customer service training. The result was an increase in customer visits and return on capital.

To summarize, gaining insight is key for retailers looking to manage their expenses. Keep this in mind when faced with the decision of cutting costs. For more information on good vs. bad costs, check out rule number three in the Harvard Business Review’s Five Rules for Retailing in a Recession. Stay tuned for part four of our Retailing in a Recession series next week.

Virtual Fabric Show

Join Benartex designers for the Virtual Fabric Show Spring 2023 on Wednesday, April 26th at 10 a.m. EST. At the event you’ll get a sneak preview of Benartex’s upcoming fabric collections and hear directly from the designers. Register here.

Can’t attend live? Sign up to receive a recording of the event in your inbox.

If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.

The post Retailing in a Recession: Part Three appeared first on American Quilt Retailer.

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Retailing in a Recession: Part Two

retailing in a recession

Although we aren’t in a recession, we want to give all retailers the tools to succeed if there is one. In part two of our series, we cover how customers can spend more in your store.

Recession Tip: Find the Needs-Offer Gap

A great way to retail in a recession is to get customers to spend more. Easy right? All you have to do is give them what they want. The challenge lies in figuring out what they want (and no, unfortunately it isn’t more of what you’re already selling). Enter the needs-offer gap.

To identify your needs-offer gap, you’ll need more than data. Unfortunately, data will only tell you what is selling, not what could be selling. However, if you do the work to identify your needs-offer gap your store will reap the benefits.

Take this example. A retailer was experiencing a decline in apparel sales. They could have limited the apparel they were offering and expanded their accessories and handbags (which were selling), but this would have led to over serving. Instead, the retailer looked at why their customers shopped elsewhere for apparel. They found out their customer base wanted “clothing for the right occasions, in the right styles, at the right price, and with the right fit.”

This led to the retailer evaluating their merchandise initiatives. By introducing new brands, offering more wear-to-work options, and expanding mix-and-match basics, the retailers saw their margins improve.

For more information on the needs-offer gap, check out rule number two in the Harvard Business Review’s Five Rules for Retailing in a Recession. And stay tuned next week to learn more on good versus bad costs in part three of our Retailing in a Recession series.

If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.

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Retailing in a Recession

retailing in a recession

Fortunately for now we are not in a recession. But as we heed the warning signs of an economic slowdown, we thought it worthwhile to visit how to retail in one.

Identify Headroom

The first rule of retailing in a recession is to protect your most loyal customers. However, if your loyal customers cut their spending, that means they’ll also spend less in your store. Enter, headroom.

Headroom is defined as “market share you don’t have minus market share you won’t get,” or in other words, switchers. Switchers are customers who aren’t loyal to your store, but aren’t loyal to your competitors either.

There is no single way to measure headroom. The best place to start is to identify switchers. For example, a camera store categorized customers based off their knowledge, level of service required, and product sophistication. By determining what your switchers like about your competitors, you can make the necessary adjustments in your store to fulfill their needs, thus increasing your market share.

For more information, check out the Harvard Business Review’s Five Rules for Retailing in a Recession. And stay tuned next week for more on Retailing in a Recession.

h+h Americas

In other news, join Creative Retailer as we exhibit at the premier tradeshow, h+h Americas, hosted in Chicago, IL June 21-23!

At the event, you’ll have the opportunity to join the booth hop, network with new and familiar faces (Thursday, June 22nd at noon), and watch Heidi Kaisand give a session on the main stage Friday, June 23rd at 1:30 p.m. CST.

Use this link for a free ticket ($55 value) and stay tuned for more details.

If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.