Articles

A Self-Fulfilling Prophecy Of Doom & Gloom.

The media is a powerful, all pervasive beast. It surrounds us with noise that is usually black or white extremes of depressive negativity or intoxicating euphoria. Neither is helpful to people trying to plan and successfully run a sustainable retail business. “Never let truth get in the way of a good story” (or good headline for that matter) has become a statement of media fact – not opinion.

For that reason many good retailers could be excused for seeing the horsemen of the apocalypse swooping down from the hills and heading in their general direction right now. But the reality is something very different.

Retail sales are still growing. Our customer’s household costs may also be rising, but sales are still growing. Employment is holding up. Credit is available. Cash is still flowing and the Australian dollar is still a strong, relatively stable currency.

The critical issue all retailers face is not a marketplace in total freefall but a question of magnetism. Retailers must prove a “why us” story to their customers every day – especially now. There has and never will be customer loyalty in retail – only customer relevance which needs constant reinforcement.

In the current market cycle, customers are challenging their own purchasing and shopping behaviour without any outside stimulus. Interest rate movements just increase the level of questioning. But the average household is interrogating where they spend not if they spend.

If retailers listen to too much negativity and begin to act negatively the outcome is a self-fulfilling prophecy. Employment is a case in point. If retailers think negatively and act negatively and – for example – en-mass move to widespread staff retrenchment, unemployment will sky-rocket and sales will fall. Likewise, top-line sales won’t grow if there is no stock on the floor nor store staff to sell it.

Each scrap of new information is being leapt upon by the media as more “proof” of impending disaster.

Belief is the most powerful motivation in the world. What you believe becomes reality. There is no doubt that expectations and actions need to be modified in the current cycle. But the retail equivalent of the grim reaper is not at the door.

We are over-retailed and there will be failures and consolidation. Many of us believe this is over-due in a marketplace where an overly extended retail “boom” has glossed over the cracks of some very ordinary me-too retail operators. But this necessary adjustment phase does not mean retail is in a perilous state of affairs.

Profits will continue to rise for good retailers but not in the order of magnitude that shareholders have been led to believe were their divine right to expect. Much of your future position lies in your self-belief. So the going gets tough – what are you going to do?