Articles

The Smell of Death

There are commercial vampires amongst us. People whose unquenchable thirst for cash is as compelling as a throbbing jugular vein to the proud possessor of fangs. As the flow of negative propaganda stokes the fires of fear, the vampires are hoarding cash like a blood bank stores AB positive. Let’s get one thing very clear - there’s no shortage of cash out there, just a lack of willingness to transfuse it.

Total retail sales – on a same period last year versus same period this year basis – are still in positive and indeed record territory. So it’s not the shopper’s fault. But because of the constraints on cash-flow and business funding caused by the slowing rate of growth and negative business sentiment, many retail businesses are feeling a pressure build-up that is similar to the effect of an over tightened tourniquet.

Too many people are now sniffing the air to catch the smell of death – the early warning signs of tenants or competitors or debtors in trouble. So what are the aroma notes your nose should be searching for to detect the early warning signs in retail right now?

The smell of death can be detected from the standard of:-
- Lease line magnetism
- Store foot traffic
- Conversion rates
- Basket size
- Aged inventory levels
- Stock weights
- Staff numbers & enthusiasm
- Store sales reliance on price-off
- Margin management (buy/sell ratio)

If some or all of these areas are not being executed and managed to the right levels in the current market context, the productivity of the retailer will be patchy at best. The smell of death is not only repugnant to a retailer’s financiers and investors but also to their shoppers, who are often the first to sniff a lack of confidence.

To avoid the smell of death hanging around your door, focus on the positive energy you put into the fresh life-blood you pump through your stores every day. Foot traffic in major shopping precincts has not dropped. Shoppers are still out there with money in their pockets. Seduce them on the lease-line. Convert the first sale. Top up the basket with add-on, bundles and impulse. Bounce them back with an expiring offer.

Keep your service levels high and your staff enthusiastic. Be confident with stock weights. Quit stock early and keep stock levels confident and fresh. Manage your margins through newness and turn. Treat cost management with prudence and based on productivity - not fear.

Anxiety saps energy and fuels poor decision-making. Enthusiasm and discipline drives success in retail. And success will keep the blood-suckers from the door.