Articles

If You Can’t See A Silver Lining, Get Out Of The Business.

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.

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.