Retail Observer

RETAILOBSERVER.COM DECEMBER 2014 40 Elly Valas Retail Views Elly Valas is the Marketing Services Director for Nationwide Marketing Group. She can be reached at elly@ellyvalas.com or at 303-316-7569. Visit her website at www.ellyvalas.com. RO I f I had to describe the current business climate in one word it would be uncertain. An article in the National Retail Federation's magazine STORES was captioned "Despite Upturn in Spending, NRD Downgrades Sales Forecast." This past October, the Wall Street Journal ran an article about the public markets headlined, "It's Getting Scary." A TV news special about entrepreneurship centered around the unpredictability of business today—one month great, the next one behind last year and third just fair. And finally, even as employment is stronger than at any time in the 21st Century, wage stagnation continues to limit consumer spending. One pundit said there was a high degree of anxiety. Even though sales in the second half of the year have been growing faster than the 2.9% growth in the first six months, NRF revised its annual growth projections to 3.6% from the original forecast of 4.1%. Severe weather took a pretty heavy toll on first quarter business even as consumers seem to feel more optimistic about spending. How should independent retailers respond to these constantly shifting signals? I think the best route is to steadfastly stay the course... but with a little room for flexibility. The prescription for uncertainty may be slow, certain, and calculated action. • Continue to reign in expenses. Carefully monitor every expense line and regularly compare each expense as a percentage of sales. During the recent recession, you managed without the additional delivery crew and technology upgrades. Can you grow a bit now without spending too much more? • Carefully consider expansion. Before you open a new store, take on a new line or get into a new category, map out a detailed plan. List the pros and cons. Make decisions strategically. If you open a new location, how much will it cannibalize from your current ones? Can the increased gross profit more than justify the additional capital costs? Will the addition of a new product category use up your credit line? Will it cause a cash crunch? • Stash some cash. To announce his retirement, my Dad said, "This is my seventh—and last—business downturn." His message still resounds clearly. Coming out of the doldrums? Finally making some money again? Business on a roll? Put something away for the next rainy day. I have not seen any indication that banks and finance companies are suddenly releasing their tightened grip on their dealers. Cash is still king. • Reinvest wisely. When things were tougher you may have put off needed repairs and maintenance. Maybe you spent a little less on training than you needed to. Make a list of all the possibilities— new trucks, an additional associate, new LED lighting—and look at them all together to see where you'll get the biggest bang for your buck. What investment will have the greatest return? Limit your risk by tackling capital improvements in a slow, methodical way. • Keep promoting. Don't risk pulling back on your advertising in hopes that a rising tide will just lift your boat. Yes, there are more consumers in the market... but are they buying your products and are they buying from you? Don't forget to keep investing in paid social media and email marketing to attract new customers. • Retail is a team sport. Keep an open dialogue with your associates. Tell them what you're doing, what their roles will be and how they will be rewarded. Let them help set priorities. Engage them in more decision-making. Tell them that you're hesitant to rely on a few strong months to open the spending floodgates. Ask them what they are hearing about their customers' attitudes. • Just the Facts. We live in the information age. Use data to manage your business and make decisions. Develop flash reports and dashboards to give you a snapshot view of sales, margins, cash requirements and payables on a daily basis. Don't be lulled into thinking business is better—or worse—than it really is. I respect the gut feelings expressed by most entrepreneurs…as long as they're verified by data and facts. I'm not a nay-sayer—I'm usually accused of being overly optimistic. Still, with all the mixed messages swirling around us about the state of economy, a little realism is probably a good thing. I hope the recovery and business expansion continues unfettered. I don't want to see confidence morph into arrogance. Eternal vigilance is the price of continued success. Best wishes for a happy and profitable holiday season and a healthy New Year. CREATING FIRM FOOTING IN AN UNCERTAIN WORLD

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