Retailing is one of the hardest hit industry in today’s recession.
Empty stores, bored sales promotion staffs, depressed store owner… The thought of going out of business is looming days in and days out.
50% discounts won’t work anymore. Freebies don’t attract visitors as they are intended. Friendly customer service is no longer making much difference.
All the marketing and business theories we knew just don’t work anymore. Those theories don’t answer what recession challenges.
Are you familiar with these tips (or new myths?):
- Don’t cut your marketing budget. I took this by heart and I spend every dime of my business’ marketing budget to a rather large marketing campaign. Result: More prospects, more busy sales staffs, no sales increase.
- Perhaps it’s your marketing message that fails you? Not really. My business was a franchise unit of one of the most successful franchise nationwide, used to create strong, well-thought, marketing propositions. Result: Unless you give things for free, visitors won’t come to your store.
- Cut operating cost. Easy to say, difficult to do. I’ve cut my business’ electricity spending by 25% and overall overhead by 10%, but profit margin declines by 15% due to rising cost of goods sold and discounting products. Result: More hassle, more resource used, declining profit – end result: going out of business.
I am not an expert in marketing, and I probably should hire a consultant. Unfortunately, I’m not a deep-pocketed entrepreneur that has all the resources to hire consultants. I have consulted online with experienced business owners, and all of their answers (and my very own conclusions) lead to some common issues need to be addressed.
Despite the gloom and doom above, I do see lights at the end of the tunnel. I respect those retail stores that thrive in today’s recession. Some of them are answering the right opportunities at the right time – This is what many store owners can’t answer, including me. I have covered about one of the successful retail stores in winning local customers and thrive today in one of my previous articles.
How to survive retail slump
Here are some tips (real tips!) that could save your retail business:
- Cut your resource-intensive marketing budget – Focus on buzz and viral marketing. Despite what all the experts said, you should cut your marketing budget and rely on buzz and viral marketing, instead. Have your existing customers to refer their friends and colleagues in return for a considerable amount of discount – This way, you cut your cost on acquiring new customers and get a more “trusted” group of prospects.
- Implement and practice Pareto’s Law. Pareto’s Law is probably the most underrated business strategy of all – Implement it right can be a business lifesaver. In term of retailing, here’s the premise: 80% of your customers results in 20% total profit – More customers and sales don’t always mean more profit. Here’s the flip side: 20% of your customers results you 80% of the total profit; Focus on a small group of customers that are low maintenance and bring more revenue to your business than the others. This way, you can cut customer retention budget and other resources consumed to maintain customers.
- Go online (even consider closing your offline store.) Consider selling your products online and do online marketing. Going online for is highly recommended, as it is a low cost strategy – Not expensive to implement (You can also implement it for free, if you know how ;)…) and you can cut considerable amount of overheads.
- Implement multi-tiered affiliate marketing. If your current customers can help you sell your products, they get a share of the sales PLUS a share of the sales made by someone they recommend your products to. This is a powerful proposition – In exchange for a percentage of your sales, you can get more buzz, more sales, and less resources on customers acquisition. Affiliate marketing can go both online and off line in some other forms: multi-level marketing, dealership, reselling, and even franchising.
- Never do relocation. Relocation is expensive and involve the same amount of risk as any other startup business. Even if you move to the other side of the commercial blocks, different location, no matter how near it is, effect retail stores (remember, the 3 most important rules in retailing is location, location and location.) Unless you are darn sure that relocation can get you more profit (remember, more sales don’t always equal more profit in retailing,) don’t even think of it.
Good luck in your “war” against recession.
Image by AuthenticEccentric.