Are Things Softening?
Or is that even the right question?
What can you do to drive profitable growth?
The most frequent question I get asked is, do I see things softening? But I think the right question to ask is: what can you do to drive profitable growth?
In all economies, there are those that win and those that do not. The bounce-back in 2021 was a once-in-a-millennium event. As business has returned to normal there are classifications and verticals that still have oxygen. The data below demonstrates that 80% of our clients are increasing over 2021 and 20% of our clients by almost 30%. We also know that luxury and branded goods continue to sell well and not promotionally.
Location/Vertical September 2022 VS. 2021
Luxury +14%
Footwear +7%
Women's +5%
Outdoor +5.1%
College Bookstores +5.2 %
Men’s +1.8%
Kids and Toys -7%
Client results overall for September 2022 VS. 2021*
Top 20% of all M1 clients +28.6%
Mid 60% of all M1 Clients +4.7%
Bot 20% of M1 Clients -23%
Only clients and locations with comparable revenue are included.
A Few Key Classifications September 2022 VS. 2021
Dresses + 31%
Women’s Jackets/Blazers +22.4%
Shoes + 18%
Denim M/W +3.1%
Sweaters M/W +1%
Mens Sportcoats +35.8%
Men’s Suits +15.8%
Men’s Sportswear -7%
Outdoor Hardgoods and hiking +3.9%
Design your own future
The Wall Street Journal reported just this last week that restaurant reservations are so hot, some places have a 1,000-person waiting list. The WSJ further reported on Monday the 24 th of October that “Luxury companies like LVMH and Hermes keep defying market pessimism, and network carriers such as United Airlines, American Airlines, and Lufthansa have all confirmed in the past week that demand for flying is booming.” This supports what we are seeing in the luxury market for our own clients.
Normal growth happens by design. Why do some restaurants have a waiting list and others do not? What happens next for your business is dependent on the decisions you make now, where you focus, and how you choose to invest your time and resources.
Your customers and your inventory are your most important assets. A focused and proactive effort on business development will reduce stress on the inventory purchase side as you are more likely to see better results in sell-through and inventory turnover. Quicker turns create cash and keep dollars from being tied up in unsold merchandise.
Client Development
The question I would encourage you to ask is: what can I do to improve and build on client development? Client development is controllable and creates predictable outcomes. There are two areas to focus on. One is increasing the purchasing of your current customers/clients and the second is investing in creating new customers and making them sticky.
Client development starts with a budget. How many hours and dollars are you willing to invest? Typically when we look at selling it is after the fact and is measured as a selling cost that often is the basis for different performance-based compensation plans. I admit this has always been my mantra.
What if we flipped it and looked at client development strategically and built a program to increase your annual share of wallet of your current clients (they do not spend all their dollars with you), and secondly invest in customer acquisition and retention?
Nick McHenry, President of OneShop Retail, works with his clients to increase the frequency of their purchases. According to Nick, “This is more important over the course of the lifetime of the customer than what is spent each time.” In their initial analysis of new clients, Nick finds that a whopping 40% of customers do not shop year over year. Based on that one statistic, what are you investing in time and money to improve that percentage? If business is soft, how much of that is just lost opportunities of customers not returning? How much revenue would be gained by cutting that number in half? The cost of doing something is far better than the cost of doing nothing by letting those future transactions expire.
Bob Negen, President of Whizbang Training, warns that you want to make sure your crew doesn't act like Roombas. If they're asking whether customers need help, taking no for an answer, and going back behind the counter like a Roomba returning to its docking station, you have a problem: you're not creating a valuable customer experience. It is all about loyalty. Bob continues: “When you give them the kind of experience that they deserve and expect from you, then lifetime customers are created.” How are you prepping and what are you doing to set up clients to re-visit and make sure the entire staff is aligned around that goal? Whizbang’s Sales Academy Plus focuses on creating customer experiences that create loyalty.
A budget is required to invest in your staff’s time. Hours and dollars need to be set aside to invest in Client Development activities. Goals and ROI need to be established so metrics are in place to measure success. Additionally, technology and processes need to be in place to make your people's efforts more productive.
We can learn from e-commerce retailing methodologies. They require budgets and ROI for customer acquisition. Why not do the same for Brick and Mortar?
Covid-19 did not change the buying habits of your customers to all digital shopping, it actually did the opposite. Customers stampeded back to brick and mortar in what is now considered unprecedented, unexpected, and ironic as many thought online shopping would change customers’ habits permanently. And the trend continues. As Amazon is laying off workers, Brick and Mortar openings are at a new level.
We began with an overview of what is trending in key verticals and classifications. In the same manner that retailers need to be invested in the right class, investment in client development is equally vital to counter bumps in the road caused by inflation, recession, and other economic events that place us in uncharted waters. I have said it a thousand times over the last 35 years. Invest in the right classes, invest in your people and use tools that allow you to manage your people and your inventory. There is no better competitive advantage.
Onwards and Upwards,
Marc Weiss - Co-Founder