Lessons Learned: The Model for Now!
By Marc Weiss - CEO, Management One
As we cast our thoughts to the end of the year and into Q1 of 2021, we have a roadmap to guide us. We didn’t know what we didn’t know back in March. However, we have learned a great deal from our collective experiences over the last nine months. That knowledge is both freeing and energizing. Yes a second wave is upon us, and yes, there may be more restrictions, but our efforts in the last nine months have put us in a much better position to sustain and even grow. Below are three key takeaways from 2020 that should be baked into how we move forward for the rest of the year and 2021.
Less is More
The number one feedback our Retail Experts are hearing from their clients, “What you have been telling me for years is true. We can sell more with less. I am now a true believer.” Turn rates have gone up and the feeding frenzy for new goods is in full swing. The lesson learned here is that fresh sells and turning inventory faster creates and feeds demand. Clients are recognizing key classifications are capable of driving enormous business. Staying invested in those important categories was achieved by quickly getting out of old and underperforming inventory, and using that cash to reinvest where there is new demand. The proof is in October results. Our stores collectively performed, and this resulted in a 3.86 % increase for the month compared to October 2019. It may not be an inflection point as a second wave has rolled in, but it shows that our actions are working.
Just because there is uncertainty does not mean you don’t need a plan
We hear all the time, “No one can forecast the future so your guess is as good as mine and how can we possibly plan?” We reply, “Baloney!” Daily tracking one of the largest Indie specialty databases in North America provided visibility into trends. Our on-demand reporting gave retailers the ability to make decisions. Progress monitoring is an essential part of the solution. Knowing where you are and where you are going allows you to adjust course and create a better outcome. Trend info also allowed us to reforecast fall and is resulting in better results, even better than we originally expected. We are now dialed in.
This opened the door for new merchandise strategies reflected in re-engineered assortments, new vendors, dropped vendors, and new tactics that are bearing fruit and renewing energy. By increasing turns and focusing on signature categories markdowns have been greatly reduced. The good news is that seasons, as expected, have been extended at full price, and the need to turn to markdowns to raise revenue has been eliminated. Cash has improved and many retailers have made up the losses they incurred during the shutdown, especially when including the strategic use of funds delivered through PPP and EIDL loans.
Adaptability
Covid-19 was the great lifter for those who chose to adapt. Retailers used shutdown time to refocus their energies into preparing for opening, re-evaluating their merchandise strategies, negotiating with vendors and landlords, and accelerating and in some cases jump-starting their digital blueprint and footprint.
It has also become increasingly important for Indie retailers to prioritize customer convenience. A threat to our community is the increased nimbleness of large competitors.. Nimbleness has long been a strategic advantage of small businesses, but large retailers have leveraged technology to become much more agile. Indie retailers that have thrived are those that have doubled down on convenience and service. The result was a capture of market share and more cash on hand at the end of October than the previous year. I have said before great change brings great change.
The Next Chapter
We have entered an era of episodes. Where we once thought of business as seasonal periods we are now looking at a series of episodes. Covid, Re-opening, Recovery, Post-Recovery, and interspersed in these episodes are encapsulated periods. Where we once set our sights on Back to school, Halloween, Christmas, Resort, Easter. Summer, etc,, now these are events within our episodes. The one constant through all of these episodes is that the customer keeps shopping. Their tastes, behaviors, and expectations changed but not their desire for the merchandise and service you provide.
The next chapter demands a willingness and energy to keep adapting. Over the next year Management One™ will be laying out a game plan to adapting. In a chapter sequence we will share the tools, resources, and examples of retailers that are moving through each episode of change.
Stay tuned……….