Peter Huskins
Welcome to the start of Christmas 2020. Wallets are empty, credit cards are growing in popularity, and retailers are finally able to shake off the trickling sales results of the past nine months.
From ShopAbility Director Peter Huskins.
To put that last sentence in perspective, some retailers, especially those with decent ecommerce skills, have had some really decent sales results. Kind.
Demand has increased from cash-rich shoppers, all of whom are looking for a slightly forgiving retail solution, and now it's brick and mortar retailers who are taking their share of the cake.
We talked in a previous 360 issue about the potential impact Black Friday will have on early Christmas sales and the potential flattening of the traditional madness that historically occurs two weeks before Santa's arrival. Food aside, that is, we're all going to go a little crazy if we cut up as much food as possible to enjoy a well-deserved Christmas party or two … or three.
Guess what? The first part of our prediction was realized. The car to malls and pedestrian traffic in malls have been hectic, and that's probably a polite way of putting it. I visited four of my local centers at the end of Black Friday weekend and most of them were like a parking lot before you hit the parking lot!
Stationary retail is facing new challenges. The online world is extremely competitive now. Every brand, retailer, marketplace, new players like social platforms and even messaging operators are chasing the newly expanded pool of confident and capable e-shoppers.
Retailers across different channels and categories were affected very differently as shoppers made more of their JobKeeper-supported purchases during the Covid lockdown. Some have benefited because their sectors have benefited from the shift to home work, cooking and eating, others have been hit hard.
Hopefully most will see the need to change or reposition their business models as they plan for a longer term reversal to something that vaguely resembles the trading world we left this March. After months of challenging trade, JobKeeper and rent relief, government packages and cash injections, we find ourselves in a brief second of unnatural calm, even though the initial storm that was triggered by Black Friday has just occurred.
Repositioning a company or changing a business model to a significant extent involves costs. To that end, retailers and their supplies need to take a responsible stance towards the measurement and management of their financial performance that this pre-Christmas trade boost will provide. Cash is king, both from a cash flow perspective and to finance the costs of repositioning or model changes.
After a drought in sales and the margin advantage it brings, the temptation to spend a little too much on trivial and non-essential items of expense will just be too great for some retailers and suppliers. As mentioned in previous articles, Covid will wash out those retailers and suppliers who have shaky business models and would likely have expired naturally. Something like the survival of the fittest, but in a commercial sense.
At times like these, you can't analyze your numbers enough.
Check your sales performance at least daily, preferably every trading day:
- Where did my sales come from? In the store or online?
- Stocks of the bestsellers
- Which categories and segments do well and which don't? What do I have to do?
- Ad mix and segmentation
- Brands and labels
- Pack sizes and flavors
- Inventory to support bestsellers
- Pricing options
- Old warehouse clearance, including end of area
- Bearing rotation.
Check your margin and running costs at least daily:
- Security and Covid safe
- Wages are my second largest cost after inventory. How can I reduce or at least optimize the most important trading patterns?
- Important availability of staff
- Late night trading reporting
- Is my rental current?
- Packing and packaging
- Cleaning and preparing the business for the next day.
Understand what $ you have left and prioritize paying your overheads.
Understand and plan for what the next week might look like, including sales and cash forecast. Do I have to deposit additional cash due to (un) planned expenses?
Understand what the next week looks like and plan that too.
Do the same until Christmas.
Do the same for Boxing Day and the inevitable sale.
Do the same for January, especially if I'm in a regional tourist area – the party will continue well into January, trust me.
The above list is not exhaustive. It's supposed to be a thought starter, a giant mirror in front of your face that asks you the questions that need to be asked in the run-up to such a critical and unprecedented Christmas. There are many more considerations to be made according to any company's DNA, so tailored as you see fit.
I am fully aware that most knowledgeable and experienced retailers and suppliers would already be doing much of the above. Thanks to years of trading experience and prudent financial management, this is anchored in their behavior.
It's your business, no one else will do it for you.
If you haven't already started this journey, make it happen or you will not be among the survivors to succeed in 2021.
May I also take this opportunity to wish you and your families a safe and happy Christmas, have fun!
About Peter Huskins
Peter Huskins is a career retailer well known and recognized in the Australian FMCG industry. With extensive experience in department stores, DDS, spirits and supermarkets, he has worked with suppliers and retailers for more than 10 years to develop business, category, customer and channel strategies and competitive differentiation.
For more information call Peter on 0412 574 793 or send an email to peter@shop-ability.com.au.
