This is the 3rd in a series of posts based on the April 2009 issue of the Harvard Business Review. This post is a review of the article entitled, Five Rules for Retailing in a Recession (Favaro, Romberger, and Meer--p.64).
Not that long ago, I can recall people bidding many thousands of dollars over the asking price to purchase a home in the Washington Metropolitan Area—then a red-hot real estate market. Those days are over for at least the near-term future. In fact, anyone in retail is feeling the pinch—more like a bite than a pinch. The authors offer their 5 suggestions:
1.Instead of focusing on your loyal consumers—though you certainly have to take good care of them to retain them—go after the uncommitted consumer. It’s a lot like politics—going after the middle-of-the-road voter.
2.Narrow the difference between what the consumer wants or needs and your offering. One suggestion was to have sales clerks ask instead of “Did you find what you need?” to “Is there something you want that we don’t carry?”
3.Reduce bad-cost products or services—those items that consumers won’t buy. For example, keeping your stores open longer hours when no or very few customers come in or using lots of space dedicated to low-purchase items.
4. Cluster stores according to consumer similarities and differences. Chain stores are particularly effected by this. For example, a retailer found that one cluster of stores in a high-income area needed more selection of laptops, whereas, those in lower income areas needed more desktops.
5. Retool Core Processes: During a downturn, retailers have to revisit customer research, strategic planning and other forward thinking strategies that will focus on the consumer-switching market, most likely to produce an uptick in sales.