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There's no question the economic downturn has been hard on CE retailers, whose experiences have ranged from challenging (Best Buy) to terminal (Circuit City).
But according to retail training firm Associates Interactive, recessions can be an important phase of an economic cycle for dealers with a clear, bold vision in place.
“A recession is the economic equivalent of a wildfire in nature,” said Bob Richardson, president/CEO of the Buffalo, N.Y.-based business, which develops training material, courses, exercises, tests and certifications for retail sales associates. “Although destructive, it provides the ingredients for a more fertile business climate.”
Richardson believes that recessions have the power to remake industries. “During a downturn, changes in consumer priorities greatly impact customer loyalty,” he said. “The companies that will survive to become the clear winners will be the ones that re-position themselves before the full impact is seen.”
Richardson noted, “While it is important to be in tune with the recession, it is crucial to balance awareness of the now with a keen eye on recovery. As the retail industry braces itself for the worst that the recession can bring, companies that acknowledge the presence of a paradigm shift will be best positioned to survive and emerge even stronger.”
To that end, Associates Interactive has compiled five key courses of action based on current and historic trends that can help retailers redefine and re-position themselves in order to be among the leaders in the post-recession upswing.
Preserve your brand promise. While recessions cause companies to strive toward becoming smaller and leaner, they also cause consumers to strive toward getting more for less. The most successful retailers will respond to this increased customer need without compromising brand expectations. Lowering prices while undermining consumer knowledge and product perception may cause customers to question a product's expected value. This may also undermine the trust a customer has in the brand once their discretionary income returns. Since consumers are increasingly buying “experiences” rather than just merchandise, contradicting brand promises should be avoided.
Get variable and scalable. One benefit of recessions is that the sense of urgency created puts every option back on the table. In the search for ways to become leaner and more efficient, companies that provide products or services on a variable cost basis stand to reap the greatest benefits. Replacing fixed cost with scalable, variable cost that gradually increases as the economy recovers will help retailers survive the recession and help them prepare to responsibly grow as volume returns.
Reassess partnerships and joint ventures. In a recession, it's certain that some things must go: Not every function, process, product or service can survive. However, completely abandoning non-core competencies fails to prepare retailers for the future. Instead, selectively separate core competencies from other company strengths to focus on the areas that must survive the cuts. Furthermore, identifying and creating partnerships with other organizations that have competencies in eliminated areas preserves business opportunities for the future.
Reconnect with the customer. During a recession, consumers change. Their outlook is different, their preferences are migrating and new influences are vying for their attention. If retailers are distracted by the crisis-mode of a recession, they may unintentionally lose the connection they have with their target consumer groups. To be sensitive to consumer changes, dealers should take extraordinary steps to reconnect with their customers where they engage most with their products — namely, in the retail store. Strengthening personal interaction with the customer helps the dealer prepare to capture growth when it returns.
Manage expectations and deliver. The current economic crisis does not prevent companies from raising consumer expectations. This is evident from the frequency of ads in recent months that encourage consumers to expect a consultative sales experience while shopping. While it's extremely important to set expectations, it's more important to deliver on them. Set moderate expectations and then focus on delivering those realistic standards, rather than implementing expectations that can no longer be met.
For its part, Associates Interactive said it is addressing market demand for effective training material that can have an immediate and sustained impact on associates' behaviours and sales results. Its independently developed training program, RetailAI, integrates products from multiple manufacturers in the sales discussion, ultimately increasing overall sales for the retailer and manufacturer, the company said.
The firm is also developing customized training programs for Zenhire, a provider of premier online networked HR collaboration and search tool solutions designed to bring training into the staffing process. For more information visit www.associatesinteractive.com.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.