Consider these front-page headlines and the accompanying chart (see above) from the June 6 Wall Street Journal* – "Surplus Inventory Piles Up", "Stores Are Stuck with the Wrong Items."
Look at it carefully, and think of your operation in comparison. How do your numbers compare? Are you as shocked as we are?
How did this happen?
Partly as responses to the unprecedented impacts of the pandemic.
In retrospect, these seem to be over-reactions.
But there are other unprecedented factors at play. There is no "getting back to normal," and the proven methods of anticipating consumer behavior don't seem as relevant today.
No one is immune to "being caught off-guard" by rapidly changing and disruptive events, whether worldwide inflation, war in Ukraine, gun violence in America, inability to hire or retain good employees, etc. They are unprecedented, after all.
So, what to do?
First, don't delay.
Be ready to take action. Especially if your sales are below plan, take steps now to reduce your inventory levels. Get out in front of major markdowns by the chains.
Next, look ahead. And adjust!
Revisit your inventory buying plans, by department. (See The ROI's Multi-Department Open-to-Buy Calculator to make that happen quickly.)
Benefit from seeing, in advance, how your purchasing plans would change with each change in sales, margins, and turns.
Then, your judgment comes to the fore. But, thanks to the power of "playing what if...?", of looking ahead, comparing outcomes, yours will be informed judgment.
There is power in that. Unprecedented power!
* Surplus Inventory Piles Up in Stores as Spending Shifts, Suzanne Kapner, Wall Street Journal, June 6, 2022.
Throughout the pandemics, many independent retailers successfully shed their "technology laggards" label, as they pivoted to embrace an array of digital tools.
Yet going forward, it is well to keep in mind what really matters to the customers. And it may not be more technology.
A recent survey* of more than 2,000 customers provides some interesting insights as to who shops where, why, when and how. It especially highlighted the differences between "large stores" and "smaller stores" (or as we view them, "specialty stores.")
Hmm. This suggests to us that shoppers essentially are treating large stores the same way they treat the internet:
Some thoughts from Nordstrom leadership that are spot on!
That's what Nordstrom President and Chief Brand Officer Pete Nordstrom told Puget Sound Business Journal columnist Patti Payne on April 23, 2020.
And what he succinctly stated is exactly the challenge – and opportunity – that is confronting all retail owners.
In order to answer whether you should re-open once you can, you first must be very confident in WHAT kind of retail operation you will be re-opening.
The only certainty of the aftermath of the pandemic is that everything will be different. Given that, what better time to re-imagine your business?
The constant challenge for retailers is to anticipate what their customers really want. And this year, there seem to be plenty of choices available.
It is all part of the on-going challenge of retail; the art and craft of being a merchant.
Then there are the customers who are reacting to the constant drumbeat of news about supply chain issues, merchandise shortages, and looming price increases by starting their shopping early.
Adding to this stampede, some major chains were launching their Black Friday specials before Halloween!
"Buy low. Sell high. Collect early. Pay late."
That's the essence of retailing, right? But now, in the early summer of 2021, retailing more than ever demands a strong dose of good judgment.
It's shouted everywhere: "Look out! The inflation tsunami is coming!"
Yikes! It's buying season for many retailers, and the pressures to buy more, now, at these-low-prices-that-won't-last are mounting. And this is only the beginning.
As we follow economic indicators that particularly affect retailers, our primary focus always is consumer confidence. And the reports coming out this week give us pause.
The highly transmissible Delta variant and the vaccine hesitancy of many have changed the momentum. Covid fatigue is back. This affects consumers.
And with it, more challenges for retailers. Decisions and policies may be needed regarding vaccinations, both for your staff and your shoppers. Meanwhile, consumers are likely taking another pause. Will schools reopen? Will offices reopen?
So, what's a retailer to do? What you always do: deal with it!
"Of course I want it today. If I wanted it tomorrow, I would have come in tomorrow."
That's what we call "retail time." Retailers are comfortable with that pace; they enjoy the variety; they welcome the need to change and adjust.
But, instead of just keeping life interesting, 2020 seems to have gone overboard in bringing changes and disruption to us all. The triple pandemic of the virus, the economy, and the civil unrest. And oh yes, it's also an election year. Enough already, right?
We think the most challenging part of this is the effect on our sense of time.
Still less than $1 a day! 👀