People Power - January 2008

By Scott Humphrey

Believe it or not, it’s generally during economic downturns that creativity and ingenuity flourish. You may be surprised to know that more than half of all Dow Jones companies trace their birth to recessions. Hewlett Packard, now a $92 billion company, can trace its roots to the Great Depression, where it was birthed with less than $6,000 in total investment. But growth during a downturn is not the norm; except for winners. Winners by nature rise up when the odds are against them. In this article I want us to take a look at eight things that you can do to win in retail in 2008.

Value your employees.
You would think this would go without saying, but when things are tough, employers tend to be tougher on their people. Unfortunately, this is the time when employees put up with more because other jobs are not easily found. If anything, this is the time when a boss should invest in his team. After all, this is the same team that was helping you succeed during the good times. They’re likely as frustrated as you by the current situation. In most cases their income has been directly impacted. They need encouragement. Let them know that you are aware of the challenges they are facing, but more importantly let them know you are confident in them and in the direction of your company.

Value every customer contact.
Make the right impression with your employees, and with your store. What many retailers struggle to see is that their store has an identity within the community. Many things can impact your store identity. The two with the greatest influence are your people and your in-store environment, both of which you can change and improve. Do you know what your store identity is? Ask some of your friends who like you enough to be honest, “What do you think people in the community think of my store?” “How would you describe it?”

Understand today’s changing customer.
Beginning this year, the boomer generation will begin retiring. We’ve heard much about this generation. Indeed, it would be safe to say that a large part of our marketing has been impacted by this generation’s buying habits and patterns. What many retailers don’t realize is that the next two generations, Generation X and Generation Y, rely heavily on the web for purchasing decisions, make more money, have more disposable income, invest more, and buy more houses…even while they are single. This might be enough to make us change our marketing practices. For more detail on generations and their preferences, read: The Generational Imperative: Understanding Generational Differences in the Workplace, Marketplace, and Living Room.

Sell using credit.
I’ve cited this in previous articles, but it’s worth repeating. It is not enough to have credit available. Train your salespeople to promote credit at the beginning of the sales interaction. This is proven to increase what the consumer is willing to spend. As of two years ago, research showed that the average retail flooring sale for mass credit (Visa/MasterCard) was $500, $750 if the consumer paid cash, and $1500 when using private label credit. It’s also a great way to create a repeat customer. Monthly statements make them aware of available credit they can spend at your retail location. Credit allows consumers to dream beyond their financial limitations.

Advertise.
We’re in an economic environment that causes the timid to crawl back into their shell. Winners know that this is the lull before the storm. This is preparation time. Think of advertising as telling your story, keeping you in the mind of the consumer, and creating your store identity. Love him or not, basketball coach Bobby Knight said it well when he proclaimed, “The key is not the will to win, everyone has that. The key is the will to prepare to win.” Advertising is a vital part of that preparation.

Use the web.
This point can’t be overstated. If you’re not using the web, you’re missing out on potential sales. The latest research shows that some 70% of floorcovering consumers use the web at some point during the purchasing process. Do you have a website? What does your website say about you?

Go green.
Research shows that 80% of consumers want to know more about your environmental focus. Make sure you understand what you have in your store and that you can wade through some of the misinformation out there touting as green, some products that ultimately will populate a landfill. The floorcovering industry has done a good job of leading in environmental areas, but still misinformation abounds. Even so, consumer polling shows overwhelmingly that consumers prefer businesses that are environmentally friendly.

Get out of your store.
Take a look at what is happening around your community. Notice housing patterns. You may decide it’s a good time to market to the renter replacement market. Separate yourself by offering something unique like next-day installation.

Remember, if you want 2008 to be the same as 2007, repeat your existing patterns. We have this tendency to think that when times get tough, we must do what we are doing faster or harder. But, if you want to get what you’ve not been getting, you must do what you’ve not been doing and 2008 is a great opportunity. I challenge you in 2008 to quit asking how you can do it better, and position yourself for success by asking how you can do it right. Then do it!

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