Greatness Is A Moving Target
As times change, small retailers must continually reassess what they're doing in order to thrive.
Published by Inc.com
"I guess the '90s are over."
I was talking with Tim Skehan, the CEO of Russell's Garden Center in Wayland, Mass., when he said that, and the more we talked, the more it became clear there was a very important insight behind what he was saying.
Russell's is a fourth-generation family business that over the years has grown into a New England institution. We were talking about the sales trend of a couple of his categories.
"Increasingly, I don't feel like our competition is just Home Depot and Lowe's and other garden centers," Skehan said. "I'm feeling like our competition is also Best Buy and Circuit City."
"Our challenge is to continue to bring in new, younger customers, new homeowners, and introduce them to the joys of gardening and getting your hands dirty," he said. "But they've grown up completely different than our older, established customers. They've grown up on electronics and computers and the internet and bigger and better TVs. That's where they spend their money."
The challenge of bringing in new customers exists throughout his business, Skehan added, but it's a particular challenge in some of the categories that really exploded in the 1990s.
Ah, yes, the '90s, when it seemed so much easier to be a small retailer. Merchandise just seemed to sell itself. Items and categories that had never before been meaningful or significant were suddenly sporting high double-digit growth rates, and developing into significant business contributors for many small retailers.
"Take water-gardening," Skehan said. "It was a major trend coming from England, where so many gardening trends come from. We'd never done much with it, but suddenly in the '90s it grew into a significant business as more and more customers wanted to put ponds in their gardens." Even after the decade ended, water-gardening was still a good category for a few more years, but it's no longer the category it once was, he added.
There was an enormous amount of cash floating around in the late '90s, cash that consumers were dying to spend, and retailers of all sizes responded. For many small retailers, the message was that sales could be grown rapidly by aggressively expanding into new categories, and with each new success the lesson was reinforced. Expand categories, expand assortments, expand offerings.
But in the 10 short years since then, some very important things have changed, and they didn't change overnight five years ago, as some might suggest.
The most important change is that there's simply not as much disposable cash as their once was. It's easy to point to the bubble bursting in the early years of this decade, but it's been an ongoing phenomenon, most recently accentuated by $3-a-gallon gasoline.
But the other significant change has been the aging of the Baby Boom generation, the oldest of which has gone from being new empty nesters to new retirees in the last decade. As their spending patterns have changed, and their impact on overall consumer spending has shifted to younger consumers, retail patterns have changed. Younger consumers don't buy their parent's Oldsmobile, so Oldsmobile is gone! Now we have HDTV and iPods.
The result is that the things that worked so successfully 10 years ago for many small retailers don't necessarily work anymore. The old business models are no longer applicable. Small retailers must be prepared to fundamentally reassess what they're doing and how they're doing it in order to thrive.
For many of the small retailers that I work with and talk to, their answer is to refocus on their core competency, the one thing they do better than anybody else, which is often built around products of the highest quality, state-of-the-art product knowledge, and the finest customer service. Their focus is on doing what they do best smarter, faster and leaner, and communicating the message to their target customers that they are the go-to retailer of choice for those goods and services.
This refocusing impacts every corner of a small retailer. The marketing message must be directed to a sustainable target customer. Retail displays must create the optimum traffic flow and compelling presentations. The merchandise mix must be tighter, with categories and assortments dialed in to meet the expectations of the customer. Inventories must be leaner to create a greater sense of customer urgency so as to drive sell thru's and minimize markdowns. Retail operations must be finely tuned to receive, ticket, and get merchandise to the floor with lightning speed. Associates must be trained and motivated to greet customers enthusiastically, answer questions and provide solutions. Checkouts must move customers through quickly and efficiently so that their last impression of the store is just as positive as their first.
The '90s are over. The enormous sales increases during those years masked serious issues that many small retailers are still grappling with. Those sales increases aren't likely to return in the coming years to bail them out. Those that thrive will do so because they've committed themselves to providing their customers with the products and services they expect, and an outstanding shopping experience, while doing it all as efficiently as possible.
Or as Tim Skehan put it, "Greatness is a moving target."