by John Stanley

Last month, I visited a shopping center in Chicago that once had 100 thriving shops. On my visit, however, only 25 retail stores were open, and the security guard said more were shutting down. He also said the owner had a solution; he was going to build a skating rink in the center as this would solve all his problems! At the same time in the UK, reports state 11.5 percent of the shops are empty as a result of the recession. In Australia, we are told we have too many shops per head of population and must be prepared for a reduction in retail outlets. No matter what country, retailing seems to be getting a bad rap these days. Be prepared for more retailers closing their doors; but remember, this is also an opportunity.

The first thing we need to examine is: why are these retailers closing? I know it is a lack of customers and the drying up of cash flow. Many businesses may still be profitable, but it is the cash flow that is hitting them and causing banks to foreclose on them. Take a hard look, and I think you’ll find the majority fall into the same pattern.

Today’s female consumer is multitasking one minute and going on to a new experience the next. This means she does not have as much time as she had in the past to go shopping. This does not mean she has stopped shopping, but she has changed her shopping habits.

The majority of customers would like to support their local retailer as long as they feel that retailer is doing the right thing and understands them. If you consider the retailers who have failed, you will see the majority of them have not lived up to the new consumer expectations.

70 Percent of Consumers Want More Time
In my conference presentations, I often talk about the fact that many women will pay more for a product if they can save time. Time has become one of the most important variables in their lives. They do not have the patience or the time to go window shopping like women did in the past.

Research conducted this year in the UK by HTA Garden Retail Market Analysis reveals that 53 percent of consumers now do their research via social media. This does vary by age group: 69 percent of Gen X women shop this way, and 21 percent of Greying Tigers also shop this way. This means retailers that want to stay in business must have an online presence on the Internet. I recently worked with a client who wanted to create a new brand for his online retailing. The consumer is confused enough. It is critically important that you have a consistent “bricks and clicks” brand message. Many retailers that are closing down have ignored the “clicks” side of their business, which is something you do at your peril. There are times when your customers will want to deal with you online while they are time poor and multitasking, while other times they may want to come to your store and enjoy the shopping experience.

One important message for successful businesses is that promotion is critical, but the way we promote has changed. We must have an online marketing presence if we are to be successful in the next ten years.

What is the Customer Service Like?
The era of the salesperson is dying rapidly. The new age consumer is bored with salespeople trying to sell them things. The online shopping experience means that consumers can do their own research and often purchase the product online without needing to have a conversation with a salesperson. Many of the retail businesses that are going out of business rely on salespeople, an outdated model for the coming decade.

When today’s consumers come into the store for an experience, this means they want the sales person to engage with them. The conversation that is now held between the person representing the company and the consumer is a critical one. Consumers are not looking for a salesperson; they are looking for a friend. This means the selling models of the past will not work today. You need to be recruiting people for their personality skills rather than their selling skills.

Discounting is Not the Solution
I recently heard about a survey carried out by one of the Universities in the USA among small retailers. Seventy percent of the retailers surveyed believed discounting did not affect the bottom line of the business. I am not against discounting as it has its place in the retail cycle, but we have seen it become a normal practice in many retail operations and the result has been the drying up of cash flow. A continuous discount cycle has resulted in the consumer becoming more price conscious at the expense of the other attributes of the retailer.

The Opportunities
Many financial experts are telling us that the downturn in retailing could continue for a few months yet; this will result in more retailers disappearing for the scene. This also means those that are left can gain an increase in market share. There will be more of the cake for fewer retailers. The lessons to be learned are that those retailers will have an online presence and will provide an experience for the consumer when they walk into their stores.

It does mean we need to rethink the retail model, but now is the time to reinvent yourself and look forward to the rewards the future will bring.

John Stanley (CSP) is one of the top 10 percent of speakers in the world today, an acclaimed retail consultant and WA Entrepreneur of the Year 2009.  The author of several marketing, customer service and retail books, including the best seller, “Just About Everything a Retail Manager Needs to Know,” Stanley’s company is a WA Small Business Champion 2009 – Educational Services.  www.johnstanley.com.au