What’s Killing Retail?
Quick, get the defib, this puppies dead, pupils fixed and dilated. What’s dying is the business model that bad leaders hold tighter than their quarterly earnings. In a lot of instances, our retailers are only alive due to diligent corporate CPR.
What made you relevant last year, won’t make you relevant this year.
The daily list of retail obituaries brings a tear to my eye. Jobs have been lost, money’s been lost and worst of all – a dream has ended – a dream that started with an entrepreneurial spark.
The press report that a weakening economy is negatively impacting our retail sector. Personally, I think that this is the easy way to look at the problem. It is neat, it is passing the blame, it is someone else’s problem to fix.
Competing by reducing prices is not sustainable, in fact it’s lazy business. Staff, cost of goods, supply chains, buyers, e-commerce, manufacturing… I’m told there are many reasons. Reasons or excuses?
It can be fixed, it won’t be easy and it will require brave leadership and new business models. It will require a mindset and operational transformation to remain relevant and profitable.
Let’s view the problem through different lenses
Lens One:
“We’ve got declining revenues; I don’t understand why. We are doing everything we usually do that’s worked for the past 10 years. It must be caused by the weakening economy. We need to cut back, reduce (costs) the number of stores and survive this downturn. Good times will come again, they always have. I received a business confidence survey this morning. With declining revenues and a weakening economy, I had to say my confidence was low. Revenue was down again today.”
Verdict – Weakening Economy Is To Blame.
Probable Outcome – Meeting the liquidators & a weakening economy.
Lens Two:
“We’ve had declining revenues, so we got out there and talked to customers to find out why. They were great. They told us that we were not relevant anymore. They used to really like our products but have found that we hadn’t changed much so they found interest somewhere else.
We sat down and looked at our business model, it had done us well over the past 10 years. We realised that we had to try different things, we had to shake it up.
Doing today what we did yesterday won’t get the results anymore (I think someone said that was the definition of insanity!). We need to take risk; we need to empower and work closer with our staff… as they talk to the customers all day every day. We need to evolve and create a new fluid business model, a new culture and a new future.
We can reinvent retail. I received a business confidence survey this morning. With our new plan in place I had to say my confidence was pretty good. Customers seem to be returning and revenue in increasing.”
Verdict – Business Model and Leadership Is To Blame
Possible Outcome – Brave leadership will make the company become customer centric, it will grow which adds to economic strength, which increases business confidence.
Is it a weakening economy that is causing pain in the retail sector or is it outdated business models and leadership that are causing a weakening of the economy?
This is an important question to answer – “Which lens are you looking through?”
One, we will watch playout; and my gut tells me it won’t end well.
The other, taking action together as a nation – by being smart, brave and working hard – we can fix.
It is obvious that doing today what you did yesterday is a slow (fast if your lucky) road to shaking hands with the liquidator. Retail models need to rapidly evolve. Retail needs to reinvent itself. Right now, right here we have an opportunity for an entrepreneurial spirit to disrupt and build empires.
Retailers who persist with operating on outdated business models will meet the liquidator and will be replaced by retailers who constantly mature and evolve their business model.
Take heed…
If enough retailers blame the economy for declining revenues, they won’t see the weakness in their business models and will drag the economy down with them, ending in tears.
If enough retailers realise their business models are causing declining revenues and take action, they might just help the economy strengthen.
The key to turning this around is to reignite the entrepreneurial spirit that started the companies and has somewhere along the journey of no sleep, staff issues, tax issues, supplier issues and now revenue issues… been snuffed out in these incredible people who once had a great dream.
Keep following your old model and “She’ll be stuffed mate”
Please… Go get what’s there for the brave, work through this change with your customers and employees. Ask them, surprise them, they will keep you relevant and profitable.
Bringing the spirit of leadership back.
Be Brave - Trust, Truth, Transparency.
Find yourself in this situation? Give me a call for a chat. I assist companies and leaders through this challenging time.
Steve: 0400 005 924
#Leadership #HardButWorthIt