Sunday, April 12, 2009

5 rules for retailing in recession (HBR)


In the last issue of the Harvard Business Review, you can find an interesting article about the "Five rules for Retailing in a recession" by Ken Favaro, Tim Romberger and David Meer (all working in Consulting Company).

What's new with the big crisis for retailers ?

The authors are determining 5 key rules of conduct in order to strengthen retailer's position in a downturn market:

1) Go where the headroom is
Headroom is defined by the market share you don't have minus the market share you won't get. In short : avoid to multiply the initiatives but rather focus on protecting your most loyal customers as #1 priority.

2) Close the Needs-Offer Gap
This approach favours to expand the average basket spending rather than convincing new customers to come in. Usually you analyse what you sell but seldom have a loser investigation on what you could sell.

3) Go after bad costs
Key point is to establish a link between retailer's costs and each aspect of the offer. Drop dead the classical ABC costing for a customer-benefit costing.

4) Cluster Store
A recession inevitably will lead you to differentiate your stores. Tailoring your offer and concept will help you to stick with your local customer base. Take care of no adding too much complexity in the process that could withdraw the benefits of the clusterisation.

5) Retool Core Process
To be consistent and gain efficiency it's important to change some key process : customer research, merchandise planning, performance management and strategic planning. When a retailer is usually asking for : who is our customer ? should switch to the "why are customers shopping our stores" and "what do they buy from other retailers" questions.

Thank's Chris for the tip !

1 comment:

Nicolas Schriver said...

Great article thanks for sharing.