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Retail Summit 2009 - Hard decisions have to be made to ensure long-term success
Archived article dated Friday February 6th 2009
Retailers have to make some hard decisions, and better differentiate their offers from the competition, if they are to survive the current downturn and ultimately emerge as long-term winners.
This was the message that came out of the 'Winning Retail Strategies' panel discussion at the Retail Summit 2009. Richard Traish, vice president of Kurt Salmon Associates, says: “Retailers must take tough decisions early. A few retailers have not yet taken the decisions about what they will do in the future.”
And if any decision has been made to reduce staff numbers then he suggested the death-by-a-thousand-cuts approach should be avoided as it simply creates uncertainty. “If you cut five per cent and then another five per cent then nobody will think there is a future,” he says. Sir Brian Pitman, former chairman of Lloyds TSB Group, also called on retailers to start recognising that we are in a “very different world” to previously and to plan accordingly. “Slowly people are recognising that we will have a hard time in the UK and it will in come cases be the last-man-standing. But if you develop a position that is unique then you will be a winner. You need to differentiate,” he explains.
He pointed to the many retailers on the high street that now all sell the same products and believed that they had to address the issues over their product mixes: “Retailers have to decide: are we still going to sell furniture and clothes as well as groceries?”
The need to remove non-core products in order to improve profitability and differentiation was recognised by Richard Smith, managing director of Lloyds Pharmacy, who recalls making the brave decisions to pull out of selling products like handbags and removing sun cream that was less than factor 15 (which does not protect people from cancer) which initially meant some pain but have proved to be sound long-term decisions.
Traish agrees that such assortment optimisation “takes guts” but he says retailers should console themselves with the fact that whenever he has seen such action implemented it has proved beneficial with sales uplifts.
Tagged as: retail summit 2009 | ksa
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