Mr. Doom and Mrs. Gloom

I know….It’s bad out there.

Not only are retail sales as frigid as the “Arctic Blast” we are now experiencing, but the rhetoric and the over-reaction have sunk to new lows along with the thermometer.

If one looked long and hard, there were some bright spots in December even amidst this depressing atmosphere: Buckle again proved their concept is impervious so far with a 13.5% comp sales gain, continuing its two year string of double digit same store sales increases ; Aeropostale same store sales gained12%; Hot Topic and American Apparel also showed increases (the question is at what margin cost to each?)

Childrens’ Place was flat; Costco, BJ’s Wholesale, Family Dollar, GameStop and Walgreen’s all posted positive comps in December – which may be expected considering the climate.

But the main market maker is always Wal Mart and they didn’t disappoint as the elephant in the room. They reported a positive 1.7 comp which was, according to analysts, “shockingly” below the consensus of a positive 2.8% that they had pegged and at the lower end of the spectrum of company guidance.

Maybe it is time for the silly practice of providing guidance to be retired. While 1 point of comp sales is significant revenue when one is talking about Wal Mart, it is not a reason to commit hari-kari, which is exactly how the markets reacted to this news. It was ridiculous.

Here is why: Many factors could have contributed to the shortfall in absolute dollars in comp sales for December. It may have had nothing to do with store traffic, the number of transactions, gross margin percentage performance or operations. It could simply have been a consumer anomaly.

For example, when buyers plan a season, they try and guess (although Wal Mart “guesses” less than the average retailer because of the strength of their systems) what the consumer is going to buy, in what quantity and at what price. That is the science and art of the retail game. However, consumers have a mind of their own and they may choose to buy in completely different patterns than the buyers expected. Judging from the game-changing environment we now find ourselves in, some unexpected consumer behaviour may be expected.

So, if the consumers as a group purchase the assortment differently than what the executives expected (read : lower priced items, not necessarily because they are discounted, just because those items sell at retails less than others) , you can get an anomaly in the same stores sales performance. Average retail can have  a large affect on these figures.  Wal Mart, of all the retailers out there, deserves its results to be analyzed further before we all go off on scary tangents.

Wal Mart lost 15% the day it announced its “disappointing” sales. All I am saying is that a closer look is required before we draw such hasty conclusions.

We certainly are hyper-sensitive these days and with good reason. But we need to be reasonable too. This is Wal Mart we are talking about. They are, and continue to be, in great shape.

TheRetailTherapist

2009 Retail Resolutions

We are all guilty of making resolutions every new year and then watch as they fade away by the end of the first quarter. It is the measure of a strong, stubborn and a-type personality that actually sees a resolution through to completion and makes it last throughout the entire year (let alone make it life changing).

I would like to think us retailers are resolute enough to see through some sorely needed resolutions in what is promising to be a challenging year for our industry. It does not necessarily have to breed disaster if we all stick together and ensure the following come to life for the full year:

1) No retailer should panic and take excessive markdowns unless your business is truly on the brink. Markdowns are the scourge of all retail (especially independent retail) as full price needs to take on some true meaning once again. I realize this is easier said than done but I doff my cap to Abercrombie and Fitch, who realize that this recession too is short lived and they need to be relevant for decades to come. They have managed their business (read:Inventory) intelligently and are maintaining their pricing structure for better days. If a company has the wherewithal to do this, it will be rewarded in time.

2) Every retailer should invest in their people, especially at the expense of marketing budgets (among other line items). It is hard enough to find great people let alone, great people who actually want to work in retail. Do not let them leave either your company nor the industry. This, again, will pay back in spades when the economy turns around. Invest in training, payroll on the sales floor, product development talent and store experience talent. Do not start massive cuts of labour especially at the store level, which will inevitably create a viscious cycle.

3) Pour money, resources and talent into improving the customer experience. This could be a website or a physical environment but this is where your customer interfacing needs to be pretty special, when dollars are scarcer. Store design, staff/customer interaction, special events, visual merchandising are all examples of elements that will maximize your returns over the long term. If you start treating every sale as a gift (and this year it may turn out that way) and your staff can emulate that attitude, then you will have instilled something unique and special that will be “Built to Last”.

4) Focus your strategic plan on fewer elements in order to nail them. In times such as these, execution is critical. The organization has to be even more aligned than at any other time. Make it easier on everyone to rally behind fewer initiatives. This will actually increase creativity and goal achievement. It will also serve to lower stress levels and improve employee morale overall in a challenging environment.

5) Start to leverage your organization to make a difference in the communities in which you operate and improve your commitment to charitable and socially responsible causes. At a time when funds are drying up for charitable causes and community needs, your retail organization can do so much to alleviate the stress on these institutions by donating more product, more time and more energy and creativity to helping your staff and your company help others who need it most. That could be the most meaningful contribution any organization can make in times such as this.

So let’s get cracking on these 5 simple resolutions. Let’s also make sure they do not peter out at any time over the course of the next 360 days or so. We will be watching

TheRetailTherapist