Tips for Retailers to become Resilient as Recession Hits

Do you know? The previous recession which reported in December 2007 and lasted till June 2009 left its after effects thereafter. Around 42% businesses delivered zero returns for the stakeholders for almost four years starting from 2007, according to Mckinsey. Radical changes in the business landscape require companies to renew their business models, add innovative features and plan strategies with new imperatives in mind. To survive in a highly competitive market, more than just the ability to sell is needed; it requires the assessment of existing business processes to identify bottlenecks / gaps, the creation of more robust structures to improve operational efficiency and, most importantly, the convergence of technologies, processes and solutions that the company has evolved into the system and provide transformational customer experience.

Tips to withstand an economic slowdown for retailers

Run along digital shift The digital transformation for retailers aims to look beyond marginal improvements and rethink processes, leading to a connected engagement made possible by a significant application of technology. It’s not just about customer focus, agility, innovation, data intelligence and new value propositions, in addition to streamlining processes, reducing costs and improving efficiency improvement during the transaction cycle, transforming. Changing the rules of the game, retailers need to rethink all aspects of your business - from supply and pricing strategies to inventory planning, employee and customer training experience management. Make margin headroom In the period immediately before the economic downfall, non-resilient retailers' sales, general, and administrative costs totaled 15% of sales, against 13%. However, for resilient retailers, they have dropped to 11%, compared to 13%. These and other strategies have helped resilient to recover more quickly. In 2011, 76% of them exceeded revenue before interest, taxes, and depreciation, compared with 46% of those who were not resilient. Create cash reserves Resilient business owners had already made more capital available than other retailers. With this war chest, they were able to endure the recession successfully. They experienced an increased in their cash reserves by 18% between 2007 and 2009, while non-resilient retailers had stable cash reserves. Adopt aggressive mode As retail resilient have already tightened their belts of which they were able to invest as the economy deteriorated. They increased their operating and marketing expenses by 2.2 percentage points between 2009 and 2011. Revenue from resilient retailers increased by 10% points during the recession; they also lost six points. All the resilient participants going through the slowdown have managed to maintain or increased their marketing expenses to raise their market share. Venture new markets During the slowdown, many retailers have had to close their stores or curb their growth plans. But resistance fighters were more likely to take the opportunity to enter new markets. Zara added long-term retail space that its competitors had left. Starbucks Coffee has experienced impressive growth in China, despite having closed stores with poor performance in the United States. Reshape the value proposition By evaluating trends and repositioning the range, prices, and merchandising, resilient retailers were able to protect their existing sales and find new customers. Many non-resilient retailers offered huge discounts to retain customers and increase sales during the recession, which had the side effect of lowering margins in a way that is difficult to recover as conditions improve. Resilient retailers were adept at careful segmentation.

How Katalyst Can Make Your Business Sustainable Through Our Digital Solutions And Offerings

Businesses have not only survived the great recession, but they also became more robust. It is also to be seen how retailers' performance in the next slowdown will largely be determined by how they prepare and act decisively. Many retailers are already investing time and resources in such preparations, for example, by trying strategies and brainstorming to gauge the future anticipations, readiness, and improve their resilience factor. These efforts should aim to ensure that the organization is ready to act decisively when the economy changes and to identify specific interventions. Katalyst Technologies is one of the pioneering service provider for ERP and supply chain solutions. Anticipating the future trends, it is estimated that the businesses will have to come up with standby strategy to keep their revenue flow unhampered. Connect with us, and we shall lead your way to sustainable business ventures