The latest retail sales figures reported for the month of March reveal American consumers are pulling back on discretionary spending. “US Retail Sales Declined as Consumers Remain Cautious,” a Wall Street Journal headline declares. “US retail sales down 0.3% in March vs. 0.1% increase expected,” CNBC reports. “Retail Sales Unexpectedly Fall as U.S. Consumers Scrimp,” Bloomberg announces. “US Retail Sales Decline in March as Consumers Spend Less on Cars, Clothing and Eating Out,” reports ABC News.
Among the sales slump, a 2.1 percent drop in automobile sales across the country. Weak sales also occurred in other retail sectors: clothing, restaurants, catalog purchases and online sales. Overall, March retail sales tumbled by a seasonally adjusted 0.3 percent, according to the United States Department of Commerce. However, the news isn’t all bad, in fact, home supply store purchases increased 1.4 percent and other sales trends ticked-up by 0.1 percent in March. Historically, this mixed news isn’t new and clearly demonstrates why it’s important to know how to survive a retail sales slump.
How to Survive a Retail Sales Slump
Regardless of the overall economy, some retail sectors will experience slow periods. It could be due to seasonal trends or emerging new technology. Whatever the case, if you are in retail or are going to open a business of your own, you should be prepared for dry spells. The paradoxical nature of retail can’t be ignored. Best Buy’s last earnings report disclosed a 4.1 percent drop. However, Disney reported its best quarter ever. Though, Chipotle Mexican Grill continues to struggle while exploring new avenues. Apple likewise reported its best quarterly profit in the company’s history.
Running or managing a small business often leaves little time to keep track of national, and even regional, economic indicators that might affect your industry and your specific operation. Yet conditions such as interest rates, inflation, gross national product, stock prices and consumer confidence have direct impact on your profitability and on relationships with vendors, customers and even employees. During periods of economic decline, whether widespread or cyclical for a particular type of business, entrepreneurs are most likely to bear the brunt. Yet the fact that conditions are changing opens up opportunities for resourceful firms to outsmart larger competitors who, during a downturn, carry on business as usual or are unable to adapt quickly… —Small Business Administration
Clearly, these figures prove what happens time and again in the retail industry. Even if you enter or are currently in a hot sector, there’s just no guarantee it will continue its high demand. Hills and valleys are common in the business world. It’s knowing how to deal with what’s going on that’s your best weapon. Anemic sales result from a number of causes: changes to wholesale pricing, shifting public demand, bad employee behaviors, national or regional economic trends, and more. When the cycle starts, you need to know how to survive a retail sales slump:
- Reduce spending. Though obvious sounding, it’s worthwhile because business spending becomes so routine. When a sales slump strikes, it’s time to review your budget and make cuts where most appropriate. Chances are excellent you’ll immediately identify a few and will be able to completely cut or reduce expenses.
- Make staffing changes. This is a familiar, go-to measure and it doesn’t have to be permanent. You can rearrange schedules, reduce hours, or try a combination of both. Retain your best for as long as possible and be willing to put-in extra sweat equity whenever you have the time.
- Use resources in new ways. You probably have certain resources and when retail sales are down, you can use these in a different way to drum-up business. If you are able, you can rent out space or use a delivery vehicle to pass out freebies at local events.
- Maintain accounts receivables. Cash flow is critical during slow sales periods and it’s imperative to be on-the-ball maintaining your accounts receivables. Though it isn’t a pleasant task, it’s necessary, particularly when business stalls.
- Expand your creative marketing. Offer discounts to current customers, ask for referrals, hold a contest, host an in-store event, or entice new customers with giveaways. Use creative marketing to reach more consumers to bolster sales.
What other measures have you employed during slow sales periods? Are there ways you would approach this situation? Have you turned a business around with specific actions? Please, leave your comments to contribute to these suggestions.