The news was bleak for the holidays, as most of you are aware. Slower traffic, excess inventory, and consumers buying less has hampered the entire retail industry as it hobbles into 2009. You can read more about some of the winners and losers in an article on CNN.com.
Slower traffic in malls along with some chains that closed last year (and more predicted to close in 2009) will cause malls to suffer substantially.
In an article on CNN.com, The International Council of Shopping Centers is predicted a loss of nearly 150,000 stores in 2008 in both the public and private sector. It’s predicting about half that number (73,000) to close in the first half of 2009. All told, it’s nearly 625,000 retail jobs in 2008 with about the same projected for 2009.
But not all news was bad. A few chains fared well, including Aeropostale, Wal-mart and Hot Topic.
THE REAL WORLD RETAILING TAKEAWAY
The key seems to be inventory.
As I’ve written many times, reducing inventory is a key to financial stability. The analysts in the articles referenced above agree. Retailers that reduced their inventory for the holidays versus prior years, then worked to clear all the excess inventory they still had from this holiday will find themselves more financially stable than others.
It’s simple economics. Less inventory means more working capital — to pay for things like payroll, rent, utilities, etc.
If you haven’t taken a look at your inventory position, now’s the time. Pare it back. Way back. Just don’t pare it to the point where you run out of products.
You may also want to consider cutting brands that don’t sell well. Take a look at total sales for 2008 by brand. Do you have a brand or brands that don’t sell well, or at all? Cut them, and mark them way down to clear the inventory and increase working capital.
Customers more than ever expect value (and a deal). Make sure you have something on sale to offer them, or they’re going to go elsewhere to find it.
The point is to clear the inventory now. And only bring those levels back up when your business warrants it. It could be the lifeline your business needs.