Things you can do to respond when a large competitor
goes out with a bang instead of
a whimper.
Once the COVID-19 scare is in the past, I'm afraid that there will still be a lot of things to keep you awake at night. It wasn’t that long ago that all we had to worry about in the retail world was making sure that our newspaper ad was on page three, the flowers on the box spring matched the flowers on the mattress, and that we knew what the store down the street was promoting.
Then the big chain stores came to town followed by big box stores selling our products. Next came magic 1-800 dial-in stores and shopping on that darn interwebby net thing. Scientists say that after an environmental disaster occurs, the rate of evolutionary change quickens. Retail, like the world itself, is in constant evolution.
Changing Retail Landscape
Once business returns to more or less normal, walk out the entrance of your store, look to the left and the right. Chances are good that you will see the changing landscape of brick and mortar retail right before your eyes.
Even in 2019, before COVID-19, 9,300 retail locations had been shuttered, with 2,600 more stores already on the chopping block for 2020, including former industry leaders like Art Van. Before it all hit the fan you were probably thinking “Wow, I am really going to clean up after all of the dust settles!” And, most likely in the long term you’ll need a giant Swiffer to collect all the dough you’re going to make.
But before you can do that you are likely to see lots of Going Out of Business (GOB) sales. You’ve seen the yellow and black window posters, the sign walkers and the smashmouth TV ads claiming, “FINAL DAYS” (90+ of them) “SAVE UP TO 90%” (and more!) and “EVERYTHING MUST GO”. It’s like passing a car wreck on the freeway for your shoppers. They know it’s a mess — but they just gotta look!
It's a sure bet that in the near-term shoppers are going to stay away from crowds no matter how good the deal is. But sooner or later, they will come back. And if they don't buy from you — then they will be out of the market for a year or more.
Say what you want about GOB companies — They know how to sell. Some will jack up the retail only to drop it down. I saw a mattress with a normal retail cost of about $3K tagged at $13,500 at a recent sale. Then it was tagged 70% off. (It’s OK to take a calculator break here). Some of their sales people are rough, but they know how to close a deal and take the money. And each dollar they take is one more you won’t make.
Control Issues
You can’t control which store will close its doors next, or when business as usual will resume, but you can be prepared to change what you need to do to maintain or reclaim your sales growth.
Your good shoppers and loyal customers need to know that in the changing landscape, you are there to service their existing purchases and are in the community for the long haul. Start with your top ten customers (per location). They deserve a personal call from the owner or senior management. Start the call with “You may have seen some news about XXXX closing their store… I want you to know we are here to stay”. After that, utilize that email list you’ve been building for the last few years (You have a list, don’t you?). Include some loyal customer specials and add in a free item or two — or a $50 gift card for your store. Deliver the same message to everyone else via a professionally designed postcard or letter.
Panic at the Disco(unt)
GOB guys like to promote big discount numbers. Fight back with some big discounting too! Plan for a warehouse, tent, or parking lot sale when the time is right. Drag out some of those non movers and floor samples and add a few special purchases, to meet the competition head on. Or promote a Half the Store-Half Off Sale!
Review & Rehearse Closing
They’re closing so you need to CLOSE! The average person has an active vocabulary of 20,000 words. The average GOB salesperson has 19,998. They blocked out Be Back! Those guys and gals are trained to be first-time closers, and if they can’t close the sale, they’ll T.O. it to someone who can. If your in-store training only consists of product knowledge, your team is simply going to be out-sold. Review, rehearse and internalize methods to close the sale with your sales team. Have them roleplay it until they get it right.
Eye-Spy
Play Eye-Spy. Run a reconnaissance mission to your neighbor that is closing. See what the activity level is, what the sales terms are (Final Sale?), delivery charges, and price tags. Take a few photos for when you get into a price match situation. Be stealthy, bold, and assertive in this operation.
Plan to Win
Our retail world always seems to be rocked by an external “Crisis of the Day." Right now we are in a really big one, but this too shall pass. Creating a plan to win and executing that plan will help you avoid an internal crisis and keep you in the game for the long term.