As we are entering a new decade, the message for retailers is loud and clear: step up your game or your business won’t survive in this tough environment.
With the likes of Jeanswest and several other retailers going into voluntary administration or liquidation, retail insolvency specialist, Andrew Spring, urges Australian retailers to evolve their business models, otherwise we will continue to see more retail insolvencies this year.
“Retail failures aren’t new and it’s not a situation that’s likely to change unless many retailers make changes,” says Spring, a partner with insolvency and business recovery firm, Jirsch Sutherland.
“Retail is a tough environment to be successful in over the long term. However, there are things that retailers―large and small―can do to set themselves up for success rather than failure.”
He says it’s essential for retailers to keep up with the latest trends and stay ahead of the curve to keep thriving as a business.
“You only have to look at well-known examples of companies like Encyclopedia Britannica, Blockbuster and Kodak, whose products became redundant because the companies didn’t keep on top of changing trends.
“A more recent example is the Australian textbook retailer, the Co-op Bookshop, which for decades used to be the place to buy your university textbooks but sadly went into administration after, among other reasons, over-the-counter textbook sales plummeted.”
A failure to integrate online as part of their total offering is also a big mistake many retailers have made. “E-commerce is a necessity, not a point of difference. However, some retailers are being left behind or have not sufficiently invested in their e-commerce platforms, and they find that the fixed costs of having a bricks-and-mortar presence alone are too high,” Spring says.
He adds that retailers who find themselves in financial trouble shouldn’t be afraid to ask for help―early.
“Whether it’s discussing your issues with your accountant or an experienced insolvency specialist, there are options out there if you speak up early.”
Spring’s top 10 tips for retailers to consider when starting or running an existing business:
1 Understand what’s happening in the market e.g. changing product demand
2 Understand the barriers to entry
3 Know who your target audience is
4 Develop a strategy for going to market and attracting customers
5 Have a strategy for retaining customers
6 Work out what you want to be known for or great at and know how to ‘tell the world’
7 Know how to create brand loyalty
8 Know how to use data that you gather (e.g. through loyalty programs)
9 Ensure you have strong back office management
10 Always take time to know your numbers and accrued liabilities such as taxes