The death of Main Street retailers has driven headlines for decades, yet brick and mortar sales have continued to grow. There is no doubt that the impact of the Covid-19 pandemic will hurt sales in the short term, but as the Great Recession demonstrated, American retailers – especially those who operate small businesses – are resilient and innovative in the face of a crisis.
However, ten years of steady growth allows for complacencies to creep into the decision making process. Many of the small business retailers I have been meeting with are either counting on a return to “normal” as the economy reopens or fear that their business is too far gone to save. Neither of these extremes should be the basis for making decisions about your business right now. Successful recovery for your business will depend on three key factors – having inventory for your customers, getting your customers in the door, and managing your cash flow.
Even before COVID-19, many retail supply chains were disrupted by the ongoing international trade disputes. If you have not already re-evaluated your supplier relationships and inventory management strategies, there are somethings you should consider.
- What products will your customers need to purchase? Consumers will be tightening their wallets in the short term. Focusing on what customers will actually need ensures that you are not stuck with inventory that will not move.
- What products will your customers want to purchase? Even when times get tough, we still need to indulge from time to time. Make sure you have a few products that your customers will seek out when they do have a bit of extra money in the budget.
- How diversified is your supplier base? Can you source products from local suppliers? Focusing on buying smaller lots more frequently can help you meet customer needs and wants with a selection of fresh products.
The most important thing I am stressing to retail clients right now is to ditch the one-stop-shop mindset. Position your space to be a niche destination for a curated inventory of products that will actually move. This means less inventory in the store and more space for social distancing.
Of course having the perfect inventory in place does you no good if there are no customers to purchase your products. Many storefronts were struggling to get and keep customers before the pandemic. The silver lining here is that the many businesses are being forced to rethink their approach to customer engagement. The adage “if you build it, they will come” is a fallacy. It is time for brick and mortar businesses to embrace experiential commerce – providing an experience for customers beyond simple purchasing a product.
- Create a reason for your customers to come to you, besides just the products you sell. Develop a community around your business. If you’re a hardware store, be the one that offers the best DIY classes in the area. If you’re a hotel, be the one that hosts the best staycations. Find the interesting twist that makes local customers want to follow you on social media – where they can influence their family and friends to seek out your business.
- Embrace your customers where they are. Young adults are not going to be found on Facebook, but they are on Instagram and Snapchat. On the other hand, older consumers are still active on Facebook. Know your customers so you know where to engage with them.
- Take a more active approach to marketing. An Alaskan river guide once told me that he catches better fish with a hook than with dynamite. Clickthrough and SEO marketing is fishing with dynamite – you may get a lot of floaters but the quality of the customers is questionable. It may take more time to market your business to the best customers, but the returns will be worth it in the long run.
Now more than ever, customers need a reason to visit a brick and mortar establishment. Marketing your new sanitizing and social distancing measures will just serve to prove you are doing what every other business is doing. The winners in the emerging economy will be the ones that foster a sense of excitement before the customer steps through the doors. Draw them in with an enticing experience and win their loyalty with exceptional products and customer service.
Managing cash flows should be a primary focus for all small business owners right now. This is especially important for brick and mortar businesses that are not sure when and for how long they will be open.
- Prepare a rolling 13-week cash flow forecast that you update weekly. Thinking ahead without getting too far out will be key to keeping your business responsive to customer demand and changing government mandates.
- Audit your cash flow and operating process, specifically looking for areas where you can implement efficiencies that will save you money.
- Research and take advantage of all the programs and grants that are available to you. While CARES Act and PPP loans have captured the headlines, there are thousands of programs and grants available from private entities, non-profit organizations, and local, state and federal agencies.
The one thing I would caution against is hoarding cash right now. When times are tough, the tendency is to protect what you have. Unfortunately that means many small businesses will miss out on great opportunities. Do not be afraid to spend money, just take the time to plan out how you are spending.
Long Live Main Street
I have never discounted the survival of Main Street businesses. In fact, I believe that small storefront businesses will soon see a rebirth, but it will require brave small businesses owners to innovate and take command of their futures. You have the power to shape how tomorrow’s consumer will spend their money, embrace this opportunity.
The professionals of Hogan Forensics are committed to helping small businesses owners survive the Covid-19 pandemic and its aftermath. To show our commitment, we are offering to help small businesses owners set up their own 13-week cash flow forecast template. This process involves a phone consultation where we learn how your accounting and finance system works, then we will provide you with an Excel workbook and instructions on how to update, maintain, and interpret your cash flow. This is a free resource for eligible small businesses. There are no obligations and we will not collect any of your business data. For more information, please contact firstname.lastname@example.org.