October 2008

We’ve known for a long time the customer perception of big box versus neighborhood business is pronounced. Big Box = Evil. Small Business = Neighbors. Doesn’t mean they always shop that way, but the mental picture is certainly in tact.

Until now.

Wal-Mart has been talking about creating a smaller, local-feel environment in their big boxes for a couple of years now. Well, that talk has translated into reality with this week’s opening of the first four Marketside locations-—Wal-Mart’s new “smaller format” grocery stores, placed nowhere near a Wal-Mart. Marketsides don’t wear the parent company’s moniker…have a much more whimsical logo than the original giant…but still don the teeth of a large, big box operation (aren’t you proud of me for not using the word “fangs?”).

They aren’t alone. Loew’s began kicking a similar concept around during their annual meeting last month. If consumers nibble at this, you can bet there will be more, and they won’t be planted on major highway intersections; they’ll land smack dab in your very neighborhood.

For now, this appears to be aimed predominantly at hardware and grocery-—retail categories not previously impacted the way the gift and stationery industries have been (think: Paper Source, Swoozies, Blue Tulip, etc.).

Will it stick? Or is this something that will burn itself out? Time will tell, although a failing economy only makes it harder for the locally owned stores to hold their own if one of these Mini-Me boxes pops up nearby.

Good luck, fellow retailers…and welcome to the party.

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In browsing through some of the old RetailSpeaks newsletters, I ran across my column in the January issue. Somehow, it seems more timely than ever…especially when you hit the part about Washington Mutual:

Let’s face it-—what shakes the economy shakes our stores. Many of us felt aftershocks from the mortgage crisis jiggle our registers; next up appears to be a wave of shakes from the very thing we love to see-—our customers’ credit cards.

Notoriously the last to admit risk, banking officials have been not-so-quietly whispering warnings of potential disaster in 2008. According to Newsweek, Citigroup has earmarked $2.24 billion to cover credit card defaults this year; Capital One, Bank of America, and Washington Mutual are each bracing for a 20% uptick in losses; and AmEx-—long seen as the home of financial sound credit card holders-—is boosting its default coverage reserves by a whopping 44%.

…I’d be the last to suggest anyone should be buying as if we were still in the cash-rich days of the late ‘90s (oh, to be there again!). But I do firmly believe the fastest way to store failure is to circle the wagons, hide the checkbook, and stop looking for new product….

Concepts like “open to buy” and “turns” have never been more critically important to independent retailers than they are today. It’s not enough to remember how last spring’s sales went; that was last spring.

In the end, and regardless of how the quarter played out, independents need to remember that looking behind never bodes well for what’s ahead. We have the ability to spin on a dime, allowing us far more flexibility than the big boxes, and can can tailor our product mix to the customers we know will keep shopping.

…Remember that this roller coaster ride we call “retail” has wonderful peaks as well as sometimes scary valleys.

Read that bold faced type part again. And again. Now’s the time to get smart, folks. Now’s the time to plan your budget, then stick to it. Now’s the time to switch from big, whale-sized orders intended to carry the entire quarter to a series of smaller re-orders that can be placed as cash flow supports them. Now’s the time to pay that credit card down as fast as you can. Now’s the time to reassure your employees that things are under control so they don’t scare off your clientele with deer-caught-in-the-headlights expressions on their faces.

And now’s the time to smile at your customers, no matter how hard it might be…after all, they can’t see your knees shaking when you stand behind the counter. You have to remember, the image they receive is the word of mouth they’ll take away.

Hang in there. You can do this. Believe it.

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