Getting Back to Basics

Mark my words: The top 2009 New Year’s resolution among retailers is to cut costs. I have a feeling retailers’ declarations are going to stick. And I think they have to if they want to survive.

No matter how tight the economy gets, however, retailers cannot cut costs at the expense of customer value. That’s why chains need to rethink IT spending strategies and focus on solutions that will help them operate more efficiently and still uphold the “new” value-driven evolution of consumer-centricity.

As we enter 2009, the economic downturn continues to take its toll on retailers and consumers alike.

With less discretionary income, shoppers are curbing store visits.

This, coupled with the economic downturn, has accelerated retail bankruptcies. Less store traffic and fewer sales are also forcing some retailers to close stores in order to free up capital.

While consumers don’t want to see their favorite retailers go away, they are more interested in shopping with chains that can provide the best value. But don’t be fooled. A tight economy is clearly pushing the pendulum back toward price, but “Retailing today is not just about selling cheap stuff,” Paula Rosenblum, managing partner, Retail Systems Research, (RSR) Miami, told Chain Store Age. “It’s about allowing the consumer to continue enjoying life, home and family—just at a different price point.”

This is the new formula for consumer-centricity, and retailers need to make sure they can deliver.

Cost savings, operating efficiencies and quick returns on investment are retailers’ priorities going forward, and they are turning to technology to fulfill these goals. But to reach that value proposition we need to dig deeper.

And it is no harder than refreshing ourselves with Retailing 101: Chains need to have the right stock available in the right channel at the right time and at the right price. By leveraging existing “basic” operating solutions, retailers are primed to cut costs and still deliver consumer value.

• Data warehouses and business-intelligence tools should be at the foundation of any future operating strategy. It is paramount to analyze shopper behavior, compare it to years past and accurately forecast merchandising budgets;

• Retailers need to dust off price-optimization solutions and merge this software with merchandising strategies. This combination will ensure the right price points are applied to specific merchandise mixes;

• Of course, retailers need labor to execute these strategies. By merging time-and-attendance, labor-scheduling and task-management solutions with budget and merchandising forecasts, retailers will be able to allocate an optimal work force to meet consumer demand; and

• The proper training programs, complete with e-learning modules, will educate staff with the knowledge needed to answer customer questions, help shoppers comparison shop and educate them on product attributes — bringing consumer-centricity full circle.