“The Top Five Ways For Retailers And Small Business Owners To Thrive During A Recession”

Retailers are hurting. Not all, but I hear the rumblings of “Recession” almost every day. Are we in a recession? Maybe.

Let’s assume that we are.

How can we thrive when other retailers are feeling a crunch?

First, let’s talk about who is most affected; real estate agents, mortgage brokers, banks…….car dealers to a lesser extent.

The people who are affected sell “Major Purchases”...that are typically financed.

Not what most of us sell. But our customers may be affected...and that affects us.

Gas prices are related. At $3.50-$4.00 a gallon...who is affected most? People who drive a lot but make little money.

If you drive 30 miles to work & back, but only make $10 an hour, of course you’ll feel it.

This is not a “If you ignore it, maybe it will go away” speech. Positive thinking doesn’t help if your business is off by 30%.

I have a theory. Let’s call it ““Claude’s Theory”.

During a recession, there is not less money. Nobody is burning money to make less of it available. The money is simply not changing hands as fast. Then why are some retailers affected?

Costco, Wal-Mart, and Buying Clubs are actually growing. Consumers are still spending money, they are just spending it where they think they will get a better value.

Now, what economic group is most affected by gas prices? The lower income buyers.

What group is most affected by a slowing economy? Lower income buyers.

A lot of this is perception on the part of consumers. Did they lose their job? No. Did their mortgage increase? Maybe, but again...lower income buyers.

Here are a few things NOT to do during an economic slowdown;

Stop advertising. Don’t stop advertising. That what your competitors will do to make selling easier for you.

Lower your prices. Don’t do it! Once you lower your prices ...your customers and employees (especially your employees) will resist the later increase back to “normal”.

Buy less inventory. Don’t buy less in anticipation that you will sell less later. An empty looking store always sells less...and this creates a cycle of “Buy less...sell less...buy less”

Cut hours. The first sign of a dying business is that the hours are cut. Cutting your hours almost always hurts business.

Sell lesser expensive items. This is where most retailers go first. They will stop demonstrating (or offering) their higher profit items, because they are afraid the buyer will say “No”. So they immediately go for the “concession sale”. This one habit can cut a store’s profit in half. Don’’t do it.

Remember what income group we said was most affected by economic downturns?

What group is least affected? The “Mass Affluent”.

Here’s the bad news. The middle class is disappearing!

The Good News is that two thirds of them are becoming wealthier. (that’’s bad news for the other third, of course)

So……

How do you thrive during a recession?

Sell higher end products. Concentrate on the Wealthier customers in your area. They exist, I promise you.

Keep advertising, but advertise higher end. If you advertise lower end product, you are forcing yourself to compete with Wal-Mart, Costco, and Buying Clubs. You can’t win that battle.

Use promotions that bring in buyers….not “free gift” takers who will stop in and pick up their gift...on their way to Wal-Mart.

Advertise with ads that cost very little. Last month, (the last few months, actually) I told you about my little display ads...that draw you into a voicemail recording ...that gives the commercial in your voice. These ads work, they are cheap, and I keep hearing success stories from Gold Members using them. (go to www.unfairadvantageretail.com in the Member area...to see the archived issues.) By the way, if you are trying this idea, and it’s not working..you are doing something wrong.. Send me your ad, give me the number for your voicemail. We’ll figure it out.

Send offers to your current high end buyers. These are profitable. Every time. If they bought a high end vacuum cleaner two months ago, they are now ready for your new “Whiz Bang” Air Purifier, or anything else that you sell that generates a

high profit.

Learn about Marketing and advertising. Is this Self-Serving? Absolutely. But I keep reading (on two business forums I belong to) about retailers spending thousands of dollars a month on advertising...and they have no idea if it will work. Stupid. I get this call; “Claude, I just spent $5,000 on a Direct Mail contract...how should I advertise?” (these are usually, non-members) My first suggestion would be ...get Selling Retail by John Lawhan. The single best book on retail selling. Ever. Next, buy my book… The Unfair Advantage Small Business Advertising Manual. If you want to do it right, invest in my Advertising System. Just go to www.unfairadvantageretail.com for more information. You should know something about marketing and advertising...before you spend a fortune on advertising.

Get a private labeled store credit card. This is the rare instance of me not following my own advice. But believe me, people will run up their credit cards. You want them to have your store credit card before they don’t qualify anymore. Do you know the number one reason people buy a SEARS vacuum cleaner? (I asked a clerk) because the buyer has a SEARS credit card. There are several companies that will set you up. Homesource.com is one.

OK, I promised you 5 Ways to Thrive. I gave you seven. But the last two were kind of promotional.