Do What You Need To Do
History shows retailers can survive with marketing moxie and a healthy dose of innovation.
May 27, 2009
Okay, what do you do now? Statistically we’ve found that 48 percent to 62 percent of the total sales for the year happen in the six-week window surrounding Mother’s Day.
That’s a short window to make hay. This year if the weather doesn’t kill you then the economy, or news about the economy, just might. You know it is really bad when news of the Swine Flu is a relief from the daily dose of how bad the economy is.
More than one retailer, ranging from Syracuse, N.Y., to Charleston, S.C., has said that it doesn’t seem too bad where they are. However, the opinion is that consumer spending is stunted by fears of what might be, rather than what is actually going on in their neck of the woods.
Either way, most retailers report that sales are off. It is still early in the season (as I write this in the first week of May), but there is nothing more than cautious optimism. With that said I thought it might be helpful to offer some suggestions of how other industries are handling it, as well as ideas for independent retail garden centers.
Learning From Others
A recent Wall Street Journal feature (April 23, 2009) offered “Strategies for Survival” showcasing eight success stories from industries ranging from a five-star restaurant to a local pastry shop. All faced similar challenges – significant drops in sales and customer counts. Strategies for success featured reduced pricing, increased marketing, marketing support from vendors and suppliers, and improved customer service.
Nothing earth shattering there. It is funny how tough times can snap you out of years of lethargy. Don’t price, service, quality and innovation still equal value?
Easy to say, harder to do, so let’s take a closer look:
David Burke is one of the top restaurateurs in the country, but his upscale restaurants are located in hard hit areas such as the Upper East Side of Manhattan and Las Vegas. While the industry is projecting a 12 to 15 percent drop in sales, Mr. Burke is reporting an overall growth in sales. What did he do? He selectively dropped prices. He created some significant in-your-face promotions such as a $20.09 three-course meal (in some cases featuring lobster and oysters). This is hardly what you would expect from a high-end restaurant where entrees traditionally sell from $29 to $44. His idea was to create discounts as drastic as need be in order to attract attention. At his Chicago steak house where a 14 ounce sirloin is regularly $48, he recently offered a $5 burger and a shake. This is the type of stuff that generates a buzz.
His goal was to model another restaurant that is doing well these days: McDonald’s. What is easier to understand, as well as easier to market, than a “dollar menu?” Before you shed any tears, please understand that despite the setbacks, he is still doing okay. While his margins may have slipped from a high of 35 to 45 percent, his restaurants, which generated $35 million in revenues last year, are projected to break $45 million. I think Mr. Burke also understands that creating a sensation, well… creates a sensation. After all, you couldn’t put a price on a half page feature in the Wall Street Journal.
Adjusting To Survive
The lesson here: Burke understood that the object of marketing is to do whatever it takes to get customers in your store. A $20 meal at a five-star restaurant sure put the fannies in the chairs. He made up for the lower prices with smaller portions, well managed labor costs and better buying (lobster dropped to $5 a pound).
How about a history lesson? It turns out that a few other companies survived worse – such as the Great Depression. They say necessity is the mother of invention. Did you ever wonder how ketchup got its start? Well, Henry Heinz (yes, that Heinz) went bust back in 1875 when a banking crisis (sound familiar?) made it difficult to secure short-term credit. He had to resort to selling his parent’s furniture in order to satisfy liens against his equipment. So a year later, in addition to his original product line (pickles and horseradish), he brought out a few new products, including, you guessed it – ketchup. The rest they say is history.
The lesson here: the relationships you cultivate with your local banker can help you weather the storm when times get tough. Make sure to schedule quarterly meetings to keep them up to date on your business. Also, tough times will force you to innovate. You never know what might come out of it. The key is to never give up. As long as you constantly review consumer demand and can adapt to the market you always have a shot.
Back in the early 1930s (the era of the big D) Proctor & Gamble (heard of them?) decided to “market the hell” out of the products on the radio (which was like the Internet today). They opted to sponsor the radio dramas that were popular in those days – in fact that is how soap operas got their name.
Market, market, market.
Publix, a $24 billion dollar behemoth, has decided it will suffer the costs in order to maintain the high level of service that built the brand. As a privately owned company, it doesn’t have to answer to Wall Street, but rather to the loyal customers who shop the 1,003 stores. While executives may have dropped prices, they have maintained staffing in order to continue to deliver exceptional service. Their mindset is that setbacks are temporary, but the experience that a shopper has at Publix translates into repeat business and word-of-mouth advertising.
At the end of the day it still comes back to value – that rare combination of fair pricing, exceptional customer service and the innovation needed to not only meet consumer demand, but to anticipate it with a continuation of improved products and services. Yes, the news can be dreadful, but remember that a business based on the consistent delivery of value to its customers will survive the worst.
Kurt Fromherz is the owner of Sunrise Marketing. Dedicated solely to the horticulture industry, Sunrise Marketing works with more than 1,OOO independent retail garden centers and the growers that support them. For more, contact Kurt by phone: 1-888-393-4443, online: www.sunrisemarketing.com, or by email: email@example.com.