Some ways that companies hope to find business success even in a flagging economy.
During a down economy, retailers are feeling the loss along with us. The mathematics is simple: people purchase less when they earn less. Additionally, basic expenses such as food and utilities continue to rise. From clothing to luxury purchases, retailers are getting hit hard. Several major retailers will close their doors in 2010 — but will any be opening more locations during leaner times? And if you own a retail business, what could this tell you about your own prospects down the road? I’d like to take a look at some well-known businesses and how they’re coping with changing market forces.
Online Retailers, Business Outlook For 2010
At online retailers, shoppers can shop anytime, anywhere and have the goods delivered. Customers are lured away from traditional retail stores because bargain hunting online allows them to save time, effort and even gas money.
Case Study #1: Blockbuster
Take the case of Blockbuster, which intends to shut down up to 20 percent of their stores by 2011 because of competition from Netflix and Redbox. A total of up to 960 out of 4,356 Blockbuster stores might be closing, with the company shifting its focus to DVD rental kiosks in other merchant stores. At this time, Blockbuster only has 500 kiosks but looks to have a significant 10,000 by the middle of 2010.
Customer reaction makes retailers take action to accommodate consumer purchasing preferences. Will switching over to more kiosks and fewer store locations help keep Blockbuster profitable? This seems to be a good start for Blockbuster since I know many consumers (including myself) who prefer to rent their movies from kiosks. In my case, I’ve been patronizing an affordable Redbox kiosk at my local supermarket where, for just under 5 bucks, I can rent the latest movie and get a soda and snacks.
Case Study #2: Crabtree & Evelyn
On another note, I remember the introduction of the Crabtree & Evelyn bath and body chain in 1973 when I was a child. The fresh, natural scents were a welcome pleasure after the heavy, heady fragrances of days gone by. Now Crabtree & Evelyn has filed for Chapter 11 bankruptcy protection. With 126 stores, the company will close those locations that don’t perform up to standards. It seems that Crabtree & Evelyn will continue to appeal to the high end market.
Unfortunately, I stopped using the Crabtree & Evelyn products when I discovered Bath and Body Works natural fragrances. With coupons and online deals, I get great natural essences for less. During these tight times, the more high end retailers are facing some challenges.
Case Study #3: Bank of America and Citigroup
In the midst of the financial crisis, the powers-that-be at Bank of America plan to shrink their branch network by approximately 10 percent despite a positive growth record over the last two decades.
Meanwhile, Citigroup plans to lower the number of retail outlets and limit banks to six major metro areas including New York, Los Angeles, Washington DC, San Francisco, Miami and Chicago. This shift is in accordance with Citigroup’s plans of focusing on certain metropolitan areas for their business. Definitely a sign of the times.
Case Study #4: Kohls
Seems people are shopping more or at least as often as they used to at Kohls, the fourth largest department store in the country. In 2009, Kohls opened a total of 56 new locations. As shoppers turn away from pricey high end products, they turn to middle of the road retailers such as Kohls. By buying out Mervyn’s and converting their locations to Kohls stores, the latter saved on costs associated with opening brand new stores.
Chairman and CEO Kevin Mansell says that the secrets to Kohls success are partnerships with names such as Vera Wang and Avril Lavigne. Another secret involves good inventory management such as keeping shelves well-stocked with the proper placement of items. As a former merchandiser at Kohls, I was always impressed with the stock rooms and knowledgeable staff when I would set up merchandise displays at the stores.
What’s Next For The Small Business Owner
If you operate your own home business, it might be time to shift gears yourself. Are new market opportunities appearing while old ones die out? Are you ready to expand and grow, thanks to good decisions you’ve made in a changing market? Note that what works for big business also works for smaller businesses trying to stay afloat at this day and age.