November 06, 2007

Comps And Pressure

On Thursday, retailers will release comp store sales performance for October. Some are not expecting optimism.

One of the harder transitions you make as an employee is the transition from a healthy business to one that is struggling.

In the healthy business, you focus on objectives and projects, with varying levels of stress.

But when business goes in the toilet, your job is to immediately fix your business.

And this is a challenge, because in many cases, business doesn't stink because of anything you did. It isn't your fault that banks and homeowners partnered to fuel our economy on the paper value of homes. It isn't your fault that oil is surging close to $100 a barrel. It isn't your fault that Wal-Mart opened a new store and cannibalized 17% of your business.

It is your fault to not be prepared.

Every few years, businesses experience a downturn. Your job is to have everything in order, so that when leadership runs through your department with hair on fire, you are ready to respond to them.

If you are in business intelligence, you have algorithms pre-written to answer executive-level questions. You have bandwidth set aside to answer extra questions.

If you are in e-mail marketing, you have a "bible" of "what works", already documented and ready to be shared with anybody who wants to start adding e-mails to the calendar with clearance/sale merchandise. You walk your executive over to the "bible", and teach the executive how your craft works, while at the same time meeting a short-term business need.

If you are in online marketing, you've done your homework on clearance-based search marketing. You already have the answers for your executive. You tell your leader that if she spends $100,000, she will clear $300,000 of merchandise.

If you are in catalog marketing, you've compiled results from all sale/clearance mailings during business downturns. You've standardized the results for changes in the business climate, since the last downturn.

If you love the profit and loss statement, you have already analyzed the cost/benefit, both short-term and long-term, of cutting the budget. You'll already know that a dollar cut from the budget today costs you three dollars of net sales in 2010.

As our economy edges closer to recession, your job is to be ready to answer questions, to lead your executive team.

Of course, your leaders will probe you for a "big idea" that will magically turn things around. If those ideas existed, you'd already be doing them.

But by being ready, you prevent your leadership team from running you in endless circles looking for tactics that clear inventory. And in the short term, that's often the primary concern --- how to get out of excess inventory. Until excess inventory is cleared, you cannot try new things.

Get your ducks in a row now, so when negative business performance lights a fire under your executive team, you're ready to respond, ready to reduce the pressure/tension everybody feels.