Last year, Phil Aronson, writing in Security magazine, made a thought-provoking assessment of the store closures that took place in 2017. Aronson believes that every store has a culture, and within the scope of that culture, stores can prosper. While a store’s culture should keep pace with change, its basic precepts should also remain consistent.
Macy’s and JCPenney both have a culture that extends back a century. While these retail giants have made many impressive changes (Macy’s was an early adapter of online selling, while Penney’s wisely resulted to price promotions after a previous CEO got rid of them), apparently, these moves have not been enough.
As a result, last year both retail giants elected to close a large number of under-performing stores. One suspects that if senior management had monitored the changes taking place more closely, steps could have been taken to correct the decline earlier. The lesson to be learned is that resting on one’s laurels can be fatal.
So what can be done? The following is a four-step procedure for recognizing decline and correcting it: 1) Decline; 2) Survival; 3) Recover; 4) Surge Forward.
No operation is perfect. Continuous adjustments must be made to maintain a competitive and profitable posture. The organization must first accept that adversity may cause it to downsize. Recognizing and dealing with the decline converts the operation into survival mode. The organization’s resilience/survival objective is to establish a mode of operation that recovers from the adversity.
In recovering, an organization’s resilience/survival objective is to regain the pre-adversity position. If this is impractical, then it needs to quickly establish an organizational format that will effectively function in the prevailing environment.
Once the new organizational format is established, the goal is to surge forward. The organization must not only survive the adverse situation but must also positively profit from the experience- to resume growth and profitability.
While 2018 does not suggest a year of radical change, retail competition at all levels continues to intensify. That’s why high-end stores like Neiman Marcus and Barneys aggressively established outlet operations. In some cases, this tangential move was a dramatic, and potentially disastrous, departure from the store’s culture.
With no retail experience, Mark Twain is credited with a wise observation that remains true today: “Do what you do best.” In the retail landscape, with competition becoming more challenging, retailers with a successful niche should put all of their efforts into expanding profit within that culture, commensurate of course with the changing taste of their customers.
So, as 2018 unfolds, here’s my advice to retailers. Reflect on what made your store historically great. Then, think about what you need to do going forward to expand upon that trend.
Remember, Henry Ford went from making a buggy to a Model A to a Model T to a Mustang, all within the same culture. So can your store. Think about it.
Marshall Kline is the founder the Marshall Kline Buying Service in Los Angeles. He can be contacted at 213-689-1269.