Our industry is now faced with an ethical dilemma. We all want to take care of our employees. I am reminded of an experience years ago. I was invited to participate in a deal involving a failing Southern sewing factory with 600 employees. The strategy was to run the plant for a year and then sell off all of the assets and walk away. It bothered me greatly and then a friend advised me that these 600 would lose their jobs anyway and operating for a year might result in success and their continued employment. I passed on the deal but this concept might be appropriate today. Hurting some loyal employees/friends for the benefit of the whole seems like an unfortunate but ultimately viable solution.
First of all, the new ideal profit goal is zero profit. Frankly, I am not sure how anybody can get to that number. So, the next goal is how much of a loss can you sustain to make it to the other side. That number is your strategy. That goal applies across the entire distribution chain. Asking a landlord for a delayed, discounted rent would be better for them than a vacant store. Asking the same to your vendor is the same scenario. Asking the same of your Asian supplier is the same. Asking the same to your banker is the same. Cancellation of orders is certainly now appropriate. It is my opinion that at this time not a single link in our chain should expect a profit. If we survive and a “partner” is not helpful remember to make them an ex-partner at some appropriate time. Study the federal bail-out plan closely, a necessary pot should be available somewhere.
So where and when is the other side? We will get past this but that does not mean suddenly everything will be OK. The consumer is clearly getting hurt. Their disposable income will be reduced if not completely eliminated. The entire supply chain is disrupted. Err on the conservative side. I think these thoughts apply to the small single specialty store as well as the national chain.
Good luck and be safe.
Fred Rosenfeld is an industry consultant. He can be reached at email@example.com.