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Selling the Candle at Both Ends

GDA Staff -- Gifts and Dec, 5/20/2011 2:00:25 AM

The Recession AS WE ALL SLOG THROUGH WHAT SEEMS TO BE THE-RECESSION-WITHOUT-END - despite what all the experts in suits keep telling us - it's clear that those businesses that have survived have had to radically redo their business models.
     Whatever side of the gift, stationery and home food chain you're on - retail, wholesale, rep - chances are the way you do business in 2011 is very different from the way you did it in 2008. But this is not just about Darwinian evolution. Lots of strong companies have fallen flat on their faces during the past few years and being good at what you used to do does not necessarily mean you are good at what you need to do now.
     In fact, it's a lot more about being smart than strong. Smart businesses that have endured have found the capabilities to remake themselves on the fly, keeping customers close and creditors closer.
     Nowhere is that more true than in specialty retailing. Independent stores have had the distinct advantage of being able to reshape themselves faster, more efficiently and easier than some of those lumbering behemoths out on the highway.
     One of the best techniques that has worked for many independent specialty operations has to do with merchandise mixes. As the economy turned south, the natural tendency was for a store to trade down and have more promotional products for a customer suddenly and seriously pressed for disposable income. And indeed some stores have had some success with this strategy.
     But the really smart stores have not just done the knee-jerk thing. Yes, they brought in some more lower priced merchandise in to kick-start their businesses and at least get the customer to take out their charge cards again. But they absolutely did not abandon the upper price points of their assortment. And that's the key.
     Look at a great retail operation like Coach. (Yes, they are a chain, but they are very much a specialty store.) When things softened up, Coach developed a new, lower-priced line called Poppy. In some cases, the prices were 40 or 50 percent lower than traditional Coach products.
     But those traditional Coach products did not go away. Coach pushed both ends of the pricing envelope and in doing so, has come through the recession in much better shape than most other retailers.
Gift and home specialty stores have the same opportunity ... and the same shot at making their businesses better.
     The best way to get through all of this money mess is not to think of things as either-or: It's all of the above.
-Warren Shoulberg, Editorial Director

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