23:18
Shivaram
Chains stores are beginning to feel the heat. After the Future group started closing unviable stores, it is now the turn of Aditya Birla Group to begin to close some 30 stores.
Store closing per se is not necessarily an ominous sign of bad things ahead. Decisions on store openings are made based on multiple factors and not all stores achieve targeted top line and bottom line numbers.
When the going is good, typically, companies tend to keep the "non performing store" going for some more time, because of the efforts, not to mention the costs that have already been sunk in. This is very similar to buying shares and hoping the share, which is currently below the purchase price will turnaround in the future.
But, once the going gets tough, then tough decision are made. And it looks like the tough decisions are being made and stores are being shut.
What does this indicate to the retailers?
The scenario that is unfolding in 12-13 is a tough year ahead , which for a new year just one day old is not a good thing at all. We have 363 days to go.
What can smaller retailers do ?
First take an inventory of the product range, inventory value, marketing spends, price off , etc. All the budgeting that has been done in the last few months for this year, might be worth a small but serious review. Afterall lot of thought has gone in and we should not scrap it at the first sign of difficulties.
Once you have identified potential "traps", begin to monitor these more closely. If possible, put a tracking mechanism for these . As a retailer, inventory is the first thing that can go out of control. Put a visual tracking system like a chart, which gives day to day inventory ( not sales ) value for you. It might take a few attempts to get it right first, but the impact will be substantial.
Once you have this inventory tracking system, begin to track it like your daily sales on your mobile or note book or whatever. Get your team into this monitoring mechanism as well.
Identify the A,B, C category products and first focus on the high cost low turn categories in your stores.
Look around for some software, which can help you with your analysis. It will be worth the effort.
Summary of Action plan :-
1. Quick Review of budgets
2. Identify areas of monitoring
3. Process to monitor - simple visual techniques - SMS/ Paper chart etc
4. Segregate inventory by ABC method, Costly and slow moving on priority.
5. Give and take feedback on action taken and share your experiences with us here.
RetailGurukul@gmail.com
Store closing per se is not necessarily an ominous sign of bad things ahead. Decisions on store openings are made based on multiple factors and not all stores achieve targeted top line and bottom line numbers.
When the going is good, typically, companies tend to keep the "non performing store" going for some more time, because of the efforts, not to mention the costs that have already been sunk in. This is very similar to buying shares and hoping the share, which is currently below the purchase price will turnaround in the future.
But, once the going gets tough, then tough decision are made. And it looks like the tough decisions are being made and stores are being shut.
What does this indicate to the retailers?
The scenario that is unfolding in 12-13 is a tough year ahead , which for a new year just one day old is not a good thing at all. We have 363 days to go.
What can smaller retailers do ?
First take an inventory of the product range, inventory value, marketing spends, price off , etc. All the budgeting that has been done in the last few months for this year, might be worth a small but serious review. Afterall lot of thought has gone in and we should not scrap it at the first sign of difficulties.
Once you have identified potential "traps", begin to monitor these more closely. If possible, put a tracking mechanism for these . As a retailer, inventory is the first thing that can go out of control. Put a visual tracking system like a chart, which gives day to day inventory ( not sales ) value for you. It might take a few attempts to get it right first, but the impact will be substantial.
Once you have this inventory tracking system, begin to track it like your daily sales on your mobile or note book or whatever. Get your team into this monitoring mechanism as well.
Identify the A,B, C category products and first focus on the high cost low turn categories in your stores.
Look around for some software, which can help you with your analysis. It will be worth the effort.
Summary of Action plan :-
1. Quick Review of budgets
2. Identify areas of monitoring
3. Process to monitor - simple visual techniques - SMS/ Paper chart etc
4. Segregate inventory by ABC method, Costly and slow moving on priority.
5. Give and take feedback on action taken and share your experiences with us here.
RetailGurukul@gmail.com
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