Corra Daily Planet » 2008 » December

Is it the Death of Retail as We Know it?

Wed, December 31st, 2008 - 5:30 am - By Gordon Basichis

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Over the holiday season, while driving around Los Angeles I noticed an inordinate amount of vacant storefronts.   These vacant storefronts were not located in the more destitute of neighborhood, although I’m sure there are plenty of empty stores there as well.   These vacancies were located in some of the more tony neighborhoods, along certain streets that are known around the country, if not the world.   If there are empty stores in places like Beverly Hills and Brentwood, Studio City, then it is fair to believe there are empty retail venues in just about every neighborhood in every city.

This is the holiday season, after all, and the business that once occupied these stores couldn’t hang around long enough to make good in this brief window of shopping.  I would guess, as most do, that once this very disappointing holiday shopping season is over, the economic downturn will cause many other retail venues to fold their proverbial tents to never again appear.

Even the once solid luxury consumer market is down over a third.   For the stores that haven’t yet folded, the all but beg consumers to come in and buy the stuff that just a few months ago seemed to disappear magically from the shelves.    There are liquidation sales, giant liquidation sales, blowout sales, here is the deal of a lifetime sales, and just get this stuff out of here sales.   There are sales in Beverly Hills and sales in Studio City.   The entire city seems up for sale.  It probably would be, was it not carrying with it huge budget deficits.   And predictions for California’s immediate future are pretty grim.   If not dire.

Some of it is due obviously to the economic meltdown and the accompanying fallout.   There is no doubt people who have maxed out their credit cards, can no longer go to the equity home loan well, and who may be out of a job, are buying milk and groceries and not designer clothing and jewelry.   And while most are buying cheaper merchandise, reports say that the wealthy in cutting back may still buy the same brands but they are buying fewer items.   So what was once a well stocked store is now stuck with surplus.

There are other factors at work here.   Go to any mall.  Go to even the chic stores in the upscale shopping areas.   What do you see?   You see the same stuff.  In the mall you see the same cheaper brands.  In the richer neighborhoods you see the same richer brands.   There is nothing unique, really, nothing unusual.  The good news is that we understand our brands.   The bad news is that we are enslaved by them.

Not only can most consumers not afford many items.   What is really the point in purchasing the same items as the store down the block and the store across the street?   What about original merchandise?

Perhaps to survive and to prevail in the future it is incumbent upon the retailer to find not only quality merchandise at a better price point, but original brands from emerging designers and manufacturers.  It may well pay to hire people who after a preemployment screening check can demonstrate they can source new clothing, equipment, cupcakes, whatever it is, so customers will shop your stores because of the original merchandise you carry.   I realize this is not always possible.   I also realize that carrying the same-same as your competitor doesn’t say very much about your own branding and your buyers’ imaginations.

Look to employ people who can bring you the unusual.  Not just wild and unusual but something that people actually want to buy.   Look for employees who understand what customer service is all about and know how to apply it.   Forget about the sales clerk snobs at some of the tonier stores on Rodeo Drive and places like it.   Their time may soon be past.   Customers want someone who they can actually talk to.  Who actually understands their needs.   They are hard to find.  I realize that.

But sooner or later even the blowout sales will get pretty boring.   Those who are going out of business will be out of business.   it will be up to the survivors in the retail trade to try something a little different.  Like true service.  And merchandise that you can find everyhwere.  It’s a challenge to offer both service and original merchandise.  But what isn’t a challenge?   Driving by an empty store.

Are Your Sales People Relationship Builders or the Average Car Sales Person?

Tue, December 30th, 2008 - 4:37 am - By Gordon Basichis

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I was at a friends house for dinner the other night and a couple were sitting across the table from me.  The woman was one of the leading sales people in fleet sales in Southern California.   She had worked at it for years, and had moved from a downtown auto dealership to one on Los Angeles’ ritzier west side.   On the west side of Los Angeles it is difficult if not near impossible to sell many domestic automobiles.   The west side is the land of Lexus, Mercedes, BMW and now the ecology minded Prius.   Ford and GM products are not all that desirable.

Yet this women she does well in her fleet sales.   She has built relationships and as one responsible for the corporate market she is able to see Fords to America’s corporations.   She said the same people keep coming back to her, just as they have for the past fifteen years.  She insisted the domestic cars were of much better quality than the rap against them.   Matched against, say, the Toyota Camry, she insisted the Ford Focus in the better car.

At this point her husband chimed in and issued comps that were designed to demonstration the more positive qualities of the American cars.   Business is good she insisted.  Her husband believed it could be better.   He acknowledged Ford has its troubles but in no way is it going out of business.

I asked the key question.  Business is lousy in the automotive industry, I offered.   But Toyota, while experiencing its first loss in decades has watched its stock drop from $138 or so to about half of that now.  But Ford meanwhile is sitting at just over two bucks a share, and GM is somewhere around $3.66.   There is a marked different in stock value, I pointed out.   As well as the loss of market share.

The conversation went back and forth in its usual form over this very subject.   But then I seized on something that made sense to the husband, while the wife wouldn’t allow herself to absorb the concept.   The fact is most automotive dealerships have lousy sales people.   Even with training, the bulk of the better ones come off as wooden and obvious.   The others are just plain obnoxious.   Sure there are some excellent sales people in the dealerships.   There are sales people who truly know their products and who know how to actually talk to people.   But they are few and far between.

Meanwhile, if the Ford and GM quality is comparable to their foreign rivals, it is incumbent upon these two domestic auto manufacturers to convey this through branding.   They need to drive customers to the lots.   They need through advertising and branding to make the domestic car a desirable product once again.  Because, if they just leave it up to the average Ford or GM sales person to convince you, the customer, that the domestic car has experienced a renaissance of sorts it is never going to happen.  Customers will stay away in droves.   Briefly put, the sales people are not up to it.

The husband agreed.   His wife did not want to give such ample ground.  She went back to her own sales figures and talked about her bewst year ever.   It didn’t seem to matter that while she did well in the kitchen, the rest of her proverbial ship was rapidly taking on water.  Which on a macro level has been the problem with Detroit executives for quite some time.

So in thinking about it I had to wonder how many industies still recruited decent sales people.  Surely there are legions of them out there.  But are mere legions enough to adequate service what’s left of American Industry?   Are the sales people really the relationship builders that their supervisors want them to be?   Do they even know what it truly means to be a relationship builder?   Or are they merely high pressure arm benders and back slappers who as tactics have had better days?  Are they obvious about qualifying customers?  Obvious to the point of being annoying?  Just like the sales people on the car lots.

With the economy in a downturn and with people out of jobs, it may be time for you to look around for the few diamonds in the coal pile.   It may be time to find true relationship builders and recruit them while you can.   A good sales person can perform the kind of business development that can make you the exception in an ordinary world.    It is worth thinking it over.   Before you start looking to the government for a bailout of some sort.   Because that, I’m afraid, may never come.

When You Have Employees Who Steal Data

Mon, December 29th, 2008 - 5:06 am - By Gordon Basichis

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Cedars Sinai Hospital is one of the best hospitals in Los Angeles and for that matter in the rest of the country.   It has a sparkling reputation, one well worth preserving.   But when a former employee with access to medical records uses that database to bilk insurance companies, this poses a serious public relations issue.  It can also provoke lawsuits from angry patients who had their identities stolen for illegitimate purposes.

According to an article in the Los Angeles Times, a former Cedars Sinai employee bilked insurance companies for some $69,000 by making false claims, using the stolen data of Cedars patients.  The former employee took advantage of the computerized system to steal and profit from the data and from the position to which he had been entrusted.

This was not some employee who had not permissible access to the data.   This was someone who illegally used data to which he had legitimate access.   To counter the privacy breach, Cedars has applied more security to its computerized system.   But security only goes so far.

That is why you need to run background checks on all your employment candidates.  There are no guarantees you will eliminate all threats, but preemployment screening goes a long way to help eliminate the obvious threats.   It also pays to run enough background searches so that you can discern a behavior pattern.   In this economic downturn it is particularly necessary since employees in desperation are more prone to indulge in illegitimate activity.

Some companies run period employment background checks on their current workers.   this is becoming an increasingly common practice.   Because the few bucks you spend running background checks is a lot cheaper than the loss of proprietary information, the resulting lawsuits and the public embarrassment theft will cause.

Check them out before you hire.

Cutting Costs Without Layoffs

Fri, December 26th, 2008 - 5:27 am - By Gordon Basichis

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A week or so ago I suggested the companies should look for ways to cut costs without laying off their employees.  Layoffs are not only demoralizing to the entire workforce, ultimately they reduce efficiency.  Reduction of efficiency can cause you to cut back on services to your clients.  You can overload your surviving employees,  increasingly the probability of mistakes.   Ultimately, the domino effect can result in your losing clients.  Not a good idea anytime, but especially during this economic slump.

According to an article in the New York Times more companies are looking for ways to avoid laying off employees.   they are exploring the four day work week, unpaid vacations, and even pay reductions.  Les money is better than no money at all.   Companies are for the time being reducing or eliminating their contributions to pensions and 401K plans.

According to the article, many companies say they have been very selective in hiring.   What with preemployment screening programs in place in most companies it would stand to reason, as they claim, that most of their workers are the productive sort and not the slackers.   Many companies believe that since the economy dropped so quickly, it may come back just as fast.   No sooner would they layoff their employees, then they would wish they hadn’t done so.   The other bonus is that your not laying off employees builds the kind of employee loyalty no birthday or holiday parties will ever buy.

There are ways to cut costs in supply chain management.   You can cut costs by making better deals with your suppliers who may not be thrilled about it but would rather keep you afloat.   You can cut costs in materials, but using less paper, fewer office supplies.   I remember working for one company that shipped brochures to trade shows.  These were heavy boxes.  So heavy they never would pay to ship the surplus back to headquarters.   So be prudent.

In fact, do you even have to go to all those trade shows?   Maybe.  but in this economic downturn, how many of your clients are really showing up there?   Even cutting back on one trade show and certainly cutting back on the executive conclaves, can save you some bucks.

So, as the article notes, it is wise to look for other cost cutting measures, before you layoff your personnel.  and check them out before you hire.

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