The Challenges and the Opportunities of a Changed Landscape

Many commentators are already referring to the global and banking meltdown of 2008 as the Great Recession, and there is plenty of anecdotal and hard evidence to support that assertion. To many people, the current recession certainly seems like much more than a mere downturn, with staggering levels of unemployment and general anxiety about the state of the economy.

Even those who have lived through the deep recessions of the 1970s and 1980s have nagging thoughts that this time it is different, and that many of the changes in consumer spending and personal attitudes toward money are likely to remain long after the current downturn has ended. That presents a real challenge for retailers, both at the chain level and at the store level. Companies who fail to adapt to the changes might find themselves in search of customers who never come back.

If you doubt the importance, and the significance, of the current downturn, just consider how sharply the personal savings rate has turned around in this recession. Before the Great Recession hit, the personal savings rate was actually negative, meaning consumers collectively not only spent every penny they made at their jobs but that they borrowed money to spend even more. That has turned around quite dramatically, and recent statistics found a personal savings rate in excess of 5X. That might not seem like much to our ancestors who hoarded cash after the Great Depression, but it is a dramatic turnaround no matter how you 100k at it.

That means that consumers are now spending less of their discretionary income, and saving much more of it. While in past recessions consumers quickly reverted to their old spendthrift ways when the economy turned around, many experts feel that the depth of the current downturn has shaken consumers to their very core. That means that at least some of the changes consumers have made are likely to be permanent, and that will affect everything from the way retailers advertise their products to how they run their sales and promotions.

It is also important to note that while some of the issues with the economy are national, and even global, others are quite localized in nature. For instance, while many states have unemployment rates well in excess of 10% other states, including North Dakota and South Dakota, have unemployment rates less than half the national average. That means that it is more important than ever for stores, including even the largest chains, to rely on their local management to run promotions and gauge the level of customer satisfaction.

Even though many national chains carry the same merchandise in all their stores, there are significant differences from town to town, and only local management can deal with those regional differences effectively. If you have ever wondered why the same store can flourish in one part of the country and fail miserably in another, you need only look as far as the local management of those companies. A quality manager can do a lot to help a store succeed in even the most challenging environment, while poor management can doom a store to failure even when times are good.

In order to succeed in what experts everywhere are referring to as the “new normal” companies have to adapt and change the way they do business, from the way they train their workers to the way they attract and retain their best customers Only local management, with its ear to the ground and its eyes on the bottom line, can achieve those important goals.

Local People-Local Service
Just consider the vital importance of something that might seem simple at first blush. Hiring great people is one of the most important jobs of any retail manager, yet many chain stores provide little control over this critical process. That can be a big mistake, since local management is much better equipped to gauge the strength of the local employment market and make the best hiring decisions. In some markets that might mean offering a slightly higher rate of pay than the company average, or adjusting hours to provide more flexibility. Giving local management more control over the hiring process helps them hire better people, and that in turn allows those stores to provide the kind of top notch customer service that is so important in the current challenging economy.

Training is another important consideration for retail chains, and another place where top notch local management can be a big help. Managers and assistant managers at the local level are plugged in to the day to day operation of their stores. They know which processes are most important, and they know how to get things done. Giving your local management team more control over the training of new employees can help those new workers learn the ropes more quickly and serve the public more effectively.

Good Management Means Happy Customers
Quality management at the local level means happier customers, and happy customers means more sales and more profits. Companies that provide local control to their retail managers can enjoy higher profits and better sales, providing a strong incentive for chain retailers to empower their local management teams.

Local management is often more in tune with their customers than the management of the company as a whole. As a result, those local managers are better able to anticipate, and meet, the needs of their best and most lucrative customers From coupons sent to the most loyal companies to local incentives in the store, managers can provide all manner of enticements to encourage cautious consumers to buy the items they need, even when most customers are cutting back and looking for reasons not to spend money.

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