Managing a retail business in recession

“If retailers are to stay off the economic rocks they must run a very tight ship,” says Andrew Blatherwick, executive director of Argility, an international software business supplying electronic point of sale (EPOS) and merchandise management solutions to the retail industry.

The current economic environment is as tough as we have seen for a very long time. For the public, the perception is that we are close to disaster and the natural reaction is to reduce spending and put up the shutters until better times.
In this environment, retailers need to be right on top of their game if they want to survive.

However, as we all know, in tough times the really smart operators prosper and come out of it much stronger. These are times for the brave, the smart and also the ones who control their business more tightly and have the right controls in place. If that means spending on new solutions to give you those controls, then this may be the best investment you could make.

If you are under pressure on costs and margins, what you cannot afford to do is have large levels of shrinkage, staff theft or fraud – and you certainly cannot afford to lose customers because of inabilities to process sales, be creative on promotions or manage customer service properly. Every customer is invaluable, every cent counts and your staff members are likely to be in a state of flux, as you upgrade employees in order to get the best.

What is imperative when looking at retail technology solutions is to ensure that you have a product that is easy to use and intuitive. With high staff turnover you need to be able to get new starters up to speed rapidly and new systems implemented very quickly to achieve the fastest possible return on investment. No retailer today can afford to be spending years implementing a new central system, not just because of the costs of the implementation team – which can run into the millions – but also because of the time demands on your own staff for the implementation.

Training staff on new, highly complex and restrictive solutions can cost millions of rands in lost time. What’s more, in retail outlets you cannot afford to take staff off the shop floor for days to train on a new EPOS solution. Neither can you afford to have them struggling to use a difficult complex solution while customers wait. The customer will vote with their feet and walk away from your store and not return. Think of the competitive edge to be gained by implementing a new merchandise management solution in less than 20 weeks and having you staff up and running to achieve your return on investment whilst your competitors struggle to implement theirs, cash flowing out of their business rather than in.

It is also vital that the solutions you use are secure and have a high degree of security and operational controls. It is unfortunate that when times are tough for retailers they are also tough for their staff – if staff are struggling to make ends meet they are more likely to take the chance of taking a little extra. The retailer must protect against this and make sure it is under control. The company also needs to make sure that customers are not able to take advantage of loopholes in the operation and profit from their purchases.

Promotions, returns and credit notes are all targets for the streetwise shopper looking for the opportunity to gain from the retailer. When the customer and staff come together, the retailer really does need the protection of a solution that will ensure the highest levels of security and information to eradicate these risks from the business where possible
As we said, the next year is going to be tough in retail. In order to survive, retailers will need to be on top of their game and in control of their business.

Whilst investing in new technology at this time seems instinctively wrong, it may be the saviour of your business if it plugs those holes that are allowing your profits to leak away when you can least afford it. The brave will not only survive but also be there to prosper when the corner is finally turned. With less competition on the high street you will be in a good position to really enjoy the good times. Modern EPOS and merchandise management solutions provide these controls yet are very intuitive, easy to use and can be rapidly installed.

Andrew Blatherwick, CEO Argility Ltd., June 2009