Biz 101: Retail expert George Whalin weighs in with tips on adapting to a new world order in retail

Trench warfare takes on a whole new meaning when you look at retailers on the front line today. They’re dealing with reduced consumer spending, leaner business management and take-no-prisoners competition. Consider George Whalin, founder of Retail Management Consultants (www.whalinonretail.com) and author of “Retail Superstars,” as a general in the battle for retail, working to navigate dealers through the landmines of competition to come out on the other side intact. Whalin spoke frankly with SNEWS® about today’s evolving consumer, strategies that are making retailers money in today’s times, and retail’s prognosis for 2010…. No, it’s not all rosy (and he doesn’t paint it that way), but you already knew that. Still, Whalin has tips and insights that can help you think about how you are doing business.

SNEWS: How has today’s retail environment changed and how can specialty retailers adapt to this new world order?

George Whalin: It’s changed in pretty dramatic ways. Certainly, in the last 18 months, but really over the last five or six years, things have changed. The thing that has changed over that time is the level of competition. The Internet has literally changed how people shop, what they look for, how they buy and what influences their purchases. The retailer who had a competitor down the street now has a competitor on every desktop. A host of competitors, really.

It is my contention that retail is more impacted by unemployment than any other single economic factor. It’s not just that we have 10 percent unemployment in this country; it’s that we have probably another 25 to 30 percent of the population worried about their jobs, and that population is equally as important as the people who are not working. If you’re not working or you are worried about your job, you pull back on your spending — and that’s had a tremendous impact on the retail business. So you have fewer customers coming through your store, and you have customers who are much more value oriented than they’ve ever been.

SNEWS: How has the economy changed how consumers are looking at stores?

Whalin: Let’s say you were going to buy a canoe or a kayak. In the past, you’d visit three, five, eight stores, depending on where you lived. Today, you’re going to spend a great deal of time on the Internet researching it, learning about the companies, figuring out which one is the best, and then make your choice — probably before you even go into any store, you have narrowed down to at least one or two.

That has profoundly changed how consumers think about a store. They’re less dependent on the store to help educate them. The retailers who understand this are finding new ways to educate their customers, like in-house clinics. We know one consumer electronics store that puts out white papers on every product they sell. They tell you what questions to ask, what to look for, what are the key features. Retailers today have to look at their business in a very different manner.

SNEWS: How can retailers stand out among their competitors in today’s market?

Whalin: There are several ways. The first way is to create a true destination store. I am more convinced than I have ever been that if you cannot distinguish your store from everybody else in the marketplace that sells similar products, you are in big trouble today because of the national chains and the big guys that are all in these businesses. You have to spend some time, effort and money in making your store unique from a visual standpoint and from an experience standpoint.

Secondly, you have to look at what you carry. Are you carrying the same thing that everybody else has? If you are, it’s very difficult to compete because customers walk in and see the same thing in every store. You have to have some alternatives that are not available in every store. We recommend that retailers who have that problem start looking outside of the United States for products that aren’t available, or belong to a buying group that only has one dealer in a marketplace.

Certainly, of course, your salespeople have to be friendly, helpful, knowledgeable, people-oriented type folks. It’s what you have to have. Finally, you have to start looking at your business not just as the four walls that you are. You have to start looking at your business as part of a community. How can I be more active and proactive in the community? How can I make us more visible in the community through PR and special events? You have to differentiate yourself in powerful ways.

SNEWS: What tips can you give independent, specialty retailers to compete with larger chains and big boxes?

Whalin: Be different. Don’t pay a lot of attention to the competition. The one thing that I found was a commonality among the retailers profiled in my book, “Retail Superstars,” was that most of them don’t pay any attention to the competition. They just don’t care. Their entire focus is on making their business better and serving their customer better, and not dancing to the same beat. They’re all very independent folks who do things their way. I think that kind of revolutionary thought is the way you have to do it today if you are an independent retailer.

SNEWS: What are the retailers profiled in your book doing differently to succeed?

Whalin: One of the common things I found about these retailers is that for every one of them, the entire focus of their business is on the customer. We’ve been talking about it for years in retail. We’ve talked about how important the customer is, but I defy you to find many retailers who truly believe that. They talk about it, but they still put customers through hoops if they want to bring something back or if they’re unhappy with something. They just don’t make it easy for the customer to do business with them. And you go, wait a minute, isn’t the customer the most important thing? Yeah, they say, but we have things that we do our way.

Every successful independent I know … wants to have the right merchandise, the right prices, the right selection, the right people, the right policies, the right procedures, the right systems — everything in place to serve the customer and make sure they are responsive to the customer.



SNEWS: What are some strategies retailers should embrace when the economy is challenging?

Whalin: They have to better manage their cost of doing business. One of the things we’ve seen over the years is the retailers who get into the biggest trouble are the ones that have too much inventory. Over the last few months, the best, smartest retailers have all taken a hard look at their inventory and are not buying the same way they used to buy. That may not ultimately help the suppliers they are working with, but it certainly helps to keep them in business. They look hard at their inventory and their turns. They look at the profitability of various lines and categories. They’re constantly analyzing all those things to make sure that they have the right mix of merchandise, the right pricing and the right amount of inventory to justify the business that they’re doing.

SNEWS: What is the prognosis for 2010?

Whalin: The popular media would have us all believe the turnaround is here, but I don’t see it. It’s better, a little, than it was a year ago,…but it’s not a lot better. The National Retail Federation just reported that they think the retail business will grow by 2.5 percent this year. If it does, that’s not very healthy growth. That’s pretty anemic. I think that’s a little optimistic, frankly.

This has been a very difficult 18 months. It has been brutal, and I know a lot of retailers who had a very bad year in 2009. I know a few that had a pretty good one, but, boy, most of them didn’t. They cut staff; they cut inventory; they cut costs. I don’t know how much else these guys can cut. Retailers still have to be cautious in their spending and cautious in how they manage their business, and they have to develop those powerful relationships with their customers. I think things will get a little better this year, but I don’t think we’re going to get out of it this year.

–Wendy Geister



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