Jirsch Sutherland partner Andrew Spring details the ways in which retailers can combat the challenges of these disrupted times.
In February last year I wrote an opinion piece for Ragtrader called Retailing 2020 style: a balancing act of demands and desires.
It was just prior to the COVID-19 pandemic being officially declared, and I wrote that striking the right balance between bricks-and-mortar and online selling was one challenge, not to mention avoiding overstocking in order to meet the demand for greater variety and to compete with foreign-owned fast-fashion corporates and international online retailers.
Fast forward 18 months and fashion retailers are faced with many more challenges – not least being lockdowns.
And while pre-pandemic the message was that eCommerce was a necessity rather than a point of difference, now eCommerce could be considered a life raft.
With customers unable to go into stores because of restrictions, having an online presence has been and continues to be crucial – even beyond lockdowns.
In addition to trading restrictions, the environment for retailers has been further complicated by supply chain disruptions and hard border closures.
However, despite these challenges, the fundamentals of business remain. What has changed is how they’re applied and also their order of priority.
Key tips for retailers during these abnormal times:
• Forget pride! Now is the time to seek and accept help. Educate yourself on government support and grants, rent relief options and your rights and responsibilities as an employer.
• Rework the numbers to work out what a new breakeven position is – i.e., the point at which total revenue equals total costs or expenses.
• Eliminate excess costs. For example, it might not be the right time to replace the in-store mannequins. Evaluate all costs for the immediate requirements of the business strategy for the short term.
• Reposition yourself. Ask yourself some key questions, such as: How is your target audience evolving? How are you keeping up with demand and changes? What are your competitors doing?
• Revisit trading partners: how have they responded/supported you? Are there better deals available?
• Consider pricing adjustments – and I mean adjust them up!
• Dig yourself out of the sand – excuses and blame-games get you nowhere. Time is likely your most ready commodity currently. Use it to innovate; reimagine your business in its best form, knowing what you know today. How different does it look?
• Protect yourself: know your risks and, if necessary, consider speaking with an expert. There are protections which can assist with a restructure. You should be aware of legislation that allows directors to remain at the helm instead of ceding control to external administrators.
• Know your limits and your options: these times are unprecedented; we should always remember that trying to save a business at the expense of the people within it is not a fair trade. Also consider your own mental health; there’s a strong correlation between financial distress and emotional distress.
And I can’t emphasise enough – seek help from a specialist if you’re in financial distress. You would not go to your tailor to have your car serviced.
I’ve heard many stories of business owners and directors who are dipping into their own savings or maxing out their credit cards in an effort to keep going.
It’s not a sign of weakness to ask for help. That goes for your business and for yourself.
There are different solutions that can be explored if you’re struggling financially.
Equally, there are a lot of resources for business owners and directors if your mental health has been impacted.
But in a world that at times feels like it is upside down, remaining honest with yourself and accountable for your decisions will keep you moving forward.
Support numbers and resources available below:
Mental health support:
Lifeline: 13 11 14
Beyond Blue's NewAccess free mental health service for small business owners: 1300 22 4636
Business Support:
National Retail Association: 1800 RETAIL (738 245)
Australian Retailer's Association: 1300 368 041
Australian Small Business and Family Enterprise Ombudsman: 1300 650 460