Three Things to do while others hide in the storm cellar
1. Get to know your new customer base by collecting and analyzing customer data (customer analytics). In all likelihood, the customers that you used to think of as yours have changed. As the economy has worsened, and consumer confidence and spending have contracted, you may now be selling to and serving a different customer than you were even a year ago.
The more economically challenged segments of your customer base have either reduced or stopped spending in your category, and customers who may in the past have traded elsewhere are giving new venues a chance for a variety of reasons, most having to do with price and price/value ratios, and/or convenience.
In restaurants, this has played out as "trading down", a trend that has been a benefit for many QSR's. In retail, we have seen WalMart gain share in many categories, and aspirational brands, like Coach, suffer significant comp store declines. You, as an owner/operator, will want to understand now more than ever who is shopping in your stores and filling seats in your restaurants. You have a unique chance to reward the loyalists among your customers who have stuck with you, and they in turn will appreciate the effort and reward you when things turn around. You also have a chance, and responsibility to your business, to "meet" your new customers, those who may be trading down from other, more costly venues. Understanding their needs and wants now will enable you to keep their loyalty tomorrow, and next month, and next year...
2. Reevaluate, from bottom up, what you have to do to your business to make money on a lower top-line revenue number at the unit level (AUV). It is reasonable to assume that consumer spending will not, in the near future, approach the levels that led up to our current economic crisis.
Yes, store and mall closings will result in more reasonable levels of retail and restaurant per capita metrics. But the reduction in retail space and concepts will be more than offset by a shaken consumer who has less access to the easy credit of the past, lower income from fixed income investments and a significantly reduced net worth. Add higher unemployment to the mix, and I believe many retailers, and most restaurant operators, will look back longingly at the AUV numbers of the past.
3. "White Paper" the US to gain an understanding of what your concept could and should look like given the new retail landscape. Use new AUV and footprint assumptions gathered from step 2, above. This will help you to be more selective about which stores to close, which new ones to open and where--and in general to take a more strategic approach to managing your real estate portfolio.