Tuesday, September 28, 2010

Different Industry-Same Lingo

Last week I attended an event in San Francisco sponsored by the Association For Corporate Growth. A.C.G. is a national yet locally driven chapter based organization that brings together founders and operating executives from companies across a myriad of industries. I was impressed by the caliber of executives in attendance and even more so by the panel participants. The topic of the day was "Confronting Reality: Retail And Consumer Trends In The New Economy". The panel was comprised of two Private Equity investors and a former large retail chain CXO, now a consultant. In addition to the networking benefits from attending I was interested in hearing from people who's industry was at center stage in the economic downturn drama. Here are some of the key takeaways:

1. Times have changed. Forever.: When the capital markets tanked in late 2008, the "discretionary" or "aspirational" spender vanished overnight. Gone. Not likely to return. These are people who had a couple of extra grand in their checking account and decided on a whim to purchase those alligator skin running shoes or bought that Rolex watch that they really couldn't afford but aspired to own it. Hey, after all they had a fat line of credit and money was cheap. Times are good. Why not?! So what if Bear Stearns failed that past July...who the hell is Bear Stearns anyway?

2. Consumers will buy what they need-not what they want.: Well, thanks for deep insights into the obvious Mike. What evidence do you have to support this? Target, Wal-mart have moved fast and furious into the food/grocery business. They are opening smaller footprint stores and will sell value oriented groceries seeking to lure you to their location and not your local Safeway. These retailers figured if they sell you what you NEED, you might buy something you WANT while you are there.
But I am pretty sure it won't be those alligator skin running shoes. Smart move.

3. Investors in technology and in retail base their investment decisions on similar criteria:
  • Category creators: How many times have we heard this term in high tech? It applies to retail and fashion too: MBT Shoes and LuLu Lemon are two contemporary examples.
  • Under-served markets: Ranch Markets, a grocery chain targeted specifically at the Asian Community has plopped it's stores into the heart of Asian neighborhoods and customized their selection to meet their market's tastes and cultural preferences.
  • Multi-channel model: Customers are attracted, acquired and served over the web, from a catalog, a mall location or an outlet. J.Crew is a great example of this. You have to be where the customer wants to buy.
  • The People Experience: Go into any Apple Retail Store and you will understand. Not only are Apple's products technically superior, but the customer experience in an Apple Retail location is phenomenal. Way better than Nordstroms. If you don't have a business strategy that is customer centric, you won't get funded or much less survive.
So, what is your take-a-way from this blog? Try this on for size:

Take a hard look at your business. Times have indeed changed but are there areas of your business that are still stuck in 2008 because of denial, inefficiency or arrogance? Have you adopted a multi-channel approach that enables you to reach customers based on how they want to buy verses how you want to sell? Finally and most importantly, what would your customers say about their experience with your company? Is it more like Fry's Electronics or The Apple Store?

Regardless of industry differences if you focus on these common fundamentals you will greatly improve the odds of future success.