STORES Magazine - March 2009 - (Page 87)

CONSIDER THIS / LOEB RETAIL LETTER Copyright 2009 by Loeb Associates Inc. Used by permission. Cutting Costs in a Recession BY WALTER LOEB Last month I stressed that the current economic environment has conditioned customers to shop for merchandise that has been marked down, and that retailers will find it difficult to reverse that trend. effectively communicate ideas down the line, There is another challenge, however, and Macy’s stores are large enough for store and I believe that survival will only be managers to be empowered to make effecachieved by adopting a totally new mindtive decisions.This same philosophy applies set. Changes have to be made in order to to many other retail companies that have streamline store operations and remain been divided into multiple divisions or reviable. Many retailers would like to run gions. their businesses with an upscale image, Eliminate unprofitable stores. Now is the but now it is a fight for survival. time to strengthen the profitable units and With this in mind, here are some sugdelete stores that have been underperformgestions that I believe would tighten opering because of poor locations or a shift of ations and allow for expansion when the population. I applaud The Home Depot’s deeconomy turns around. cision to close the entire EXPO division, as Streamline the executive suite. Durthere can now be a clear focus on the home ing the lush years companies split funcimprovement business. tions within the executive suite, and many Walter F. Loeb is a New YorkExamine store hours. While some days new “C” jobs were invented: We have based consultant and member are very productive for blockbuster sales, marketing officers, operations officers of the NRF board of directors there are other times when stores could trim and information officers who have been whose newsletter is published their hours and staffing levels. elevated to sit next to the CEO. They, in monthly in STORES. Reduce capital spending plans. Many turn, have a retinue of assistants who companies have reduced their new store help them perform their jobs. While some openings and curtailed store renovation programs. The of the functions might have to be absorbed by others, in postponement of renovations can be tolerated for a limited leaner times it is appropriate to reduce senior-level staff; time, but would hurt the store’s image if extended for a prothe decisions have to be made by the CEO and executed tracted period. The retention of cash is more important by a leaner team. than adding additional units at this time. Do not return unsold merchandise. In these stressful times, manufacturers must survive in order Associates will feel committed to their to be ready to supply when consumer demand acposition and their company if they celerates. It is frequently a partnership that has been understand that they are strengthening developed between stores and vendors, and stores the company by forgoing raises; must support their sources of supply. Freeze salaries. While I do not believe that comsimilarly, shareholders should not pensation should be reduced, I do feel that there expect increased dividends during should be very few increases. Associates will feel this difficult period. committed to their position and their company if they understand that they are strengthening the company by forgoing raises; similarly, shareholders should not expect increased dividends during this difficult period. Consolidate operations. Macy’s consolidated its Former Federated chairman Harold Krensky believed divisions from seven to four last year, reducing its staff by that his company should be lean and mean in difficult 2,300. On February 2, further consolidation was antimes. I feel quite strongly that retailing will show better nounced, with Macy’s executives detailing plans to intesales and earnings by the end of the year, but it is prudent grate all its divisions into a central operation and cut an to heed Krensky’s words at the present time. additional 7,000 jobs. I believe that strong leadership can WWW.STORES.ORG STORES / MARCH 2009 87 http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - March 2009

STORES Magazine - March 2009 Contents Executive Editor's Page President's Page Movers and Spenders What Shoppers Think Take Your Laundry Online 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Luxury for Less Q & A CONCEPT2WATCH Checkout Management Online Entrepreneurs Sustainability POS Online Strategy Online Scheduling SaaS Online Marketing Merchandise Security PCI Compliance LPinformation Supplier Directory Exception Reporting Industry Perspective Theft Research LOEB Retail Letter ARTS Update Point of View NRF News Retail Crossword Retail Industry Calendar End Cap

STORES Magazine - March 2009

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