Gloombuster Kit For Retailers

News Release 19 May 2009

In the wake of the March quarter’s plunge in retail sales activity, accounting and business advisory firm Grant Thornton has come up with some timely tips for survival and pointers to opportunities.

Gloombuster Kit For Retailers

Retail, one of the sectors hardest hit by the recession, has as many opportunities as it does drawbacks in the current economic environment, says business adviser Eugene Sparrow of Grant Thornton.

And to encourage retailers to look on the brighter side as they battle the economic elements, Grant Thornton has today released a Gloombuster Kit – a twin-pack of survival tips plus pointers for even being cheerful.

“We thought it important to make available publicly not only some guidance on how to get through the recession, but also how to take advantage of these testing times,” said Mr Sparrow, Auckland-based director of business advisory services.

“Different parts of retailing are being affected in different ways, but our kit can be applied virtually right across the sector.

“We do know that while retailers of consumer necessities are generally holding up well, they are in the minority as households curb spending – and this impact is exacerbated by the current downturn in tourism.

“But we also know that some retailers are moving more to internet or mail-order offers to hold or increase market share. In some cases, internet sales are increasing very rapidly.

“Whatever the individual situation our kit should contain enough useful advice on survival to help companies through, as well as some reasons for outright optimism. It may also be useful for non-retailers.”

Grant Thornton Gloombuster Kit for Retailers follows:

Pack 1: Tips for survival

Tips for survival • cut down on expenses – particularly overhead, administration and discretionary expenses.

• tightly monitor and manage cash flow, especially where there is seasonality in revenues and payments due

• manage stock by clearing old stock quickly and eliminating obsolete items

• improve partnerships with suppliers to ensure that supply chain cost increases are more fairly shared

• hone in-store staff selling techniques to drive up average transaction values

• ensure store staffing levels closely resemble the customer traffic-flow patterns on a hourly/daily/weekly basis

• negotiate with your landlord a potential rent holiday or rent reduction

• dispose of non-core assets to ease cash flow problems

• consider sale and leaseback deals on any freehold Properties

• stay close to lenders and keep them informed – they don’t like surprises

• stay close to shareholders and raise fresh equity where possible.

Pack 2: Reasons to be cheerful Reasons to be cheerful • recessions, even deep ones, come to an end

• a number of retailers are performing well as they take advantage of more price-conscious consumers, they are gaining market share

• the strong will survive so the sector will be more robust in the medium term

• the sector will become more efficient as companies are forced to examine their cost base and take action to cut costs

• good possibilities exist to acquire competitors at attractive prices

• opportunities arise to recruit talented and experienced people

• renegotiation of major supply contracts on more favourable terms is possible as suppliers want to maintain continuity

• not all retailers have customers impacted significantly by the recession

• internet and mail order retailers (either pure plays or with strong add ons to a terrestrial presence) are benefiting from consumers’ current interest in range/price/convenience

• as far as the consumer is concerned; selling prices will continue to be keen and retailers will have to go the extra mile with customer service to retain market share.

ENDS

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