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Be it the pandemic, inflation, or the risk of recession, the market today is an unstable one. But that doesnât mean your business canât thrive despite it. In fact, there are a lot of benefits to being a small business during this time. Instead of fighting through the corporate red tape of big-box retailers, you can be agileâmaking revenue while better serving your customers and communities.
To learn how to build a resilient business that does just that, we sat down with Ashley Alderson, founder of The Boutique Hub, and Mark Cohen, director of retail studies at Columbia Business School. From being vigilant about your finances to prioritizing customer happiness, these rules will help ensure your business can withstand market uncertainty for the long haul.
Protect your balance sheet
While he currently teaches at Columbia Business School, Mark Cohen was formerly the CEO of Sears Canada and has over 30 years of experience in the retail world. When we asked him about shoring up your retail business for market instability, the first thing he recommended was being vigilant about your finances.
âWithout liquidity, you canât outlast a bout of inflation,â he says. âWhether itâs downsizing or otherwise, being extraordinarily careful about your outflows of cash and your relationship with cash providers, banks, and other lenders is absolutely vital.â
While new business owners tend to want to move fast in the early stagesâspending more cash on inventory (especially on inventory youâre not sure you can sell) or hiring too many peopleâCohen says to take it slow. Think about the consequences of not having cash when you need it, like if a building owner increases rent, the market takes a downturn, or you need new tech.
As the founder of The Boutique Hub, Ashley Aldersonâs mission is to help retailers run smart, efficient, and profitable businesses (and enjoy the process). She agrees with Cohen here: Listen to your analytics.
To stay resilient during times of inflation, you need to know your business. Whatâs your maintained margin number? Your profit number? What are your customer acquisition numbers?
Alderson says that paying attention to analytics will help you discern what your bread and butter isâthe items that you know are paying the bills. During a tough economy, those are the things you should be doubling down on, rather than buying something your consumers might not like.
Be good to your customers. Like, really good
âPeople want to do business with people, not companies,â says Alderson. âAnd thatâs always going to be our superpower in this industry.â Your differentiator is that youâre not Amazon. Youâre a person working with other people, and you genuinely care about the end userâs happiness. Because when you care about your customer and prioritize a good relationship, you build loyalty. That loyalty will last through difficult economic times.
Thereâs no substitute for human-to-human contact, especially if itâs gracious, friendly, upbeat, and informative.
Mark Cohen, director of retail studies at Columbia Business School
For example, letâs say you need to update your pricing. âThereâs no substitute for human-to-human contact, especially if itâs gracious, friendly, upbeat, and informative,â says Cohen. Instead of risking the consumer misinterpreting a price change, explain the situation yourself and level with them. The more human you can be, the more forgiving theyâll be. Same goes if the customer is unhappy with their purchase. Be sure to take their feedback seriously and make things right in their eyes.
Itâs not just about being gracious when thereâs a problem. Providing little flourishes with every sale, like a ribbon or some tissue paper or a handwritten thank-you note, are ways to show consumers that you care. If youâre growing your team, make sure your sellers prioritize customer happiness as well: They should greet customers, by name if possible, smile, and genuinely enjoy the selling process.
While communication is absolutely a hallmark of good customer service, so is a brand that resonates with consumers even if youâre not face-to-face. It would be impossible to go against Amazon or Walmart on pricing and assortment alone. To differentiate yourself from those big-box stores, Cohen says that you need a brand identity. âYour backstory should be able to communicate with customers who you are, what youâre trying to accomplish, why they should give you a chance, and why they should patronize your business.â Then, once they buy, you need to give them every reason to come back.
Curate your inventory wisely and position it smartly
When inflation hits, Alderson suggests that you pay close attention to your inventory assortment. From your analytics expertise (see above), youâll know your bestsellers, so be sure to stock those to keep your customers happy.
Remember that inflation doesnât stop shoppers from participating in gifting seasons, whether itâs the holidays or Valentineâs Day or even wedding season, so you need to be smart about your inventory and stay agile with your pricing all year long.
âDonât put the good stuff on sale,â says Alderson. âThink about your margin building. What can I buy low and sell high? Thatâs the whole strategy. Thatâs the name of the game.â
When people have less to spend, you want to curate your inventory and price it in a way so that they can feel really good about their purchase. This is less about slashing prices and more about creating value. âCheap ainât loyal,â Alderson says. Just make sure with every item you sell, youâre creating value and solving a problem for customers, like bundling under $50 gifts consumers might want to buy together.
Whether youâre in the midst of a gifting season or challenging economic times (or both), Cohen reminds us that an empty shelf, absent size, or missing color can be particularly costly. âCustomers will forgive you for a lot of things,â he says, âbut if you donât have what theyâre looking for, theyâre going to find someone else to provide it.â Thatâs why itâs so important to pay attention to your finances, your customers, and your inventory. If you can stay liquid and agile, keep delighting shoppers, and position your goods in the right way, you can withstand just about anything.
