That’s us done for, then said the voice of doom (regular readers will know that the voice of doom is aka my darling wife). "Customers aren’t spending like they used to, your pension fund’s just lost 40% of its value and no-one’s going to be able to raise the money to buy your site. You’ll never be able to retire - you’ll still be working when you’re 90."
Now while I was tempted to reply "Don’t worry dear, it’s only a recession. We’ve seen it all before," in truth I don’t think many of us still in business really have seen anything quite like this before.
The sheer volatility of the world’s markets in the past two months has been breathtaking, while the scale and speed of the changes has been astonishing. On holiday in Europe this summer, I observed that the euro was making things so expensive that we’d have to go to America next year. Less than two months later and the dollar’s changed by almost 20%. In under a month, despite the dollar, pole prices have crashed 15p a litre, half the world’s banks have needed bailing out and some countries are left teetering on the edge of bankruptcy.
And, oh yes, my sites have just had two months of very healthy profits! So maybe it isn’t necessarily ’rope over the beam’ time just yet. Now don’t get me wrong, I’m not suggesting that everything in the garden is rosy. Of course it’s not. But the truth is that our industry is in a very fortunate position. Basically, we’re in the commodity end of the retail market. Yes, we’re affected when our customers are feeling the pinch, but the extremes of differential spending are not for us. While that misfortune is befalling the department stores, luxury goods retailers and the leisure industry, they have to remember that when times were booming we never really shared in all that froth. Sometimes there are advantages in just plodding along and making a steady return.
In some respects the current turmoil has a sense of unreality for our customers. While stock markets crash and the media abounds with doom and gloom, most of our customers still have jobs and still have a steady income. So while the UK cannot expect to be immune from the cold economic winds blowing around the world, right now for the majority of us, the roof hasn’t fallen in. The challenge for all of us is more about returning to a life where we live within our means rather than racking up ever increasing debt.
So how do we alter the way we operate in the coming months? The most valuable advice I can give is DON’T PANIC! Firstly, assess your market. What socio-economic class do your customers come from? While it may be a politically incorrect paradox, if you’re in a poor area you probably don’t have too much to be alarmed about. Most of your punters aren’t spending their own money, which is why your prices are probably already higher than they would be if you were in a middle class area. Your customers don’t usually plan ahead, don’t get attracted by the savings from a weekly shop at Aldi or the likes and, provided the government doesn’t go bust in the short-term (although I think there’s a real danger that it might in the long term, but more of that another time), their income isn’t likely to be affected. If you’re in a super rich area you’re also unlikely to see too much change -recessions are for the ’little people’, don’t you know!
If you trade in middle class land, however, it’s time to cut your cloth accordingly. It’s easier to save money than earn it, so cut out those expensive little extra overheads that have crept in over the past few years. And yes, you will have to work harder and longer yourself! Then examine your product range. Cut it back and add some own-brand discount products for those who want them. But the most important lesson of all is to stop chasing turnover. What matters is profitability. Sell less, make more. Keep an eye on the cash flow. And smile. It isn’t rocket science.