While times are tough and it seems as if the economy is in freefall, the fact remains – customers are still making financial choices on what, where, and how much to spend. The mental calculus is changing, however, there is no need to panic, we have seen this before.
A little over ten years ago, before joining the Sedulo team, I was working for Best Buy in Minneapolis. I was leading the Competitive Intelligence team and we were watching businesses being impacted by the beginning of what has become known as “The Great Recession.”
Our team was in a meeting doing some light “if/then” scenario planning about what the impact of the 2008 holiday season might have on our competitors. If it was a good Christmas, then we would see “X.” If Santa gave our competitors a lump of coal, then we would see “Y.” It was then that I made a cynical remark.
“We are going to see so much consolidation across retail, one day it’s just going to be Walmart, Amazon and one specialty retailer for each product category.”
Unfortunately, for hundreds of retail chains and millions of employees, my remark turned out to be true. The US has lost most Consumer Electronics retailers, leaving retail with one major CE retail chain. Only one bookstore chain remains. Sporting goods retail condensed down to one chain a couple of years ago, and there isn’t even a single national toy store chain any longer. Department stores started major closures then, which has only worsened in the last few years.
Now, as I look around retail, I see echoes of 2008 all over again. COVID-19 has accelerated the long-term trends across retail which were already set in motion by the rise of online retail, changing consumer habits, and a near-zero barrier to entry into retail. Have you ever sold anything on eBay or Etsy? Congrats, you’re a retailer. New, digitally native companies are popping up all the time.
While endless articles exist on which sectors will be hit the hardest by the upending of our economy (if you want my opinion, feel free to email me), it’s much more difficult to find solutions for the crisis you are already in.
What did Best Buy do back in 2008?
We pulled together the smartest people in the company. We found subject-matter experts who knew our competitors; who knew the landlords and real estate; who knew our suppliers, — and most importantly, knew our customers. We asked their opinions based on what they knew. We built a small team and a virtual war room to bring them all together and share their respective pieces of the jigsaw puzzle.
We researched our competitors. Our team was lucky to have a dedicated staff of people around the country who knew our competitors –literally. We knew the names of the local management. We had a solid competitive rivalry, sure, but we also knew who we could ask a simple question like “How are things?”, which offered great insight to our competitors’ current situation.
We understood tactical performance builds to long-term results. A retailer’s business consists of millions of small transactions. We knew the signs; we could compare performance on a weekly and monthly basis to build the big picture of a competitor’s business for a quarter or fiscal year.
We built scenarios. We talked through possible outcomes. We conducted wargames. We came up with pre-set plans of action based on predicted movements and likely results.
The outcome? Best Buy survived “The Great Recession” while dozens of other consumer electronics retailers did not. We made it through the consolidation of that sector of retail. Was it just our team? Of course not. Tens of thousands of employees generated that outcome. But as we all know from Schoolhouse Rock, knowledge is power.
What does this mean and where do you go from here?
I see the same signals in the market that existed in 2008, and I want to let you know you can do something to prepare for the next recession. No matter your industry, you have customers. Those customers are making choices about their immediate future. Will consumers shun crowds forever? What does a long-term work from home situation look like? Will offices downsize long-term to reduce lease expenses? Will small stores, bars and restaurants close forever?
With nearly 20 years of experience providing competitive strategy consulting, Sedulo Group can assist you with the decision support needed to navigate the current uncertainty. We have taken the painful lessons learned a decade ago and can apply them to your business today. While COVID-19 has accelerated trend timelines (from years to weeks in some cases), we can help you quickly adjust.
- We have retail subject matter experts on staff.
- We can talk to your people and bring them together to share knowledge and ideas. Managing competitor research and analysis may not be your day job, but it’s ours.
- We can conduct primary research. Go beyond the trade journals, industry websites and stories everyone sees in the media. Let us speak to your suppliers, your competitors’ customers, as well as ethically research your competition.
- We can workshop likely scenarios. We can help you design and facilitate scenario planning exercises, from an afternoon-long thought exercise to full-blown wargaming. We understand that it is hard to get individuals together right now to plan, but we can help.
Behaviors have changed due to COVID-19, and it is important to quickly adapt to whatever the new normal will be once this has passed. We can help you plan through this crisis, deliver the insights and implications needed to fuel your competitive edge, and assist your company in emerging stronger on the other side.
Contact us today for a free consultation!