A key factor retailers have to look at
We beat last year! Sounds good, but is it really? Particularly in Retail, managers are looking backwards at numbers to ensure they did better than the year before. Doing better than last year is important, but depending on the health of the company, beating the year before may or may not be enough.
Retail is changing and nobody really knows where it will end up over the next few years. Technology combined with consumer behavior has everyone questioning everything. Looking at past performance numbers are not enough anymore. You have to look forward more than you look back to see if your business will be viable in the years to come.
How has your niche market been performing? Are you performing along the same lines? If your niche is growing by 30% a year and you are dropping or increasing under 10%, you have to start evaluating, not celebrating that you are better than last year. Growing 10% in a 30% growth industry is a problem. If you don’t identify why you are growing at a slower rate than the rest of the market, you are on your way out.
I reverse engineer based on industry performance. If the industry is showing a certain consistent growth, I establish that growth as my desired result. Now I have number. Next I have to make a plan that takes into account everything. I have to start with dollars in the bank at the end of the year and figure out step by step, level by level, action by action…. How do achieve this goal? I literally break down everything I and my team can think of as a factor. You have to look at yourself and be real about what you have available. You have to see where the market is finding success and see if you have those opportunities as well.
By analyzing yourself and studying the market you should be able to formulate a plan to get you where you need to go. If you can’t, either spend the money to bring in people that can, or move on because you are not built for your business anymore. There is no shame in recognizing tha time has taken its toll on you. If you have it in you to adapt, you can survive. If you don’t, you are done.
Your this year last year plan can hide real problems you are facing. You have to take much more into account than internal performance when judging the health of your business. I created a scenario where you are failing, what to do? If you are growing faster than the market, you still need to figure out why? Never take success for granted. If you know why you are succeeding, you have a much better chance of continued success than if you are just riding it blindly.
How you judge your business performance matters. Look at how your performance stacks up against prior years, but also see what else is trending in the world. Hold yourself to a market standard, not just an internal.