There have been some interesting periods throughout the storied history of retail – moments in time, from recessions and depressions to rebuilds and renaissances, that have challenged the resolve of merchants and sparked innovation and creativity. However, it’s not likely that people have bore previous witness to such a cacophony of social, political and market turmoil as the one that exists today. It’s presenting those operating within the industry with a host of challenges to address and overcome if they have any ambition to achieve revenue and growth over the coming months and years. And, according to industry expert and Founder of Inception Retail Group Inc., George Minakakis, in order to do so, retailers and brands are going to need to draw from a number of different disciplines.
“There’s a war happening in the Ukraine,” he recognizes. “Inflation has gone through the roof. The pandemic, which is not quite under control, continues to cause problems and issues around the world. Stagflation is a definite risk. Shrinkflation is catching on, forcing consumers to pay a lot more for a lot less. When you put all of these converging issues together, it’s incredibly problematic. And so, how do retailers respond to this amalgam of challenges and difficult circumstances? They have to be artists and scientists. And they also have to be financial gurus in order to pull everything together and make it work. In short, it’s going to require smarts and ingenuity in order for retailers to compete and succeed going forward.”
One of the ways in which Minakakis suggests that retailers can be smarter is with respect to the marketing and advertising that they develop. He says that one of the greatest mistakes that any brand can make during inflationary times is to pull back and reduce advertising. It’s a tactic employed by retailers amid slower economic climates in an effort to minimize and streamline costs for the business, with marketing and advertising often being evaluated as less of a priority investment. However, according to Minakakis, it’s a function that may in fact serve a greater strategic purpose during challenging economic times.
“It’s often a bit of a knee-jerk reaction by companies amid inflationary periods to cut back on their marketing and advertising,” he explains. “But in many cases, it’s one of the absolute worst things that they can do. In fact, what they should be doing instead is becoming smarter with their advertising and increasing their focus locally. During economic downturns, brands need to develop better, stronger offers and incentives that will bring traffic through their doors, whether that’s physical or digital, in order to attract more revenue. They need to rethink their offers and reengineer how they’re structured to compete at the highest level. Success going forward will require a lot of smarts and savvy and a real compelling reason for customers to visit their stores.”
Planning for the worst
Minakakis goes on to explain, however, that not even the smartest and savviest of retailers can know more than they know, meaning the industry can’t be completely sure of the nature of challenges that lie ahead. He believes that the inflationary issues and supply chain challenges that are being faced by retailers and brands all over the world will linger for some time longer, adding that prices are not likely to ever come back down again. It’s a set of circumstances that poses considerable challenges for retailers vying for a piece of the consumer’s spend and compete in such a turbulent and uncertain market. However, in order to effectively and efficiently comprehend today’s market dynamics and respond to them, the seasoned industry expert suggests that the development and maintenance of a scenario planning toolkit will become more valuable than ever to organizations that employ them.
“I learned very early on in my retail life that any great corporate and brand strategy is supported by solid scenario planning that can help the organization identify risks and plan appropriately for them. The idea is to protect the company’s assets and health, preventing negative happenings and events from impacting it too severely or avoiding them altogether. And, the very best, most effective scenario planning will help brands recognize the opportunities that almost always come along with risk and adverse situations. And it’s up to the brand then to seize the opportunities that they’ve dedicated planning and resources toward seizing. It’s perhaps going to serve as the most important and effective tool for retailers and brands going forward, allowing them to look at their businesses just a little differently, preparing and enabling their operations to withstand future disruptions in order to maintain success and growth despite the circumstances.”