There’s no shock value left, no more room for lamenting what was. Now is the time to accept the cold, hard facts of life: The business’ glory days may not return
for quite a while.
Those who are prepared to accept this reality and move forward will be the eventual winners. Those who can’t will fall by the wayside. It’s that simple.
These last few weeks have been telling. After the craziness of holiday sales came the dreaded January doldrums. Under the best of circumstances, this is a challenging time, and last month, the long, dark wintery days were the source of much angst for industry players trying to cope after the financial meltdown last fall. While it lived up to its billing in many ways, January also has been a time of acceptance and regrouping by those companies that see opportunity amid the havoc of a sharply diminished global economy.
At the recent Outdoor Retailer show in Salt Lake City, business was clearly off. Show officials called it a modest dip, but the local cabbies (an excellent source of information) were probably more accurate, noting a drop in traffic nearing 30 percent. Even in diminished form, this market still displayed a certain amount of vibrancy driven by the innovative and passionate players at the wholesale and retail levels.
While most lamented the current state of business, many of the more forward-thinking executives in Salt Lake City had their eyes focused on the future. To the surprise of many, two major deals were announced in the first two days of the show. Wolverine’s purchase of Chaco and Decker’s buy of Ahnu both fit a pattern that could repeat in the days and months to come.
Solid industry players with clean balance sheets will be able to boost their portfolios by snapping up established, albeit struggling, brands at bargain prices. If the current economic state has made it hard on little brands, it also has presented an unprecedented buying opportunity for the right players. In most cases, it is a win-win situation for buyer and seller.
The new deals prove that even in the darkest times, there are options for growth. And the opportunities in the footwear market don’t end with mergers and acquisitions.
Smart companies are taking this time to reassess and revamp. With business at a low point, they are reviewing everything from product to people. This is a unique chance for manufacturers to redirect resources to boost product quality and customer service for their retail accounts. Declining store traffic allows retailers to spend more time delivering the kind of customer experience that engenders loyalty.
This is also a time when the critical relationship between the two sides can be improved. Last fall, there was a lot of finger-pointing. Wholesalers felt that many retailers went on sale too quickly and went too far with price-cutting. Many retailers said wholesalers didn’t deliver the right kind of product for a troubled retail environment.
Moving forward, wholesale and retail have to learn to play nice. At the end of the day, both sides need to realize that the meltdown was the result of negative forces that came together in an unsettling way. It doesn’t help to demonize. In fact, the current state of retail presents a unique chance for retailers and wholesalers to rebuild their often-troubled relationship. Neither can survive without the other. It’s time to start from scratch with realistic partnership goals that acknowledge the specific challenges each side faces moving forward.
Of course, this is easier said than done. The painful elements of this downturn are not pretty. It isn’t fun to lay off people and watch companies go bankrupt. But if we focus on the bigger picture, it’s clear that the current economy will serve as a giant filter, taking out those brands lacking enough traction, hobbling the companies that don’t have the means to survive a prolonged downturn and removing stores that contributed to an overabundance of retail space.
Once the decks are cleared, the savvy survivors will have a better shot at grabbing market share. Those with a real purpose, a healthy balance sheet and the guts to take a few calculated chances will be able to position themselves for what will inevitably be a buoyant recovery.
There is a silver lining if you know how to find it.