Five of the most important facts the retail business will be forced to take into account in a crisis
The financial crisis is a unique phenomenon that puts a trump card to the hands of one business and at the same time destroys another without a chance of recovery. And of course, retail will also fully experience all the consequences of economic and political changes. Can a certain business survive or is it a definitive end? It all depends on whether the retail company made the right conclusions from the previous crisis period.
In this article, we have collected five of the most important facts that the retail business will be forced to take into account in a crisis. Although, of course, it’s best to learn these few lessons ahead of possible events.
The Customer Decides
In principle, this statement is always true, but in a crisis, it takes on even greater significance. Shopping behavior patterns are changing. In times of crisis, the buyer is trying to maximize the profit from the money spent, so he changes his consumption model and is looking for a brand that meets his expectations at an adequate price.
Retail, in turn, is forced to adapt to the new situation and be sure to change the methods of attracting customers. If the business is not ready to make changes, then most likely the level of sales will become even lower until the process becomes irreversible.
In addition, thrifty buyers force merchants to be more thrifty themselves. In other words, falling revenues force companies to cut costs, and this is a good lesson on how to optimize business processes. In crisis conditions, retailers are looking for opportunities to save money where they have not even been seen before, for example, put the store in energy-saving mode.
Not All Financial Institutions Are Trustworthy
As we have already said, the crisis is absolutely indifferent to what niche your business belongs to. Everyone will receive what is supposed to be received. Financial institutions are no exception. And when the crisis affects banks and other financial companies, it only exacerbates the problems of the business that works with these organizations.
The most common problems that a retail business is faced with when a crisis begins to concern finances are the inability to receive money from their business account, and the inability to withdraw their reserve funds. This leads to the conclusion that not all financial institutions will withstand the crisis. Sometimes it’s worth it to use the help of independent financial platforms like Lendgenius, and abandon banking services for a while.
Therefore, choosing a company working with which the retail business will feel safe, it is necessary to analyze a lot of different factors.
It Is Quite Necessary to Have a Strategy for Any Situation
“What strategies can we talk about now?”, “The main thing now is to survive,” “We don’t know anything about the future – how can we make plans?” Such statements and doubts can often be heard from business owners from different industries. Can they be called baseless? No. They sound justified enough and it’s hard to argue with them.
Nevertheless, if the main decision is to continue to work and develop the company, the retail business needs a strategy for any unforeseen event.
Under current circumstances, strategies should be, firstly, multi-versioned, which involve different scenarios for the development of the political and economic situation. At the same time, the implementation of strategies will require management to quickly switch from one version to another while updating strategies.
Secondly, you need to think about the short term. When a crisis attacks, which was just an action plan at the usual time, becomes a strategy.
What is more, if there is a common goal, for example, survival in this period, then, in any case, a strategy for this survival is needed. On the other hand, it is now necessary to think about what will happen in 5 years, how current circumstances will affect the development of the country and markets, what will develop, what will die out as a phenomenon. It is important to stay in good shape and be ready to build muscle and increase speed, as soon as external circumstances allow.
If We Had Big Data Before the Crisis Began, We Would Be Able to Predict It
Big data analysis for the retail business can be a useful tool in making decisions in finance, supply, marketing, and many other issues, including predicting changes in the economic and political situation in a particular country.
The use of artificial intelligence technologies, including predictive analytics, allows the company to minimize possible losses, automate logistics management, modernize inventory management, etc. But most importantly, these systems are able to analyze a huge amount of historical information and develop assumptions about when the situation will turn from the stable into crisis and how consumer preferences and behavior change. It is like looking into a magic ball to see the future, however, it is important not only to see it but also to make changes to your strategies (see the paragraph above).
And Yet, the Crisis Is a Time of Opportunity
The crisis drove the wrong people and the wrong companies out of the market. As a result, the market itself got rid of idlers and loafers – those who are not able to do business effectively.
Who stayed afloat? Those companies whose owners had strong nerves. Those companies whose owners were willing to work from morning to night and constantly adapt. These are those who know how to work with a small margin, at low demand and, nevertheless, build a successful profitable business, and not chase fantastic performance.
As a result, many successful companies that are firmly on their feet today rely precisely on the experience of crisis periods. Entrepreneurs learned the art of survival in difficult economic conditions, mastered the skills of building more stable and effective governance structures, were able to find non-obvious opportunities for savings and other useful things.
Final Words
It would be wrong to say that the crisis is good. It also cannot be argued that it is categorically bad. Each period gives business new opportunities and forces it to solve new problems. But in any case, forewarned means armed.
This content is a joint venture between our publication and our partner. We do not endorse any product or service in the article.
