Be it the pandemic, inflation, or the risk of recession, the market today is an unstable one. But that doesn’t mean your business can’t thrive despite it. In fact, there are a lot of benefits to being a small business during this time. Instead of fighting through the corporate red tape of big-box retailers, you can be agile—making revenue while better serving your customers and communities.
To learn how to build a resilient business that does just that, we sat down with Ashley Alderson, founder of The Boutique Hub, and Mark Cohen, director of retail studies at Columbia Business School. From being vigilant about your finances to prioritizing customer happiness, these rules will help ensure your business can withstand market uncertainty for the long haul.
Protect your balance sheet
While he currently teaches at Columbia Business School, Mark Cohen was formerly the CEO of Sears Canada and has over 30 years of experience in the retail world. When we asked him about shoring up your retail business for market instability, the first thing he recommended was being vigilant about your finances.
“Without liquidity, you can’t outlast a bout of inflation,” he says. “Whether it’s downsizing or otherwise, being extraordinarily careful about your outflows of cash and your relationship with cash providers, banks, and other lenders is absolutely vital.”
While new business owners tend to want to move fast in the early stages—spending more cash on inventory (especially on inventory you’re not sure you can sell) or hiring too many people—Cohen says to take it slow. Think about the consequences of not having cash when you need it, like if a building owner increases rent, the market takes a downturn, or you need new tech.
As the founder of The Boutique Hub, Ashley Alderson’s mission is to help retailers run smart, efficient, and profitable businesses (and enjoy the process). She agrees with Cohen here: Listen to your analytics.
To stay resilient during times of inflation, you need to know your business. What’s your maintained margin number? Your profit number? What are your customer acquisition numbers?
Alderson says that paying attention to analytics will help you discern what your bread and butter is—the items that you know are paying the bills. During a tough economy, those are the things you should be doubling down on, rather than buying something your consumers might not like.
Be good to your customers. Like, really good
“People want to do business with people, not companies,” says Alderson. “And that’s always going to be our superpower in this industry.” Your differentiator is that you’re not Amazon. You’re a person working with other people, and you genuinely care about the end user’s happiness. Because when you care about your customer and prioritize a good relationship, you build loyalty. That loyalty will last through difficult economic times.
There’s no substitute for human-to-human contact, especially if it’s gracious, friendly, upbeat, and informative.Mark Cohen, director of retail studies at Columbia Business School
For example, let’s say you need to update your pricing. “There’s no substitute for human-to-human contact, especially if it’s gracious, friendly, upbeat, and informative,” says Cohen. Instead of risking the consumer misinterpreting a price change, explain the situation yourself and level with them. The more human you can be, the more forgiving they’ll be. Same goes if the customer is unhappy with their purchase. Be sure to take their feedback seriously and make things right in their eyes.
It’s not just about being gracious when there’s a problem. Providing little flourishes with every sale, like a ribbon or some tissue paper or a handwritten thank-you note, are ways to show consumers that you care. If you’re growing your team, make sure your sellers prioritize customer happiness as well: They should greet customers, by name if possible, smile, and genuinely enjoy the selling process.
While communication is absolutely a hallmark of good customer service, so is a brand that resonates with consumers even if you’re not face-to-face. It would be impossible to go against Amazon or Walmart on pricing and assortment alone. To differentiate yourself from those big-box stores, Cohen says that you need a brand identity. “Your backstory should be able to communicate with customers who you are, what you’re trying to accomplish, why they should give you a chance, and why they should patronize your business.” Then, once they buy, you need to give them every reason to come back.
Curate your inventory wisely and position it smartly
When inflation hits, Alderson suggests that you pay close attention to your inventory assortment. From your analytics expertise (see above), you’ll know your bestsellers, so be sure to stock those to keep your customers happy.
Remember that inflation doesn’t stop shoppers from participating in gifting seasons, whether it’s the holidays or Valentine’s Day or even wedding season, so you need to be smart about your inventory and stay agile with your pricing all year long.
“Don’t put the good stuff on sale,” says Alderson. “Think about your margin building. What can I buy low and sell high? That’s the whole strategy. That’s the name of the game.”
When people have less to spend, you want to curate your inventory and price it in a way so that they can feel really good about their purchase. This is less about slashing prices and more about creating value. “Cheap ain’t loyal,” Alderson says. Just make sure with every item you sell, you’re creating value and solving a problem for customers, like bundling under $50 gifts consumers might want to buy together.
Whether you’re in the midst of a gifting season or challenging economic times (or both), Cohen reminds us that an empty shelf, absent size, or missing color can be particularly costly. “Customers will forgive you for a lot of things,” he says, “but if you don’t have what they’re looking for, they’re going to find someone else to provide it.” That’s why it’s so important to pay attention to your finances, your customers, and your inventory. If you can stay liquid and agile, keep delighting shoppers, and position your goods in the right way, you can withstand just about anything.