Retailers Starving For Sales
The recession has slashed sales for most major retailers.
According to 24/7 Wall St. three major reasons include…
1. Some retailers like Footlocker are competing with larger retailers. Sales suffer as a result of not having as broad of reach or brand name recognition.
2. Some are competing with too many retailers of the same size. Market saturation occurs.
3. The final reason is poor management.
Here’s a snapshot of what’s happened to sales for several top retailers between 2005 – 2010:
Sears
Drop in sales: -23.5%
2005 sales: $54 billion
2010 sales: $41.3 billion
Dillard’s
Drop in sales: -23.1%
2005 sales: $7.8 billion
2010 sales: $6.0 billion
OfficeMax
Drop in sales: -22.8%
2005 sales: $9.2 billion
2010 sales: $7.1 billion
Office Depot
Drop in sales: -16.8%
2005 sales: $14.3 billion
2010 sales: $11.9 billion
The Home Depot
Drop in sales: -16.6%
2005 sales: $81.5 billion
2010 sales: $68.0 billion
Foot Locker
Drop in sales: -12.3%
2005 sales: $5.7 billion
2010 sales: $5.0 billion
The Gap
Drop in sales: -9.4%
2005 sales: $16 billion
2010 sales: $14.5 billion
J.C. Penney
Drop in sales: -5.9%
2005 sales: $18.8 billion
2010 sales: $17.7 billion
As you can see, COMPETITION seems to be the biggest reason for falling sales. But is it the real reason? Because when you think about it almost every business in every industry has lots of competition. Seems to me that’s just an excuse for poor performance.
In my opinion, the main reasons for falling sales are…
1. They don’t care about individual customers. When’s the last time you got a card from a retailer with a message that was important to you? Never? No kidding! Neither have I. Don’t hold your breath waiting… because… it’ll probably never happen. The big retailers feel “entitled” to your business. They don’t think earning it is important.
2. They don’t make the buying experience fun and exciting. Ever walk into a Home Depot? The one I go to from time to time is like morgue. Finding someone to answer a question takes five trips around the damn warehouse. That’s no fun.
3. The biggest reason is a lack of marketing initiative.
Big retailers rely on “same old” marketing like: boring TV commercials… coupons in the mail (that’s a good one)… and… traffic generated by malls. What they don’t do is segment their lists and market to specific interests based on the buying behavior of their customers.
Consider this: The very best way to sell is to have a specific offer to a specific market segment that solves a specific and immediate problem.
At any one time, retail customers face different issues. For instance, think about all the people buying diapers and baby stuff from Target, Walmart, etc. This buying cycle lasts about 3 years. If retailers wanted to boost sales they could track their customers buying baby goods. And send them specific offers… or… even create some kind of “Baby Stuff Club.”
But the retailers can’t be bothered. Because that would take time, a little ingenuity and someone with an accountable marketing mindset to make the program work.
It’s much easier to rely on dumb corporate commercials, hit-or-miss walk-in traffic and all the other “innovative” marketing approaches they continue to use.
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“The very best way to sell is to have a specific offer to a specific market segment that solves a specific and immediate problem”.
I am putting that sentence up in my office – there is an incredible amount of marketing and business wisdom in that statement and something that almost all business owners have any clue about (large or small).
Thank you so much!
Wayne
Wayne
August 4, 2011 at 1:54 pm
It’s the Dan Kenedy mantra of, “Message, Market, Media.” Have a specific message to a specific market and send it to them via the media they will respond to.
John Anghelache
August 4, 2011 at 5:19 pm
I love how you presented that idea. Sometimes you see an idea presented a different way and it just seems to really click.
Many business owners don’t get the concept about solving problems. We don’t offer products or services, we solve problems.
Thanks again.
Wayne
August 4, 2011 at 8:52 pm
I agree that these retailers use marketing techniques that generally don’t work. They spend a lot of money to generate “top of mind awareness”, and as I understand it, are generally discouraged from trying to measure any marketing results.
Not to diminish any of your points, I think the bigger issue for the sales decline is the economy. In 2005, the economy was probably the strongest it ever was in the 2000′s, but in the intervening years, it’s fallen off a cliff.
I believe that is the MAJOR cause of the sales decline you note in your statistics. People won’t spend as much if they have less money and are not optimistic about the future.
There is a guru out there who believes that most Real Estate websites and copy that exist are horrible, so he developed a course for which he charges almost $1,000 that purports to teach people how to write exciting, compelling copy for the Real Estate Market. This knowledge will presumably increase Real Estate sales, and the lucky copywriter can then charge lots for his services.
This course was released (as I recall) in 2009. The problem (at least in my opinion) is that the Real Estate market was in the tank at that time (Big Real Estate Meltdown in 2008) and is still in the tank. So for the poor people who purchased and mastered this guru’s material, is it their fault that they or their Real Estate Broker clients still can’t sell much real estate? I know the guru will certainly claim it’s not his fault.
In both cases, sales are down mainly due to the overall economic situation. As John Kennedy said- A rising tide lifts all boats.
gjforsth
August 4, 2011 at 8:30 pm
I agree in principle.
My post was more about what the retailers could of done to keep sales up. For example, real estate is certainly in the tank. But not everyone in the RE market is struggling. I know of several investors who figured out a legal way to flip residential homes to investors who are buying up properties and keeping them for the long haul.
The “flippers” are making six-figures incomes across the country. The “keepers” have the staying power to wait out the market.
Likewise, retailers could find niches within their stores and cater to those niches. Not everyone is financially strapped. It’s a mindset the retailers just don’t have. Either way hopefully everything will work out.
John Anghelache
August 4, 2011 at 8:42 pm