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From June 2008
By Walter F.
Loeb
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Sponsored by
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| Speaking at
a financial analysts meeting in April,
JCPenney chairman Mike Ullman said that
he did not want to make a projection of
earnings for the current year, only one
quarter at a time. He was not sure how
the hostile economic environment was
going to affect his company’s earnings
or how it will affect the industry in
general. |
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I thought that he was being very honest in his
comments to analysts: He wanted his thinking to
be as transparent as possible and have everyone
draw their own conclusions. Other retailers
(like Coach) have followed Ullman’s lead and
declined to make projections for the current
year.
I think that there is no point in posting
estimates when the environment is so uncertain
that one can not provide the good guidance that
followers of the company have come to expect. As
a result, I think that it is likely that there
will be a wide range of estimates based on
various scenarios that analysts may be painting
for the economy in general.
Transparency has become a watchword for the
retail industry. Not only must financial
information be honest, but product information
has to become more effective in order for
consumers to make the right purchasing
decisions.
Info must be available
Often, retailers rely strictly on point-of-sale
price tags to tell a product’s story, yet the
few data points that are displayed usually do
not answer all the questions a consumer might
have. In order to develop greater consumer
trust, there must be ample information available
for them to make a decision – be it for a
camera, a computer or a washing machine.
The consumer’s demand for information is often
complex and in need of amplification. In many
cases, the salesperson is unavailable and the
consumer is left to her own devices. Unless she
has read Consumer Reports or some other guide,
there is little information available in a
self-service environment.
Associates — whether wearing the blue shirts at
Best Buy or the orange aprons at Home Depot —
can and do help — when they are free. In my
experience, however, it is rare that personnel
are available for consultation (my recent
attempt to purchase an HDTV became a real
struggle since I was not sure about the pros and
cons of the various formats – plasma, LCD and
DLP).
Create value and trust
Deloitte and Touche’s Pat Conroy states that
retailers create value and trust by increasing
responsiveness to customers — improving the
ability to sense needs, interpret requirements,
frame responses and learn from outcomes. It
ranges from interpreting weather conditions to
change in the mix of goods shipments to adapting
to changing market conditions.
In order to compete, retailers must be
responsive to changing consumer dynamics and
involve customers in creating value. While
stores must have a consistent price strategy in
all classifications, an awareness of the
competition may make a product more or less
desirable.
Transparency has to start at the top, but every
associate must understand the power of an open
door and access to information. Knowledgeable
associates who share their information generate
trust in themselves, their company and the
products they are selling. |
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