There is no doubt that the year ahead will be a challenging one. It may represent the worst trading conditions for over 20 years - although the market will still grow, albeit marginally, cost base inflation is likely to outstrip growth in the top line for many.
I see three key challenges for retailers. Those managing them effectively will emerge from this difficult time leaner and stronger. It's all to play for!
Delivering value:
Two camps - finding growth, either from new markets (a challenge given difficulties at the current time) or increasing market share, and optimising costs and cash. The best performers will have ongoing plans to realise 5-10% cost savings in certain areas which will offset rises in the remainder of the business. They will also act decisively to 'fix'/exit the worst performing units to mitigate value leakage.
Preparing for uncertainty:
A robust plan is critical but it will also have in-built contingency plans which can be enacted under different trading outcomes. The quality of up to date and accurate information will be key to enable speed of response. The ability to flex supply and respond quickly and effectively to changing market conditions will be a differentiator.
Lack of experience:
Many of the leaders and key stakeholders in the sector today will not have seen such trading conditions in their career. Drawing on the knowledge and experience of some of the 'longer serving' players will be hugely valuable as will ensuring management teams stay focused and respond as conditions change.
Sounds easy? Indeed, it does, but in this environment, those with the broader and all encompassing retailing skills, who are already well down the road to responding to these challenges, will shine through.
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