How Will a Recession Affect Your Multichannel Operation?
Recession storm clouds are darkening the sales outlook for many catalog/multichannel merchants this year. How bad will it get? What metrics can you use to forecast a downturn in response rates and sales? Consider the following points when predicting sales results in this soft economy.
* Compare housefile buyers and prospect segments for year-over-year sales. Ask yourself: “Are the same segments delivering the same sales per book as last year?”
* How are sales compared to your budget or plan? How are weekly and monthly sales compared to last year? If the same circulation is delivering fewer sales, where’s the softness?
* How are your merchandise categories performing? Do you have categories that are more recession-proof than others?
* What are you hearing from your vendors regarding how sales are holding up for the manufacturers and vendors who supply you? If your merchandise category softens, how can you maintain or increase your market share?
5 Ways to Ride Out the Storm
Now that you know what to look for, what can you do if you see sales slowing? Here are five steps to help you weather the storm.
1. Protect your profitability by cutting back on marginal circulation.
2. Protect your cash flow by ordering less merchandise.
3. Monitor staffing levels.
4. Look at potential savings in printing your catalog, including cutting paper weight, paper grade or trim size.
5. Look at financial “what if” scenarios from a sales decline.
If sales are slowing because recessionary fears are pulling down response, your profits are likely headed for the same fate. Be proactive, and present catalog circ planning options that preserve profits and/or sales — hopefully both! And know that senior management will usually choose to preserve profitability at the expense of sales.
But the key is to present options to management ASAP, so you’re planning for a slowdown rather than reacting to one that’s already happened.