• HOME
  • ARTICLES
  • COLLABORATIVE PARTNERS
  • INNOVATORS NETWORK
  • TRR ANNUAL FORUM
  • WEBINARS
  • PODCASTS
  • ABOUT
  • RETAIL RADICALS
  • SPEAKING
  • CONTACT US
  • PRIVACY

Mobile Menu

  • ABOUT
  • SIGN UP FOR THE ROBIN REPORT
  • Menu
  • Skip to left header navigation
  • Skip to right header navigation
  • Skip to main content
  • Skip to secondary navigation

The Robin Report

Courage

  • ABOUT
  • SIGN UP FOR THE ROBIN REPORT
  • ARTICLES
  • PARTNERS
    • Collaborative Partners
    • Innovators Network
    • Become a Partner of The Robin Report
  • WATCH + LISTEN
    • The Robin Report Podcasts
    • The Robin Report Webcasts
    • TRR/Fashion Institute of Technology Series – Pillars of Change
    • TRR/University of Wisconsin Series – The Next Wave of Retail
    • The Robin Report/Syracuse University 2021 CEO Series
    • The Robin Report Annual Forum
    • The Annual Columbia Business School Retail Forum
  • linkedin
  • twitter
  • facebook
  • youtube
  • spotify
12symptoms.jpg

12 Symptoms of a Dying Retailer

By Mark Cohen   |   March 3, 2015

RR symptoms of dying retailerWe all know when a retailer is in trouble financially. If public, their quarterly results invite critical comments by analysts. Their financial disclosures begin to make reference to problems with loan covenants. Their underlying liquidity and solvency comes under fire from suppliers and factors alike. Often these symptoms are noted too late for any effective remediation to take place. The deathwatch is on.

But are there warning signs that can be spotted before it’s too late?

I would suggest that, in fact, there are 12 symptoms of a dying retailer:

  1. Reductions in selling space. Stores that close off selling space abruptly are often signaling a crisis in lost productivity. Beware the department store that suddenly shutters its upper or lower floors.
  2. Reductions in inventory. Stores that begin to exhibit chronic stock outages, either empty shelves or lack of continuity in colors and sizes of ongoing merchandise, are often signaling a liquidity problem. A mass merchant, big box specialist or grocery chain that can’t adequately stock its shelves is sliding down a slippery slope that can be hard to escape.
  3. Unexplained elimination of classifications. This sometimes foretells a retailer that is beginning to lose its way. A healthy retailer finds ways to make difficult merchandise categories viable rather than eliminate them. The decision most department stores made in the 1990s to trim consumer electronics and housewares in favor of apparel and accessories — because those categories didn’t have enough margin or exhibit enough turnover — was a bad decision that is now coming home to roost.
  4. Reduction/elimination of amenities and services. A retailer that stops offering free or inexpensive gift wrap, and adequate boxes and bags for customer purchases, is also exhibiting worrisome behavior. Reductions in selling hours that don’t conform to competitors’ policies is another red flag.
  5. Wholesale changes in return policies. Returns are a never-ending challenge for all retailers. Appropriate changes that reign in aberrant customer behavior, without undue effect on customers at large, are a sign of a healthy retailer. But when changes take place that are completely inconsistent with past company policies and competitive practices, it is often a sign of inner turmoil.
  6. Deterioration in merchandise quality. Taking quality features and benefits out of merchandise and services is always an all-too-available stratagem for retailers looking to improve their gross margins. But it is almost always a fool’s errand. Customers notice when apparel doesn’t fit or wear well; when features and benefits have been withdrawn or made available at higher prices than in the past; and when packaging begins to look cheap and cheesy. Merchants under pressure, without adequate leadership, will often see this as path of least resistance. Once set in motion, however, this course usually becomes irreversible. Customers rarely give retailers who exhibit this behavior a second chance.
  7. Reduction in marketing spending. Stores that are having trouble paying their bills often begin to reduce their marketing spend disproportionately. Cheaper paper and fewer pages in newspaper inserts, less attention to quality of artwork, smaller media distribution, and failure to repeat historically successful fashion and promotional events are all harbingers of trouble. Hand in hand with this is the imposition of unreasonable and unwarranted demands on vendor partners for increases in advertising allowances.
  8. Loss of price competitiveness. All retailers are sensitive to competitive price issues. When a retailer suddenly begins to be less focused on this they are definitely heading for trouble. Failure to set prices properly, and then adjust prices, as necessary, is a symptom of a loss of integrity in customers’ eyes.
  9. Reductions in customer service. Unwarranted reductions in selling expenses by understaffing departments; cutting back sales support; providing fewer cash wraps, check out stations, and pick-up desks; and cutting back on customer service are all early warnings that something is going awry. If you are a customer and can’t get a sales representative to talk to you in a store or on the phone, you need to take your business elsewhere. If you are a vendor and you can’t reasonably correspond with your retail client, then you, too, need to think about taking your business elsewhere.
  10. Reductions in lighting. Does a store start to look dark and dim? Has the store actually begun to turn its lighting down by removing bulbs, or is it merely failing to replace the bulbs that have burned out? Hand in hand with this is inappropriate heating and air conditioning.
  11. Deterioration in housekeeping. Stores require constant attention to housekeeping. This includes everything from neat, properly presented merchandise to clean selling floors, wrap stands, and rest rooms. Dirty, disheveled stores are accidents waiting to happen.
  12. Deterioration in physical plant. Stores whose buildings and property are in disrepair are signaling larger troubles. Leaking roofs, unlit external signs, poorly maintained parking lots, entrances and docks are all signs of an organization that is coming off its rails.

Anyone who patronizes a retailer demonstrating some, if not all, of these symptoms might want to take their business elsewhere. As a vendor, supply a retailer who is in this condition and you may be in for a rude awakening when it suddenly stops paying its bills. Work for a retailer that is operating under these conditions and you should look for another employer before you really do need another job. These 12 symptoms are a chronicle of a death foretold.

Read more on Management

About Mark Cohen

Mark A. Cohen has been in the retail business since 1971. Of his 35 years’ experience in the industry, more than 20 were in president/chairman, chief executive officer level positions. Most recently he was Chairman/CEO of Sears Canada Inc., Chief Marketing Officer and President of Softlines of Sears Roebuck & Co., Chairman/CEO of Bradlees Inc., and Chairman/CEO of Lazarus Department Stores. He has also held positions with Abraham & Straus, The Gap, Lord & Taylor, Mervyn's, and Goldsmith's Department Stores. He currently serves as a Professor by Contract at Columbia University’s Graduate School of Business, and as an independent consultant to retailers, as well as marketing, manufacturing and technology partners serving the retail industry. He has a B.S. in Electrical Engineering from Columbia University and an MBA from Columbia’s Business School.

H&M Tries to Amazonify Operations by Hosting Competing Brands
Is Best Buy Unplugged?
Return on Experience, the New Metric
A Closer Look at Retail & Labor in Inflationary Times
Hidden Opportunities
Private Retailing: For Your Wallet Only
Will BOPIS and BORIS Replace Delivery?
The Good News and Bad News for Kohl’s
Sustainability Can Be Deceptive

H&M Tries to Amazonify Operations by Hosting Competing Brands

Is Best Buy Unplugged?

Return on Experience, the New Metric

A Closer Look at Retail & Labor in Inflationary Times

Hidden Opportunities

Private Retailing: For Your Wallet Only

Will BOPIS and BORIS Replace Delivery?

The Good News and Bad News for Kohl’s

Sustainability Can Be Deceptive

CONNECT WITH TRR

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube
  • HOME
  • ABOUT
  • BROADCASTS
  • CONTACT US
  • SPEAKING
  • RETAIL RADICALS
  • PRIVACY
  • Account

Copyright © 2022 · Robin Lewis, Inc. All rights reserved. Copying or reproducing, by any means whatsoever, of The Robin Report, or any distribution hereof, in whole or in part, without the express written consent of Robin Lewis, Inc. is strictly prohibited. The Robin Report is published for senior executives in the retail, fashion, beauty, consumer products and related industries. The opinions expressed herein are not, and should not be construed as investment or other advice. All expressions of opinion are subject to change without notice.

GET GREAT CONTENT
DIRECTLY INTO YOUR INBOX