Entrepreneurs tend to see opportunity in adversity, but the severity of the 2008 downturn sorely tested that. Here's what four current or former Inc. 500/5000 retailers learned from last year's collapse -- and why they are feeling better prepared this year.
CEO and co-founder
Rather than retrench and hope things get better, I hired a more senior management team and launched a new business model and a new website. We're moving toward a more focused Web-based, community-based social-networking model.
Every year, as long as I can remember, we mailed out a catalog at Christmastime. Last year, we mailed 150,000 catalogs. This year, we didn't even print a catalog. We're banking on the word of mouth from having a network of mums out there, either on Facebook or Twitter, spreading the word that this is a great company and we've got great books. I don't know what the fourth quarter will bring -- I hope it will be good, but I'm not relying on it. I'm hoping I've managed to put in place the building blocks and foundations for 2010.
Daddies Board Shop
We ordered 10 percent more than last year, and I'm glad we did. We've already had to reorder certain products, and it has been high-end stuff. There is still money out there.
The discounting that went on last year was terrible; it was almost cutthroat. This year, we have no intentions of discounting. I've been very honest with customers. We just got these boards in; why would I discount them? We have businesses to run; we're not nonprofits. Besides, customers are sick to death of seeing "Sale" signs. The whole world is on sale; they don't mean anything anymore. We may have to spend a little more time explaining why this snowboard costs what it does, but that's nothing different from what we've been doing for the past 14 years.
This year, we're creating a new line of $24 baskets for people who are extremely budget conscious but still want to send a gift basket. We have to be very careful not to cannibalize from our core sale in the $59 to $79 range.
We do 40 percent to 50 percent of our business in a 25-day window, so we have to be ready. Normally, we have a pretty good sense of what to expect. This year, we really don't know what it is going to be like. So we're building flexibility. We're going to wait to start building our gift baskets and stockpiling inventory until later in the season, and we're going to hire more staff. If sales are terrible, we'll have to send people home. But I'm much more concerned about the other scenario, where sales are really good and we find ourselves struggling to build enough baskets.
Back-to-school sales were a little better than expected, so the signs are good -- but we're still a little gun-shy. We're really streamlining our inventory. Last year, we stocked up on all sorts of brands, so this year, we're keeping lower inventory levels and focusing a bit more on products that can be shipped directly from our suppliers to customers.
We can turn around certain items in our inventory in two weeks, so instead of ordering for three months, we ordered for a month. We'll see how it goes and then order for the next month. We could be surprised with a really strong season, so we'll just have to keep much better reporting on everything. If we see signs of the slightest uptick, we should be able to adjust.