PUBLISHER'S NOTE
When a business that had built to the scale of
Made.com goes to the wall because of a decision to migrate to heavy investment in inventory holding, having previously made to order, it sounds crazy. But it is emerging that this is what appears to have caused the cracks to widen and the business to run out of money. Having suffered lost demand when stock shortages and problems getting orders out to customers during the height of the pandemic were rife, many businesses chose to buy all the stock they could lay their hands on when they could. Not, perhaps, fully realising that the demand that was driven during all those months of lockdowns couldn’t possibly continue at the same levels. And that that a ‘return to normal’, whatever that is these days, was never going to be easy.
Te vast expenditure by the government on bailing out individuals and businesses via the furlough scheme and assorted bail outs/back to business loans etc has to be recouped somehow. Not to mention the extraordinary investment that continues to be made in the Covid vaccine programmes and the cost of treating all those who have contracted the virus. Attach that to the global economic downturn which can, in my view, be largely attributed to the impact brought on us all by Covid-19 and its sibling strains, together with Putin’s foul war in Ukraine, and we have trading conditions which have changed dramatically for the worse.
A lot of sector businesses are more than a tad concerned, to say the least. Falling demand, lower AOVs, customers simply not spending on anything
other than the absolute necessities. It is harder than ever for most to ‘make the numbers’, even after re-forecasting. What previously worked well simply isn’t cutting it for many sector businesses. Te supply chain issues that have dogged just about every retailer for a good two years now, are not as much of a problem today. Te big challenge now is finding customers who have the need or desire to spend, along with the means.
Does it help to know that many are in the same boat? We’ve all higher costs to bear to hold our own. We’ve all had the stuffing knocked out of us. It is how we respond to these challenges that will differentiate us. I was deeply encouraged at the recent DCA Annual Summit to chat with business owners who have been quietly working to eradicate the ‘nice to have’ out of their operations whilst diverting resource to parts of the business which make a significant financial contribution. Agile adoption of new channels to market, entering into mutually beneficial partnerships, making better use of customer communications, less of the ‘fluffy’, more of the commercial. Te fact is that our loyal customers for the most part really want to be spending with us and are on our side. Tey may not currently be in a position to buy much but if we treat them well, find ways to empathise and help them, then we’ll have a firm foundation to build back on as our economy improves.
Here's hoping that the golden quarter will deliver enough demand to keep us all trading and that we can all end the year on a much more positive note.
JRH
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homeofdirectcommerce.com | Direct Commerce
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