The Flip Side
I got off the plane and felt like I’d landed on another planet. I picked up a paper and saw a headline that read: “Retail sales in December rise for the 7th consecutive month.” The news included stories about rising interest rates, job growth and increasing wages.
I was excited to read a story about the country’s largest home goods retailer reporting a 13 percent increase in fourth quarter sales, largely from sales of flat screen TVs. The company reported plans to open 50 new stores in 2008.
The report was not from Best Buy or Wal-Mart, but from Australia’s Harvey Norman Holdings Ltd. I was not on a different planet but certainly in a different economic world.
The strength of the Aussie economy reminded me that business is cyclical. Periods of strong growth are almost always followed by a tougher business climate.
It’s not easy to ride out these storms, but successful businesses have found ways to come out stronger on the other side. The actions you take now can ensure that your business is around when the tide does turn.
With slowing housing starts, tightening credit and near $100-a-barrel oil prices, consumers are showing caution in their spending.
All indications are that the consumer electronics industry—driven by new gaming platforms, flat screen TV and MP3 products—will far exceed the anemic sales growth that might be predicted for the rest of retail.
Even with a leg up on other industries, success in the near term will be driven by action and not by market conditions.
ACT—DON’T REACT. More than before, you need to develop a game plan for your business. If slowing home building has constricted contractor sales, what will you have to do to regain some of your retail foothold? If lowered flat screen prices are decreasing your average sale, how can you bring it back up?