“Growth in potential output (full-employment output) is flagging, languishing below its longer-term and pre-crisis (GFC) average both globally and among emerging market and developing economies,” the report said. This tallies with the average growth rate of the Australian economy post 2009.
Australian retail gross revenue continues to rise with annual MAT growth slightly higher than GDP growth. Volume is of course much higher than dollar growth due to the extreme levels of discounting and self inflicted deflation arising from perceived competitive forces, poor strategic planning and a head in the sand attitude from mass-market brands.
If your view is that your profit is inextricably linked to GDP growth you may as well close up shop now because we are most likely in for at least a decade of slow steady growth – if not longer. The truth however is that profit performance is not solely linked to overall economic growth but rather to your individual performance within the context you face. Shoppers are increasing their spending every year and they are buying more and more stuff – seemingly for less and less money per item.
So as Einstein is often quoted as saying “Doing the same thing time after time, expecting a different result each time, is the definition of insanity.”
Most – if not all – Australian retail businesses cannot continue to do what they are doing, the same way they are doing it.
IT’S NOT WORKING.
The basic fundamental “laws of retail” cannot continue to be ignored and poor performance can no longer be blamed on outside forces when too many smart retailers are increasing profits by double-digit percentage gains year after year in the same markets.
Thinking and acting differently demands putting corporate ego to one side, suspending disbelief and being open to creative strategic change that will lead to the hard work necessary not just to survive but to prosper in the new era of retail where consumer demand is healthy but the retail industry – as a whole – is not.
Retailers are suffering unnecessarily for systemic behaviour at almost every part of the value change, which is self-destructive. The risk of change is dramatically less than the risk of staying the same and while continuing entrenched behaviour is easier, success is the sole provenance of the smart, the industrious, the brave and the tenacious. Every success in retail has those ingredients in spades.
There are no free rides. There is no one else to blame. At this fork in the road, success or failure is in your hands. With a new year comes new resolution. Time to create success by opening up your thinking to what your retail business could be rather than being dragged down by how it is operating now.
Peter James Ryan is a retail expert and head of Red Communication. 02 9481 7215 or firstname.lastname@example.org.