Don't blame the downturn

With the possible exceptions of Country Road, Super Cheap Auto, JB Hi-Fi and Woolworths, there is not a lot to cheer about. Pacific Brands, Noni B and Clive Peeters have produced disappointing results and gloomy forecasts.

Fantastic Furniture MD Julian Tertini told investors that there are so many unknowns, he is struggling to provide specific guidance, but went for a likely 20 per cent downturn in earnings.

Gerry Harvey is being kind enough to share month-to-date sales figures on a weekly basis. The first of these showed sales falling by 5.8 per cent on a like store basis, but most recently improving slightly to -3.6 per cent on a like store basis.
There are many reasons why sales fall. While the economy is certainly one reason, advertising activity, both qualitative and quantitative, is also vital, particularly in advertising-driven sectors, such as consumer electronics. Getting the offer wrong is another.

Last August I was at the National Retail Forum where Ferrier Hodgson retail specialist James Stewart spoke about why retailers struggle and fail. The economy is very rarely the reason. The far more likely culprit is a failure to keep the offer relevant to customers and a related death by ego, evidenced by being stubborn and unwilling to change.

As Woolworths, JB, Super Cheap Auto and Country Road demonstrate, it is very possible to turn a profit in tough times.