The Post-Recession Opportunity: Recoveries Create New Winners

Posted on December 22, 2008 in Featured, Marketing

A recession is part of the normal business cycle, and we will get through this one, just like all of the others. But things will be different in the next business cycle. The change will be an opportunity for the companies that understand it and address it.

This recession has been particularly hard for independent retailers, with many going out of business and many more business failures to be expected in the next year. When the next recovery comes, I think the retailers that will replace those that closed during the recession will be very different.

This recession is going to drive a lot of retailers out of business, as it has been doing for the last 8 months. However, people aren’t going to stop buying clothes, and they are not going to lose interest in fashion. The retail apparel market will return, and when it does, there will be a new set of retailers to replace those that went out of business.

These newer retailers will be younger and more Internet savvy, and they are going to drive changes in the rest of the industry. What are these new independent retailers going to be like? Many more of them will be from Generation Y, born starting from 1978 on, and will share many of these characteristics:

They will have grown up with computers and the Internet.
They will be very tech savvy, especially compared to the outgoing retailers.
They will be more demanding, more likely to expect instant gratification.
They will be more likely to question the way things have always been done, and more willing to change things.

These new retailers will drive major changes in the industry. Some of the changes that I anticipate:

They will expect to buy for their stores the same way they buy for themselves: online.
They will expect manufacturers to be flexible in adapting to their business needs and will be willing to drop manufacturers that do not meet their expectations.
They will be more connected to their market niches, using a wide variety of technologies to spot trends.

The changes that the post-recession independent retailers will be driving are not new or novel; they are changes that are already happening. The difference is that in the next business cycle these changes will accelerate.

These changes should be both expected and welcome, because they are the same changes that are happening in the people who are buying apparel, so by adapting to the new independent retailers, vendors and line reps are also adapting to the new consumers.

They Will Be Internet Savvy

The new retailers will expect more of their businesses to run on the Internet, and they will favor business partners that are also proficient on the Internet.

The Internet generation goes to the Web first to find new information—information that is only on paper does not exist to them. They don’t use the Yellow Pages, and they don’t buy printed business directories. So, if they need a line rep, they are more likely to turn to FindFashionRep.com than a paper directory. Fax machines are far less convenient than e-mail and the Web, and they will prefer not to work with vendors who expect orders to be faxed to them.

These retailers will ask all of their vendors a very sensible question:

If I can buy clothes for myself online, why can’t I buy clothes for my store online?

Vendors who are not comfortable working with retailers online will have a significant disadvantage to those who can work online.

They Will Expect Vendors to Be Flexible

Generation Y is used to things happening on demand—they want fast service, last-minute changes, and immediate feedback. They will order a book today and expect it to arrive tomorrow, and they will expect the same kind of turnaround from their business partners. The expectation may not be reasonable, but they will expect it anyway, and they will prefer to work with the business partners who deliver immediacy.

This generation did not create just-in-time business, but since it has been a common experience for them, they will consider it a baseline business practice.

They Are Connected

The new independent retailer is more connected to their markets than past retailers because of a variety of social media that let them have an enormous (although superficial) social network. They can communicate with thousands of people through blogs, forums, Twitter, e-mail, and social network websites. These retailers have nearly instant awareness of the trends emerging worldwide, allowing them to anticipate changes in local buying habits.

This hyper-connectivity has also made them more aware of marketing, demographics, and media. Where previous generations studied marketing and are slowly warming up to new media, the new retailers have lived it and have a fundamental understanding of how media influences people and how people influence media. Because of this, they know when a vendor “gets it” and has crafted an appeal to the right markets. They will expect their vendors to be more than just manufacturers; they will want them to be their marketing partners, particularly with online marketing.

Change Is Opportunity

The changing character of retailers is a significant opportunity and will create new sets of winners and losers among apparel vendors, line reps, and retailers’ other business partners. Partners who want to succeed in the next recovery can start with a simple practice: seek out their youngest retailers and ask them what they expect and what they need. They will be happy to talk about their needs, although they might suggest you follow them on Twitter or post to their Facebook wall.

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