Globally, few countries are unaffected by a coronavirus pandemic that is changing the way we live and work. In Australia and across the Asia Pacific, businesses and entire industries are being forced to rapidly adapt the way they operate and engage with their customers.
One of the worst hit areas of the economy is the retail industry, which has been built on the curation of delightful, in-store experiences between retailers and consumers. With high streets, towns and cities in lockdown aside from only those stores deemed an ‘essential service’, retailers are bereft of the customers, and therefore the cash flow they rely on.
A retailer’s ability to survive through the challenging few months ahead depends on how quickly they can adapt, evolve and pivot their strategy to accommodate the changing needs of a customer base who they can no longer engage with face-to-face, in-store.
While for many, the coming months may be daunting – and cash flow has slowed – it doesn’t have to be the end of a business. In fact, many tech-savvy retailers are understanding the value of an online presence, how it can help them build a bridge towards the retail spring and how it can keep their cash flow flowing in the short- and medium-term.
Crunching the numbers
During these uncertain times, cash really is king and there is a no more important measure to closely monitor both daily and weekly. Before you can put in place systems to help you manage your cash flow, it’s necessary to deep dive into your finances and understand every dollar, where it’s going and where it’s coming from.
Analyse your financial statements and retail reports to understand your cash flow, inventory, and expenses. With regards to your cash flow, determine how much money you have in the bank and how long your resources can last. Knowing how much financial breathing room your business has will help you make decisions on what to do.
Also Read: How COVID-19 is changing traditional retail and e-commerce in SEA
Then consider your stock, and how much of your capital is tied up in your inventory. If your retail business deals with perishable or seasonal goods, how much do you have and how quickly do you need to deal with it? If your business is set up to sell online, identify the products that would have the highest demand and find ways to put them in front of your customers.
Finally, get a handle on how much you owe and when you owe it by. If possible, call your creditors, landlord, suppliers and anyone else and ask them if you can either defer payment temporarily or renegotiate payments. During a global crisis like this one, you might find that people are more altruistic and willing to help you out.
What to cut and what to prioritise
You might find that you can alleviate some of the financial pressure on your business by temporarily putting a halt to non-essential spending. Identify your business’ needs and wants, and cut back on the latter. Expenses like utilities and retail management software are examples of a ‘need’, but things like your in-store Spotify subscription or other luxury expenses would be considered a ‘want’ and thus need to be eliminated temporarily.
Go through your business bank statements to identify your expenses over recent months, then use that to figure out which costs remain essential and what can be put on hold for the next couple of months. It’s likely that every dollar matters, so be ruthless – there’s nothing to stop you reinstating subscriptions and other expenses when normality begins to return.
Unless you’re not doing business at all, marketing is likely an expense you’ll want to maintain, though – especially when considering how it will help you communicate crucial changes and new processes to your customers.
If you’re still selling, it’s more important than ever to get in front of your customers. Identify which channels, campaigns and efforts have the potential to deliver the best ROI, then double down on them.
Improve cash flow
Cutting non-essential spending will ease cash flow concerns slightly, but you still have to find ways of bringing money into your business. What products do you sell that would help people navigate these times? With more consumers staying home, do you have items that can help your customers be more productive while working from home?
Also Read: How COVID-19 is changing traditional retail and e-commerce in SEA
If your retail business sells homewares, fitness equipment or arts and crafts, for example, you might find your products in high demand. If you have a lot of excess stock, that’s a lot of money tied up, so consider how you can incentivise people to buy it through promotions or discounts. Gift cards, too, could be a great way to get money flowing into your business so look for ways to build that into your sales plan, too.
Don’t be afraid to ask for help
While it’s easy to feel adrift and isolated, we’re a community and we’re in this together – it’s OK to ask for help. Governments, businesses and industry bodies are rushing to create programs to help small businesses stay afloat during these turbulent times.
In Australia, for example, if your turnover has reduced by over 30 per cent, you may qualify for a government subsidy through the new JobKeeper Payment. It’s a fortnightly payment of AU$1,500 per eligible employee for a period of up to six months.
In addition, the Government has agreed to a temporary ban on evictions over the next six months for commercial and residential tenants who are unable to meet their commitments due to the impact of coronavirus. There’s also a series of business support funds and initiatives being introduced in states and cities across the country.
In Melbourne City, for example, businesses may be eligible for AU$5,000 worth of grants to develop an e-commerce site. Another great resource is LoveLocalRetail. Powered by Vend, it’s a coalition of tech companies coming together to provide advice and offers to help small retail businesses respond. Please, wherever you’re based and whatever you sell, don’t be afraid to reach out and ask for help.
The independent retail industry in Australia and across Asia Pacific is a resolute and dynamic community, capable of great innovation and overcoming challenges. This may be the biggest challenge many of us have faced, but by taking quick and adaptable steps to take charge of your short- and medium-term finances, you might find that the challenge seems that little bit more manageable.
We don’t have a crystal ball, so we don’t know exactly how long the current situation will last, but we’re confident that a beautiful retail spring will dawn, with busy high streets, beautiful shop fronts and delightful experiences between retailers and their customers once again.
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