A Retail Tale
Several retailers’ annual results have been announced this month, some with remarkable performance in the recession (e.g. Hallenstein Glasson and Pumpkin Patch), and some really hurting (e.g. SmithsCity). Retailers are a highly visible group. If wounded, they bleed very publicly, with deep discounting, store closures, and widely advertised clearance sales. I have been involved in and around retail and wholesale businesses forever, so I reflected on their place in the New Zealand economy and did some digging at Statistics NZ. I researched the segmented GDP records, which began in 1972. The percentages below describe a movement in a sector’s share of the total economy, so are not influenced by inflation.
Retailing and wholesaling were once giants of our economy, contributing 19% of New Zealanders’ personal incomes. In the following 35 years to 2007, their share of the aggregate Kiwi pay packet shrank by 32%, to represent 12% of GDP. Our economy has transformed and diversified in these years, with comparable shrinkage in share of GDP in most goods sectors – such as Agriculture (-55%), Wood and Paper Manufacturing (-36%), Textiles and Apparel Manufacturing (-81%), and even Food & Beverage Manufacturing (-23%)!
So where does the growing workforce of Kiwis find work now? Surprisingly, not in central or local government, nor in education, whose GDP shares have stayed pretty constant over those 35 years. The extra jobs and profits have been created in other service sectors such as Business Services (+224%), Cultural & Recreational Services (+130%), Finance & Insurance (+97%), Health (+79%), and Property Services (+74%).
Since the beginning of time, retailing has been a tough game – easy to enter, highly competitive, and requiring rapid response to shoppers’ behaviour, confidence and shifting preferences. Some years ago, I founded and facilitated a select club of leading retail Chief Executives, who met monthly for over eight years to share intelligence, insights, innovations and benchmarks. They were non-competing comrades in a harsh world. Their list of key drivers would be the same today – Skilled and Motivated People on the Team, Customer Satisfaction, Purchasing and Ranging, Achieved Margin, and the ratios of the key resources (People, Occupancy and Promotion) to Revenue. Being skilled merchants, they were daring, inventive, energetic, adaptable, resilient, and always focused on their key measures. Daily sales, stock turn, revenue per person, per opening hour and per square metre, achieved margin, people performance, new store openings and competitor tactics were their main dashboard dials.
Wherever you shop, spare a thought for your retailer – a survivor and unsung hero.