Retail in a recession – 5 tips for how your stores can come out on top

The Swedish Trade Federation's barometer from August 2022 showed that confidence in the retail sector was at its lowest for the year, and the National Institute of Economic Research confirmed that Sweden was heading into a recession. They predicted that interest rates would not start falling until autumn 2023, after which consumers would gradually regain purchasing power.

But as Winston Churchill so aptly put it: "Never let a good crisis go to waste". So here are five ideas for how your stores can emerge stronger from the downturn.

1. Focus on profitability

Taking a page from the corporate playbook – when times get tough, focus shifts from growth to profitability. It may be difficult to make the same drastic changes you read about in certain tech companies. But there is certainly room to review your offerings and identify where you are most profitable.

This applies to both the big picture and the small details. Are there stores you should close, or new locations where you should establish a presence? Can you find new partnerships with suppliers to create additional win-win scenarios in your offerings and campaigns? Do you have products and categories with better margins that you could give more prominent placement?

2. Get your house in order

When everything is running smoothly, the focus is often just on delivering. You find short-term solutions to put out the fires that are right in front of you. It is easy to lose sight of structure and routines in the process.

Now that the pressure is not as intense, it is an excellent opportunity to take a step back and look at which processes and routines actually help you, and embed them in the stores. This is also the time to catch up on clearing out inventory, reviewing premises, and training staff. All to be ready to exceed customer expectations when they return.

3. Become more competitive

Every company has strengths and weaknesses relative to their competitors. A recession provides the space to step back and identify your strengths and weaknesses, and use that insight to set a new strategy going forward.

Getting this kind of change implemented across all stores and with all salespeople takes time. So why not get started right away and use this quieter period to be fully ready to capture a larger share of the market when customers start flowing back in.

One example of a company that emerged from a crisis stronger than ever is Hemmakväll, which had to completely change direction when video rentals died out. They turned what used to be add-on sales into their core product while maintaining profitability. (Read more about their journey in our customer case study.)

4. Invest in your store staff

For most companies, a recession means changes in staffing. That is unavoidable, and in retail, staff turnover is already higher than average. This makes it even more important to ensure you retain your best people.

One tip is to actively work on increasing employee engagement through things like training and team building. It is important to address any attitude issues and actively focus on stores where morale is not at its best. Which leads us to the last and most important point.

5. Make sure you help every customer who walks through the door

This is always a key to success, but it becomes even more important when fewer customers actually walk into the store. All staff, including the part-time employees who only work every other Saturday (including the Saturday after payday), must be able to help the customers who come in.

They must greet the customer, understand the customer's needs in order to guide them in choosing the right product, be able to make the case for the right product even if it was not what the customer originally had in mind, and finally be able to offer complementary products as upsells that will make the customer's life even easier.

Success begins and ends with a smile.