Retail in recession - 5 tips for your stores to emerge from the crisis on top

The Swedish Retail Federation's barometer from August 2022 shows that confidence in the retail sector was the lowest so far this year and the Swedish Institute of Economic Research (KI) has stated that Sweden is entering a recession. They predict that interest rates will only start to fall in the autumn of 2023, with the result that consumers will gradually regain more purchasing power.

But as Winston Churchill put it so well: "Never let a good crisis go to waste". So here are five ideas for how your stores can come out of the recession stronger.

1. Focus on profitability

To take a page from the big companies' book - when times get tough, the focus shifts from growth to profitability. It may be difficult to make the same drastic shifts that you read about for some tech companies, for example. But certainly there is scope to review your offering and identify where you are most profitable. 

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This can be on a large scale as well as on a small scale. Are there shops you shouldn't keep or are there new places you should set up? Can you find new partnerships with suppliers to find additional win-win situations in your offers and promotions? Do you have products and categories with better margins that you can better expose? 

2. Order and tidiness, money on Friday

When things are going smoothly, the focus is often just on delivering. Short-term solutions are found to put out the fires that are here and now. It's easy to lose structure and routine in the midst of it all. 

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Now that the pressure is off, it's a great time to take a step back and start looking at what processes and practices you actually help with and embed them in your stores. It's also the time to catch up on clearing stock, reviewing premises and training staff. All to be ready to exceed customers' expectations when they return.

3. Become more competitive

All companies have strengths and weaknesses compared to their competitors. A downturn provides an opportunity to step back and identify your strengths and weaknesses and use them to set a new strategy for the future. 

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Getting this kind of change across all stores and all sales people takes time. So why not get started right away to use this quieter period to be fully ready to take a bigger share of the market when the customers start pouring in again.

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One example of a company that has come out of a crisis stronger than ever is Hemmakväll, which had to completely change direction when the video rental business went under. But they let the former incremental sales become the mainstay of continued profitability (read more about their journey in our customer case study).

4. Make the most of your shop staff

For most, a recession means changes in the workforce. This is unavoidable, and in retail there is a higher than normal staff turnover from the outset. This makes it particularly important to retain the best staff. 

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One tip is to actively work to increase employee engagement through, for example, training and team building. It is important to address any attitude issues and actively focus on those stores where it is not at its best. Which brings us to the final and absolutely most important point. 

5. Make sure to help every customer who enters the store

This is always a key to success, but it becomes even more important when not as many customers actually come into the store. All staff, including the extra staff who only work every other Saturday (including the Saturday after payday) must be able to help the customers who do come into the store.

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They have to greet the customer, they have to understand the customer's needs in order to guide the customer in the choice of product, to be able to argue for the right product even though it might not be what the customer had in mind, and finally to be able to offer as an additional sale the complements that will make the customer's life even easier.

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Success begins and ends with a smile.

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