Darwinian Economy in Reno/Sparks
Time to grab some more market share!
If your company has survived the downturn until now, you are probably in a better position than about 30% of your competition…or should I say former competition? Times are tough, but lets take a look at the big picture- Here in Reno, layoffs and downsizing is becoming more and more common, making hiring easier. Retail space is cheaper and easier to acquire, landlords don’t have much to negotiate with now that vacancy rates are approaching record highs. Suppliers are offering incentives and discounts like never before. Take advantage of it!
It’s been a year of devastating losses. More than 1.2 million jobs have vanished. The broadest measure of the stock market, the Wilshire 5000, is down more than $7 trillion, a 40 percent slide. The indicators that have increased are measures of misery, like foreclosures and demand at food pantries.
Survivors, however, should benefit as competitors disappear. Retailer Bed Bath & Beyond Inc. won’t have to contend with Linens ‘N Things, which is in liquidation. Best Buy Co. may not be fighting price wars with Circuit City Stores Inc., which is reorganizing in Chapter 11 bankruptcy. FedEx Corp. won’t scrap for market share against DHL Express, a German-owned company that is leaving the U.S.
Staying in business won’t be easy — sales declines are a given and job cuts are likely to continue. But we won’t remain in the dumps forever, and the companies that will be best positioned when the economy eventually improves may include the following:
Expanding Reno retailers
Kohl’s Corp. and Forever 21 are rare among retailers: They’re expanding. They have their pick of new locations, since failed competitors mean they can get bargains. The Bombay Co., Sharper Image Corp. have closed all their stores in the past year, leaving empty space at malls nationwide; meanwhile, Mervyns is in the process of liquidating.
As a result, landlords that once demanded tough terms from retailers — insisting, for instance, that they rent space in second-tier malls if they wanted to open stores in top malls — are in no position to negotiate, since they have so much empty space to fill. You may be surprised to see the rates inside Meadowood Mall now, and the Summit Sierra isn’t asking anywhere close to what it was in 2007.
Some local Reno retailers are in a prime position to expand as we see the competition close their doors. One example is a local lawn and garden retailer that is taking benefiting from the misfortunes of one of their competitors. The competitor was forced to close up shop, at the same time offering it’s remaining inventory, location and equipment to the other retailer at bargain-basement pricing. The out-of-business retailer was able to liquidate quickly and painlessly, while the dominant company was able to acquire market share for pennies on the dollar. These opportunities do not come along that often in a thriving economy, do whatever you can to take advantage of them now.
Cheap alternatives
Do you have a product or service that you can offer cheaper than your competition? Now is the time to take the hit on the bottom line in order to gain market share. I’m not talking about price fixing, I’m just suggesting aggressive competition. Perhaps you are already at your bottom line…what else can you offer? Same day estimates? Superior customer service? Find whatever it is that differentiates you from your competition and run with it. Buyers are more interested in saving money now than ever. You may be surprised to see customers that have been with your competition for years or decades are now open to trying something new…if the price is right.
Re-investing in your company
New gear and software is a great way to improve productivity. As a result, business’ technology spending may be postponed, but it won’t be canceled. Is there a software suite out there that you have been wanting to buy for your company? How about new equipment? Have you been postponing upgrading your storefront? How about your marketing budget? The point is- we’re all in the same boat now, and everyone is hungry. Is it time to upgrade the fryer in your restaurant? Give Resco a call, I’m sure they can make you a deal. How about that new diesel truck for your catering company? I can’t think of a better time to get a good deal at the car dealership than now. Has your marketing budget taken a beating? You’d be surprised at how far you can stretch those dollars now. Reno advertising agencies have seen their budgets slashed across the board, and everyone is starting to get creative (ourselves included!).
To summarize- times are ugly, but this may be the once in a lifetime chance to buy and expand for a fraction of the normal cost. If you are able to, get aggressive and give the completition a run for their money.
