Fast-paced and often unforgiving, you don’t have to look far these days to see the casualties of a competitive retail market. The good news is that there are telltale signs that a retail store is closing.
If you have the same visual clarity necessary to spot these signs when it comes to your own business, you can easily avoid bankruptcy or liquidation.
Small retail, in particular, is often so immersed in day-to-day operations that, ironically, stores find themselves caught by surprise when success starts going south. It’s no longer store A versus store B — eCommerce has dramatically altered the competitive playing field and introduced a dizzying array of unknowns.
Why, for example, should a customer travel to your store and, in many cases, pay more money when they can get an item delivered to their doorstep? If immediacy is your only competitive angle, it may be time to take a critical, improvement-oriented look at your small business.
When you’re preoccupied with the daily operations of your small retail business, the red flags might not be so obvious. Here are the nine important signs your retail store is closing – or in danger of doing so in the near future.
There’s an Exodus of Quality Talent
Bear in mind that this doesn’t necessarily have to mean a mad dash for the door or the departure of a single star employee. It’s meant to encourage vigilance in a pattern – two employees leaving in a month, followed by another a few weeks later, and so on.
Obviously, small retail stores have hiring cycles affected by everything from seasonal rushes to employees returning to high school and college. It’s the departures outside of these familiar events to watch out for.
What you should do: Exit interviews are an excellent way for a business owner to gain valuable insight into why their top talent is heading for the door. Employees that are leaving a company are often far more candid in their observations and assessments.
Their insight will highlight any operational or systematic issues that could be negatively impacting the business, particularly if they are a common refrain among departing employees.
You’re Trying to Do More With Less – a Lot Less
Bootstrapping is a way of life for small retail business owners, but if you notice your tendencies are shifting towards getting even leaner, it’s time to take a calculated look at your point of sale system for trends.
Worried business owners often nickel-and-dime themselves into a corner by cutting necessary staffing hours or reducing the quality on certain items, eventually losing business permanently from disgruntled and underserved customers.
What you should do: Performing a POS check might reveal that shifting business hours earlier or later may be all the change that’s needed to help immediate cost concerns. Where do most of your sales occur? When is the earliest or latest you can prepare for the day while still having everything ready for that rush? You may be surprised how much money – staffing, utilities, and more can be saved by pushing opening a few hours later, or closing up a little earlier.
You Notice Your Competitors Are a Lot More Tech-Savvy
It may seem like there’s a new gadget or program every week. You see them in every trade magazine or industry show, but ignoring it all does your business a huge disservice.
The fact of the matter is that your customers are using tech, period. Your business needs to make sure you’re meeting them where they stand – be it via mobile, eCommerce, location-based social media, or elsewhere.
What you can do: This business scenario is a prime example of the old motto, “the only way to do it is to go through it.” Learn the tech your customers are using and make sure your POS system and marketing strategies can keep pace.
Are your customers looking to pay with tap-to-pay debit cards or NFC smartphone-based payment systems? Do they want their receipts emailed to them, rather than a piece of paper slipped in their bag? Remember, meeting these needs won’t only impress your customers, it’s also about all the money you’ll save on receipt paper and ink that you’ll no longer need to buy.
Your Physical Store Is Looking Dated – and You Aren’t in a Rush to Fix It
No business owner looks forward to the bills that come from resurfacing a counter or getting new carpets. However, worn, broken, or outdated fixtures in your store’s interior aren’t doing you any favors when it comes to projecting a positive customer image.
Your customers’ experience in your small retail store is just as important as their perception of your products. Unless you have truly unique items, a worn storefront is enough to send them into the proverbial arms of a competitor.
What you can do: This is another easy fix with the right tech on your side: nothing signals that you’re interested and invested in your business like updated technology at the register. Once you’ve taken care of updating operations, start with the most egregious old and outdated fixtures first.
If possible, invite a friend or family member to your business that has never been in the store before and ask them for their first impressions, both negative and positive. If you’re able to get a handful of those impressions, the initial negative notes should give you a straightforward, priority-sorted to-do list for necessary physical updates.
You’re Missing Your Regular Customers
They might not have stopped by every single day, but you’d recognize them on the street: familiar, loyal customers that you haven’t seen in a long time. Granted, there’s a chance one or two might have moved away or some might even have individual reasons for being absent, but if you’re missing a chunk of regulars, especially if the problem seems like it’s worse lately, it could be one of the signs your retail store is headed toward closure.
What you can do: If you don’t have some sort of method for signing up customers and tracking data like a newsletter, an email list, and so on, you need to start one immediately. This will give you the equivalent of an open phone line to all of your warm leads at once, as well as a financial trouble-shooting tool that can’t be overstated.
While you won’t be able to tap those specific regulars without an existing contact method, you can stem the flow of sales loss and start rebuilding it with sales, coupons, and events.
Your Suppliers Are Hesitant to Extend Credit or Work With You
Business needs and goals will shift throughout your supplier network. That’s just the nature of the game. However, if you notice a trend of unanswered calls and emails when seeking credit or asking for favorable payment terms, something more troubling could be brewing.
Most suppliers, especially long term partners, are happy to help out a client in a tight spot now and then, but there’s a limit. You might not even realize that you’ve cashed in your brownie points on favors and considerations, but if you’re getting radio silence in your time of need, that could be the culprit. Remember, your supplier partners need to turn a profit too, and you aren’t their only client.
What you can do: Pestering, guilting, or hounding your suppliers is never the answer in this case. If they legitimately owe you credit for returns or damages, pursue it, but don’t make the mistake of thinking they owe you anything beyond your existing contract rates and terms.
One of the best things you can do for your business, financially speaking, is figuring out how to mold your existing business offerings around what you have, rather than overextending your credit line or sourcing a new supplier. The market tends to be considerably more self-correcting than beleaguered business owners give it credit for, and it may be trying to tell you your catalog or stock volume is too bloated to be agile.
You Feel a Sense of Panic About Your Brand
While more obvious from the outside looking in, if you’re feeling a lot of pressure to change your motto, logo, and the overall feel of your business, it could be a subconscious sign that you recognize the status quo just isn’t working anymore. While rebranding does work in some cases, for a business already struggling to pay their bills and keep the lights on, that kind of cost can be a death knell for financial solvency.
What you can do: Listen to your stakeholders – e.g. your employees. Do they think a rebranding and the costs associated with it are a good idea right now? While younger employees may be enthusiastic about trying something new and exciting, pay more attention to the advice you get from those workers that have a long history in business or may have owned a business at one time themselves.
Again, sometimes rebranding can bring a store back from the brink, but more often than not it’s a Hail Mary that doesn’t pan out when the bills come due.
You’re Getting Hung up on Productivity (Read: Micromanaging)
It’s a fine line for an owner or manager, keeping their employees working productively without being overbearing. That said, if you suddenly feel an urge to look at your employees in great detail and criticize small, realistically inconsequential behaviors, you could be driving them out. It’s easy to see an employee lingering on their smartphone during work hours as the cause of a financial downturn, but realistically it’s very seldom the real cause.
What you can do: Bear in mind that your employees are, on some level, just as stressed about your underperforming business as you are. Yes, your business is on the line, but it’s their job as well. They may be engaging in problematic “unproductive” behaviors out of nervousness, side-eyeing the writing on the wall and wondering if they’ll still be employed in a month. The best thing you can do is be candid and transparent with them in terms of how the business is going.
You’ll need to tailor this on a need-to-know basis at some points, but supporting open communication with your employees will also make it easier to solicit their opinions and ideas for business improvement. They’re the ones on the front lines every day with your customers, and they’re also the ones most likely to know where things might have gone awry.
Your Industry Is Facing Huge, Fundamental Changes
VHS tape manufacturers probably weren’t deeply worried when the first DVD rolled off the assembly line, but you can bet the pressure started piling on in the months and years that followed.
No matter how excellent your service or product may be, if the public is getting that product or service through other means, it’s time to start considering diversification. That path might not be an easy one to make, and in some cases, it may be nearly impossible, but when the alternative is going out of business it’s worth brainstorming some creative solutions.
What you can do: Keeping yourself informed is the best defense against getting caught flat-footed in this scenario. Read the trade magazines, participate in online discussions with other industry members, and attend conventions and shows whenever possible.
Even measures as simple as setting news alerts to email you when specific terms or brands show up in the headlines can be helpful. If things are changing, you need to be the first to know so you can course-correct or minimize losses accordingly.
If you’re looking at your monthly receipts and feeling hopeless, remember there’s still time to fix it. There are very few nose dives so drastic that they can’t be pulled out of a tailspin with some cautious planning and course correction on your part. If the signs your retail store is closing are showing up, that’s your cue to act, and act quickly, to avoid closing up shop. Your brand, your employees, and your livelihood all rest on your ability to recognize and remedy these issues, so make sure you’re paying attention.