I’m taking a break from finishing the Calliope business plan for 2017/18. We’re a small business with two shareholders, three stores plus a website, so this is a swift process.
And I’m writing this in between the Prime Minister’s Brexit strategy speech, and the inauguration of the next President of the United States. I am planning during “interesting times”.
There are advantages to being small – we don’t have to consult too much, and we can turn on a sixpence.
The disadvantage of course is that our leverage is limited, and the big change over the past couple of months is supply-side inflation.
Ups and downs
Whether our customers’ favourite brands are manufactured in the UK or overseas, they’ve been hit by the fall in the value of the pound.
Most are swiftly sharing the impact with us, and we’re now seeing price rises from a large number of our suppliers, as the price of every raw material rises, from glitter to essential oils. (Welcome to the gift trade.)
“Within the retail universe, even seismic change has historically taken time to evolve. Lidl, for instance, launched in the UK in 1994, and Amazon and Zara arrived in 1998”
Without a big cash cushion of our own we will have to watch our costs, and apply price rises in a considered manner, potentially tying them into multi-buys and other deals to ensure we can still offer value to our customers.
We’ve just had our best-ever December (by any metric), so in more benign and predictable circumstances we’d be feeling pretty bullish.
We know we have an offer that works for our customers, and it’s one we’d like to roll out to more locations.
But during ‘interesting times’, and with our own money on the line, we need to be prudent, careful and clever.
Two things I think make 2017 different: the uncertainty about what might change, and the speed with which change could happen.
It was clear from the start that they all offered something new and different, but it took some years for their impact on established competitors to be felt, and often longer for the establishment to respond.
Coping with change
The changes driven by Brexit and Trump will be external and geopolitical, and, if they impact on inflation, jobs or security, they could be felt by all of us, before we’ve had time to consider and plan for the consequences.
My hunch is that there’s a great deal of scenario planning taking place in Britain’s retailers right now, and probably quite a lot of discreet options being tested in below-the-radar locations.
Good retailers are fortunate in that our customers trust us to do all we can to serve them and to run honest, reliable businesses.
With trust in short supply at the moment, these are qualities of exceptional value.
In 2017 all of us, however large or small we might be, will have to work hard to retain that trust and bring our bricks and our clicks through these challenging times.