The pigs are fed but unlikely to fly

At a recent conference in Auckland I was addressing a group of mainly marketing executives representing national and international cosmetics brands. I wanted to reassure them that the current economic climate should not be viewed as a recession. If you are unwilling to change the way you do business and continue to play by the old rules then I guess you could be excused from seeing it that way. This is not a recession; it is a tectonic shift in the way business is conducted. There is no point in battening down and waiting for this to pass. This is not a storm you can ride out; it is a change to completely new ways of working.
There is no point in trying to read the tea-leaves down at the stock exchange or listening to the hand wringing gnomes of finance. These people are merely historians, forensic accountants raking over the smoldering coals trying to make sense of the global melt down. They have no view of the future worth considering.
You see balance sheets merely reflect the results of our behaviour, the red figures are what is or is not left when the job is done.
What they can confirm is that business has not been delivering value, the world has been caught up in paper investments, creative accounting and misguided loyalty. We have created a climate of distrust. We have been busy doing nothing other than creating an illusion
We are now painfully aware that business relies completely on trust. If we don’t trust each other then our sphincter muscles cramp; nothing goes in and nothing comes out. Business stops.

There are plenty of examples of old world behemoths. The BNZ, antiquated and lost, their new identity is devoid of any of the three new building blocks. They waste millions of dollars on billboards and TV ads that show us their cartoon, coloured pigs, old world creativity rather than meaningful value. Go into a bank and pick up an empty cardboard box instead of a helpful brochure (another example of creativity gone mad). Ask to talk to a business manager, as I did recently and you will quickly find they know nothing about business and what advice they offer is worse than unhelpful. They will probably blunder on because of their sheer size but sharper, faster and better banking models will overtake them in time.

The news however is good.
In the new environment the three most crucial issues will be common sense, trust and value. If you can provide all of these then you will do extraordinarily well.
The future is about smart long term strategies rather than desperate short term (colourful pigs) tactics.
Not only will you need to deliver but you will also need to communicate these. There will be no point hiding what will set you apart from others.

Do such businesses exist, absolutely?
Kiwibank and ASB are at the front of this new change process. But there are others out there, smaller businesses that are founded on the three platforms and they are doing extremely well right now.

I am impressed with the clever folk Trilogy ( www.trilogy.com ) who have embarked on a campaign requesting that businesses sign up to ‘not using the R word.
Equally I suggest everyone sign up to the concept of delivering commonsense, trust and value

Where to from here for retailing?

What a wonderful job retailers have done training the public to hang off buying for Christmas. The New Year’s sales are now where it is all at. Many businesses who hang out for that last month of the year to do over half of their annual turnover have managed a ‘not so clever shift’. Instead of having the big month with full margins in December they have pushed purchasing back a month and slashed their profits. So they have maintained sales but they have done so at the expense of profits and don’t we consumers appreciate it.
They thought they would have their cake and eat it; a big Christmas and a big start to the New Year.
Well it doesn’t quite work like that. The public has said you can have one or the other, but since you insist we will take the cheap option
Retailers have blown their bolt.
This ploy has been their response to an over subscribed market place and an obsession with ‘sales’ as the ‘no brainer’s’ marketing plan.
So that just leaves another eleven months and the question “what will retailers do now?”
Good question. I’d say they have a monumental problem. Eleven months of sales sounds like Chinese water torture.
Watch for the closing down sales this year folks because there will be many retailers who just won’t make it through to January of next year.
So who will the survivors be?
Those retailers who add value rather than dropping their prices; the retailer who becomes a brand builder.