Our market is shrinking.
The 2010 census showed that we have 3200 fewer children in the county than we did in 2000. For four straight years the number of births in the county has dropped from the previous year. Plus, people are spending less on toys than ever before thanks to the economy and the electronics market.
The toy-selling pie has shrunk considerably. (In fact, it is more of a tart than a pie right now.)
Yet, I still have all the same competition. More, if you include the explosion of ecommerce websites. My expenses like utilities, health care, and property taxes continue to go up. And my access to profitable lines of products gets smaller each year as vendors use discounting sites to move their products or choose to sell direct online.
Sounds like a recipe for disaster.
There are three ways to combat this disaster and stay profitable as a company.
Right Size Your Business
Rather than focus on growth, focus on being the right size for your market. Shrink your overhead by moving to a smaller location. Trim the fat out of your staff by letting the poorest performers go and training the remaining staff to do more. Bring some of the outside services like payroll and accounting back in house.
Rather than lament the losses, figure out exactly what the market will bear and what your take of that market should be. Then build your business around that size.
Grab Market Share
When the pie is shrinking, you need to get a bigger piece of it. You do that by hyper-focusing on your strengths. Carry exclusive brands that cannot be found everywhere. Ramp up your customer service beyond any level previously seen in your area. Make your marketing stand out so that it moves people to want to shop with you.
That last one is easier than you think. You can take greater risks with your marketing when your back is against the wall. Go ahead and be remarkable and memorable and moving. What have you got to lose?
Expand Into New Markets
You can do this two ways.
First, consider moving into a different geographical market. Go find a town that is growing or under-served in your category and move or expand your business there. Or add eCommerce to your website and see if you can grow sales all over.
Second, find new complimentary product markets into which you can expand. If you sell toys, can you sell books or hobbies or baby products? If you sell furniture can you sell decor, wallpaper, paints, appliances? If you sell jewelry can you sell scarves, hats, or purses?
Both expansions are tough and can be costly. You’ll have new competitors, new costs, new headaches. But when times are tough, you have to be tougher.
If your market is shrinking you can still grow. You just have to do it and measure it differently.
PS For the last few years we have focused on grabbing a bigger piece of the pie through better customer service. Right now our market share is over 11% in both toys and baby products. This year we have been right-sizing, too. Next year? Expansion? Yeah, in some way, shape or form. Stay tuned…