‘Overly discounting can impact the perceived value of what you’re selling’
These days administrations and profit warnings have become a common fixture in the global media. Once-booming highstreet businesses such as Toy R Us and Poundworld have collapsed, while other household names such as New Look and Mothercare struggle to make a profit.
When thousands of jobs are in jeopardy, the natural question on everyone’s lips is, what can be done, if anything, to save our high streets?
It’s natural for investors and shareholders to want fast answers – and this often results in a kneejerk reaction to focus on cost cutting, redundancies and shortterm sales as preferred go-to solutions.
While a fast turnaround is desirable, it’s vital that retailers consider other opportunities that can stabilise cash flow and improve their profitability. One such area – albeit often overlooked – is strategic negotiation.
Why is negotiation so key for retailers?
An organisation-wide negotiation strategy, if delivered properly, can very quickly improve cash flow, reduce overheads and ultimately soften expenses to protect profit, for even the most troubled of companies.
Not only that, but an effective negotiation strategy can help a business fight to see another day.
Huthwaite recently conducted research with YouGov into the impact of an effective negation strategy, which revealed that six out of ten of the most effective margin-maximising business strategies – such as rent, supplier contracts or procurement – require effective negotiation skills.
Put simply, it is not enough to focus on innovation, sales and growth strategies alone. Businesses must also work hard to ensure that every pound really does count.
Should retailers have learned lessons from their peers’ failings?
The problem with much of the high street at present is an ineffective strategic approach, teamed with a changing and turbulent market. Shops now sell a great proportion online, making the high street more of an attraction or experience than a perceived necessity.
Add to this uncertain economic climates and the aforementioned knee-jerk reactions to cut costs and in the wrong places and place a focus on short term sales, such as discounts and flash sales and you start to enter murky waters.
The issue with these rather public solutions is that they can be judged, viewed and criticised by the general consumer, stakeholders and investors alike. This in itself can impact on sales.
Overly discounting can impact the perceived value of what you’re selling, making the change to standard pricing almost impossible, whilst staff redundancies cause nervousness amongst investors and staff alike.
We’ve seen this happen time and time again, once the shaky sentiment can be felt by investors and consumers, a downward spiral often ensues.
Can the British high street be saved?
If businesses fail to embrace the benefits effective negotiation can offer, the likelihood of reversing the effects of the high street are bleak.
By introducing an effective systematic negotiation strategy, businesses can save huge amounts of capital, not to mention improve margin.
Huthwaite’s research shows that businesses with a systematic approach to sales and negotiation experience 42.7 per cent greater growth to the bottom line than those without.
This fact alone highlights the importance of applying effective negotiation techniques to drive profitability across an organisation. In times of trouble, this is essential.
Huthwaite International is a leading global provider of sales, negotiation and communication skills development. It supports companies around the world with behavioural methodologies which are research-based and measurable.
For more information, visit www.huthwaite