AlixPartners

Retailers are divided over whether we are entering recovery, or heading for a deepening crisis in consumer confidence. The news is far from cheerful. Many European countries have now entered a period of austerity to address their debt crises, and VAT and other tax increases, rising inflation and interest rates are all on the cards. Unemployment is at its highest level since 1994 and rising. Consumers are under pressure, and retailers such as Topps Tiles, Kingfisher, Mothercare and Bhs have all recently reported slowing sales in the face of this. Many retailers have had to promote and discount heavily to survive.

However, other retailers including New Look, Primark, Poundland, Halfords and Tesco seem to be performing acceptably despite these pressures, so maybe we can learn two things from this: if you have a strong value proposition, or a unique brand name, or you are the biggest beast in your jungle, while not resting on your laurels, you are in a stronger position to survive; and in order to survive, you need to get all the basic financial and operational disciplines nailed down to avoid being hit hard by further approaching storms.

At AlixPartners, we work with all kinds of retailers, often in urgent situations where there is a need to do something that really matters. Frequently we help with cash and working capital, rapid EBITDA improvement and managing key stakeholder relationships. In a nutshell, this means getting the business running as efficiently as possible, as quickly as possible, and then telling everyone that you’ve done it.

By doing this, the retailer generates sufficient cash to manage the business and reduces external stakeholder pressure, leaving the business free to work on growing the top line, market share and preparing for the upturn.

Pippa Wicks is managing director of AlixPartners Ltd