Fire Sale: How Multi-Location Businesses Should Handle Downturns and Fails
This year alone, more than 2,000 retail locations have closed. The major casualties include Party City, Jenny Craig, and Bed Bath & Beyond. Some multi-location restaurants are also slimming down, shuttering locations in markets that aren’t performing well. That doesn’t necessarily mean the beginning of the end for the brands. They may simply reduce expenses to invest in other key initiatives or markets.
But whether you’re a multi-location brand is simply reducing expenses or heading rapidly towards bankruptcy, how you handle messaging is critical.
After all, some brands that have suffered serious financial declines have restructured and reemerged from a significant decline. They want their brand to still have a solid reputation in their customers’ eyes.
Declines and total disasters have long been part of the multi-location landscape. Those retailers and restaurants who are planning for longevity will:
- Automate quickly and smartly to reduce operating expenses. Investing in new technologies can take a bite from your bottom line but reduce labor and operating costs in the long run. Don’t chase too many shiny technology objects; learn from others and invest well.
- Stay on top of customer service, inventory, and store cleanliness. Your internal financial issues should not be visible to shoppers and diners.
- If you’re closing multiple stores, ensure your local customers know the nearest location rather than opening a door for your competitors to swoop in. Pay even more attention to local SEO.
- Monitor the Internet chatter closely (including online reviews and employee complaints).
- Communicate early and often, especially when bankruptcy seems inevitable. See below.
- Be creative with your going-out-of-business sales and ensure consumers know where and when to take advantage of bargains. You may even be able to donate excess inventory to local charities depending on your financial and legal situation.
- If you’re a senior executive at a failing brand, consider your “encore” and invest in personal branding to ensure your professional reputation remains intact and positive. Senior executives (especially in marketing) are often blamed for companies’ failures.
According to PR professional Ilana Zalika, CEO of Resound Marketing, whenever a brand makes changes that may lead consumers to believe they are in trouble, they should “craft messaging sooner rather than later. Create short media-friendly statements and ensure spokespeople know what information can be publicly shared.” She adds, “Don’t get into excruciating detail. Tell the truth, do it quickly, and repeat. Just be honest and upfront.”
Consumers and partners (not to mention the media) shouldn’t hear bad news from employees or unofficial sources.
Fashion brand Betsey Johnson closed 63 stores, and Boston Market (formerly Boston Chicken) declared bankruptcy, but both are still alive and well, just in different configurations. When you have a brand recognized and loved by consumers, you may recover from the decline.
What about the category survivors?
Although we’re not advocating taking on a “vulture” mentality and circling around, waiting for your competitors to drop. But we have seen smart marketers capitalize quickly on store closings and bankruptcies. For example, many retailers accepted Bed Bath & Beyond coupons and used them to drive new traffic into their stores.
Heavy up your advertising and local profiles in those markets where multi-location restaurants and retailers are closing stores.
Look to hire the best talent from the locations that are shutting down.
Above all, look at your entire category and consider whether the failures were a harbinger of massive consumer behavior shifts.
Getting ahead of the game and examining both the BOOMs & BUSTs of multi-location brands may not guarantee success, but you can learn from the experiences of the brands around you.
