It’s been totally crazy since the summer. Many stores have had new-in sales with some having 40% off the entire store for a whole week. Diligent traders know what is happening. Gross profits are plunging.
At Texcon, we cultivate the position of specialised retailers. We sell experiences. We know a lot about the items we sell and we style our customers – at least advise them – based on many years of experience. We follow trends and know the customers. We have opinions on what they should buy, so they can achieve what they’re aiming for, regardless of whether they want
to look stylish or feel good. We have a sale a couple of times a year, but the rest of the year we sell clothes at full price with the shopping experience as added value. And the customers – of which there are many – prefer to shop in a Texcon store because we provide exactly what they want. Thanks to the trade we master.
I understand the temptation to react when the competition changes – when everything is half price in the neighbouring store. It requires both courage and perseverance to get through it. When everything is like the ‘Wild West’ it’s tempting to pull the trigger a bit too early. But, as everyone knows, the Wild West had to be tamed. Many people died. Everyone benefited from more discipline. Everyone had something to gain from more people thinking twice before they pulled the trigger.
Short-term profits often lead to long-term losses, and putting new items on sale does not only affect gross profits, it affects the whole industry, especially specialised retailers.
Naturally, all consumers want everything as cheap as possible, and customers soon get used to shopping in sales only. If this becomes the situation in the Norwegian textile industry, everyone knows what will happen. The large sales machines will win – those who can live off low gross profits because they have large volumes. Specialised retailers and experts are responsible for throwing the baby out with the bathwater. In the end, we’ll end up with two winners: online stores and understaffed cheap stores with cheap labour.
How can we protect ourselves against this situation? My best advice is to learn the art of acceleration and braking at the right time.
The most profitable members of Texcon have conquered this art. They know when to accelerate and when to brake. Year after year these members come out on top, and what distinguishes them is that they are in full control of their budgets and stock. Several of them are willing to take a risk, but in general they would rather put the brakes on a little too early than accelerate a little too late. Therefore, they may run out of summer items when summer returns in early September. However, if that happens, there are no stock losses. In addition, they sleep well at night because they know that autumn will be here in a couple of weeks.
Budgeting is the most critical component in this equation. The winners in Texcon make budgets based on real figures and analyses. They’re aware of the percentage of purchases that should be entered as pre-orders and do not make budgets according to the principle of “the same as last year”. They go much deeper. They know how many shirts, polo shirts and dresses they sold last year, and they set realistic goals for how many pieces they will sell next season.
The budgets are also based on assessments on the purchasing power of customers, their own ability to capture market shares and, not least, inflation. Therefore, they end up setting realistic goals for next season. Most of them in this league are also good at choosing suppliers with plenty of stocked items. If anything unpredictable happens, they can therefore accelerate or brake – every single week.
In combination, the creme de la creme in Texcon surpass all competitors in Norway. We know more about how healthy market-adapted clothes stores should be run. Despite it being like the Wild West in the clothes industry so far this autumn, I’m pleased to say that this does not apply to the majority in Texcon. The acceleration and braking reflex may result in some of our members losing some turnover in the short-term, but if there’s one thing that I’m sure about, we’ll win in the long-term.