Retailers Work Through Five Stages of Grief Towards Economic Recovery

Slow BusinessIn some ways, I think we can accept the current retail climate by first understanding Kubler-Ross’s Five Stages of Grief model. First published in 1969 in her book entitled On Death and Dying, Dr. Elisabeth Kubler-Ross pioneered methods of support and counseling of personal trauma, as well as the grieving process associated with death. Her ideas, however, are easily adaptable to less traumatic events that can still cause emotional upset or personal change, such as dealing with the current economic state of flux. The five stages are denial, anger, bargaining, depression, and acceptance.

Denying That Business Is Slow Won’t Change Anything

When a retailer first notices slow business in general or items not selling as they should, denial is often the first emotion felt.  “This can’t be right, the POS information is wrong, I have all the right vendors and styles, etc. There is nothing wrong with my merchandise,” he or she may think. In this stage, the retailer keeps plodding along, anticipating that things will soon change.

Anger Leads to Blame

Denial usually morphs into anger.  I would lump blame into this emotion for the fact that the outlet of a retailer’s anger can be blame.  he vendors shipped late, the fit is bad, the customers don’t understand our store, the weather is too good or too bad, the landlord hasn’t done anything to promote the center, and advertising isn’t effective. The list is endless. In this stage, the retailer can’t deny what is happening any longer, has admitted such, and is now mad and looking for someone to point the finger at.

Bargaining Could Bring in Customers

The bargaining phase can take many forms.  Initially, remerchandising the selling floor may prove fruitful.  Changing displays gives the customer the appearance of new shipments of merchandise, and often provides a stimulus to sales.  Sometimes spiffs or PMs (push money) are the next course of action.  The idea here is to provide the salespeople with an added incentive while maintaining full price and preserving gross margin. This method can be very effective if not overused. Let’s say you decide to give a $5 spiff on a $100 model that is slow. In effect, that is equal to a 5 percent markdown which most retailers today would agree is wasted effort. Yet an extra $5 per pair in a salesperson’s pocket might just work.

Vendor returns are another form of retail bargaining.  This is an effective technique used to return poorly fitting styles for credit or slow selling merchandise for newer inventory that will hopefully sell faster.  This privilege should not be abused, but is a good way to maintain margin and/or reduce stock level. The final bargaining tool available to the retailer is of course the markdown. Reduce the price in the hope of a quick sale.  You can tell that this is the last straw for the retailer as they usually don’t want to see the merchandise again, i.e. a stricter return policy.

Low Sales Help Little with Store Morale

Sometimes the depression sets in after the initial response to the markdown is not up to expectation. Other times the markdown is taken too late in the season or not deep enough to rectify the problem leading to poor results. With all of the store doom and gloom heaped upon us by the media lately coupled with more store closings than we have ever seen at one time, it is easy to understand how depression could set in.

Acceptance Is the Right Step Towards Recovery

Once a retailer accepts the current situation whatever it may be, he or she is now ready to move forward.  They may resolve to not let themselves get into the same situation again by planning better, buying smarter, being more aggressive with vendor returns, canceling late shipments, or being quicker with markdowns. Now the retailer is truly at a point where he or she can move forward rationally and positively, hopefully having learned something from the experience.

Perhaps you may have recognized this cycle or portions of it in yourself.  If you are or have experienced some of these emotions I would say you are normal.  The problems arise when we get stuck in any one phase for an extended period time and can’t find a way to quickly move into the final stage of acceptance.  Some retailers find it helpful to speak with someone outside of immediate family or coworkers.  Accountants, bankers, trade associations, and retail consultants are often times helpful in identifying the real cause of the problem and mentoring the store in finding satisfactory solutions. This option is typically more cost effective by far, than continually going it alone with less than favorable results.

Ritchie Sayner is Vice President of Business Development for RMSA Retail Solutions. Contact Mr. Sayner at or 816-505-7912.