Cautious Optimism

The most critical component to managing through the slow and still unproven economic recovery is to provide the possibility for growth while maintaining a risk adverse posture in gross margin. Not even easy to write, let alone to accomplish. Essentially, and fundamentally, it involves planning inventory utilization near but not beyond historical peak efficiency, and certainly at but not above current or recent results.

Provide your merchants with the assets to perform, while helping them to manage against the natural tendency to aggressively pursue opportunities. It has been over a year for most merchants of constant and unremittingly difficult if not outright negative comp sales performances. Any silver lining, however slight, any break in the dark clouds of bleak results is absolutely going to awaken tendencies to be aggressive. And...that's a good thing! Pessimistic, overly cautious, and careful merchants will NOT lead you into the recovery. Just as overly aggressive, incautious and optimistic merchants COULD lead you into further difficulty.

So this time period requires extraordinary cooperation and joint merchandising efforts between those who select product and those who help manage inventory and gross margin. It is far from as simple as it sounds, yet the basis for a successful approach lies in the ability of senior management to create a joint appreciation for the necessity of each part of the organization to be involved in the recovery. Merchants, as a general rule, no matter what they say, tend NOT to appreciate Planning or Financial types who seem bent on limiting possibilities and guarding against failure. Financial or Planning executives, no matter what they say, tend NOT to appreciate that inherent optimism is a requirement to be a successful merchant, as is a short memory with convenient wholes in it.

So work together....you'll need to....or the opportunities (which are going to be both discrete and small) will be missed, and instead of participating in a recovery, you'll be watching others steal market share, engage the consumer, and position themselves to be the big winners when employment begins to rebound next year.