By | Rohan Widdison | www.theceomagazine.com
The latest data is in and it’s official: discretionary spending is being drastically cut as consumers brace for more rate rises and inflation continues to bite. Meanwhile, ecommerce platforms are faltering as weak consumer spending impacts bottom lines.
On top of supply chain disruptions, staff shortages and a new wave of Omicron variants, conditions are becoming increasingly challenging for businesses, with the worst possibly still to come.
Downturns are never good news by any means, but history tells us tough times can also forge great resilience in businesses. Having survived the height of the global financial crisis (GFC) in the retail beauty industry, I can attest to the power of harnessing a startup mindset to run a lean and agile operation that is always ready to respond to changing market conditions.
“Ignore the noise and follow the money; conventional wisdom might dictate that discounts and sales are the way to move forward but that isn’t necessarily the case during a downturn.”
Examples abound of robust corporate behemoths founded during severe downturns: General Motors, Burger King, CNN, Uber and Airbnb are but a few of these. Despite the lack of easy access to financing, weak consumer demand, and strong competition, these businesses prevailed through sheer force of vision and savvy decision-making.
Like many other retail industries, the cosmetics business is a competitive one; only the toughest survive while the rest are culled from the pack. When times are difficult, there can be no room to make mistakes.
Focus on your customers
During the GFC, the number of bankruptcies in the US rose from 28,322 in 2007 to a peak of 60,837 in 2009. Similar rates of bankruptcies occurred across the 34 advanced economies that make up the Organisation for Economic Co-operation and Development during this time, acting as a stark reminder of the exacting nature of running a business.