Yesterday morning, we woke to the news that outdoor adventure wear retailer, Kathmandu, is reporting a 24.5% increase in sales for the 10-11 financial year. In an uncertain economic climate peppered with stories of doom and gloom for the retail sector, such a successful outcome has not only sent share prices soaring, but other retailers scratching their heads.
Interestingly, this strong end of year result isn’t a product of a business blessed with smooth sailing. The 09-10 financial year was disappointing for the retail chain, and they looked set to follow the rest of the market into the slump. Further challenges presented in the wake of the Christchurch earthquakes earlier this year, when they were forced to temporarily close some of their most profitable New Zealand stores.
In a market where the big players such as Myer and David Jones are continually downgrading profit projections, how did Kathmandu do it? And what lessons should we take from their success?
– Don’t become complacent and accept what the market is doing. In the current landscape, retailers are quick to point the finger and cite ‘challenging retail conditions’ in the face of down trending sales. But Kathmandu remained focused on their goals. ‘Our key strategies of new store rollout, upgrading of existing stores and ongoing growth in our product range have all delivered increased sales’ (Kathmandu CEO, Peter Halkett). Instead of making excuses as to why sales were in decline, they focused their efforts on quick wins and factors they could control.
– Ensure you understand the external influences. Kathmandu watched with keen interest as the Aussie and Kiwi dollars soared, and, knowing that it would encourage overseas travel, adjusted their stock offerings accordingly.
– Bounce back triumphantly! Kathmandu could have accepted defeat in the aftermath of the NZ earthquakes or used it as yet another excuse for disappointing sales. Instead, they accepted that not everything is within their control, adjusted their plans accordingly, cleaned up quickly and got back to business. They were resilient. A great lesson for anyone in business.
– When things look bleak, tightening the belt isn’t always the answer. After a difficult 09-10 FY, Kathmandu didn’t start locking down the budgets. They remained committed to improving the way they do business, starting with a massive overhaul of their intranet. This streamlined internal processes, so staff were more informed and readily available to assist customers. Improved customers service standards have undoubtedly led them to their current profitable position.
With most of these tips falling into the Business Basics 101 category, it’s obvious that Kathmandu aren’t re-inventing the wheel, they’re just doing the basics, well. A skill that businesses can easily lose sight of in the face of challenging marketing conditions, when it’s tempting to shift blame and make excuses.
There’s nothing like a real world example to help you to reset and refocus for the new financial year ahead. Do you have an example of business success that you’d like to share? With eighteen months of a fairly unsteady economy, natural disasters across both Australia and New Zealand and an ever changing political landscape, what business skills have helped your company remain on track?