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Five ways to protect cash flow post-Xmas

Retailers are being urged to tread carefully in the post-Christmas period as consumer confidence dwindles.

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The call comes as retailers register mixed performance over the Christmas period and as consumer confidence continues to fade, marking a downturn of 0.9 per cent last week, according to ANZ Roy Morgan data.

Mark Hoppe, managing director, Oceania, Atradius, told Retailbiz that the post-Christmas period is typically a challenge for retailers, particularly if brands didn’t perform as well as they were hoping over the holiday period.

“The Christmas period can be difficult for retailers and other consumer-facing businesses as they experience a peak in sales during the Christmas season before a subsequent lull,” he says.

“The sudden decrease in demand for products and services in January can have a significant impact on many businesses’ cash flow, including, for some, an inability to continue operating.”

Those retailers operating in areas with true discretionary spend need to be particularly careful, he says, particularly as a suite of retailers – from Toys R Us to David Lawrence – collapse under tough market conditions.

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Five tips to protect cash flow

But there are ways retailers can help themselves through the traditionally slow post-holiday period, Mr Hoppe says.

1.Upping the ante in-store

Retailers can start by ensuring they prioritise excellent customer service, he says. By working harder in-store, retailers can ensure that even customers who might be coming in to return unwanted Christmas gifts could leave the store purchasing more than they originally intended.

“One area where retailers can either differentiate themselves or hold onto their market is by making sure the customer experience is an easy enjoyable experience and having staff understand what consumer wants and having staff available and engaged when they walk into the store,” he says.

2.Maximising the Christmas peak

Offering extended trading hours, discounts and other specials can help retailers maximise their profits from the Christmas period, he says. Incentives such as time-limited discount coupons can also help, he says.

You don’t want retailers to hold onto stock for too long, so sales are a good way to move stock out the door but the key is to ensure they’re profitable sales,” he says.

3.Training staff members

Ensuring that all staff members’ knowledge is up to scratch is also essential to thrive in the post-Xmas period, he says. This means training staff in upselling and converting returns into exchanges.

4.Reducing costs

There are also shortcuts retailers can take in the post-Christmas period, such as reducing advertising spending without concern of reduced foot traffic, because most consumers already know about big post-Xmas sales.

5.Putting new items on display

The post-Xmas period is also a great time to offer new, full-margin items, he says, as people already planning to spend money in store may gravitate towards newer items.