November/December 2024

A goal without a plan is just a wish By Stan Pohmer

Based on my experience of working with retailers in many different fields and of a multitude of sizes, I’m constantly amazed that, when planning for the upcoming season or year, too many simply look at last year’s performance, choose a specific sales increase or decrease, and make their buying plans based on this number. They often base this decision on a gut feeling based on their many years of experience in the business — and fail to factor into their decision process all the various challenges and obstacles that the consumer has to deal with that will drive their spending behaviors. Consumer behavior has a lot more impact on the retailer’s sales and profit than their gut instinct.

Consumer Behavior to Watch

Following are just a few of the externalities that consumers will face in 2025 that will help form their behaviors and responses.

• Continued political polarization, especially in a post-election year. As I write this article in late September, the head-to-head poll numbers between Trump and Harris are extremely close. Which party will control the House and Senate? What financial, social, immigration, etc., policies will evolve over the next year? Trepidation and uncertainty reign.
• Though the rate of inflation is under 3% right now, we must remember that means prices are “only” increasing +/-3% month to month over already highly inflated prices. Absolute prices aren’t decreasing, they just aren’t growing as quickly as before.
• The Federal Reserve has reduced the interest rate (and likely will lower it more over the next year), which is beneficial to those applying for new mortgages (or refinancing existing mortgages) and taking on new credit card debt, but has no impact on the interest on existing consumer debt (which is at all-time high levels).
• There’s been relatively limited federal cancellation of college debt (and the potential for additional mass cancellation is low), and the moratoriums that have been in place from the pandemic period are being eliminated, meaning that disposable income will be diverted to debt payments; failure to pay these monies owed will result in hits to credit ratings leading to difficulty in obtaining mortgages and loans.
• Wage increases are not keeping pace with inflation, leading to loss of consumer spending power.
• Auto and homeowners’ insurance costs are increasing 20-50% per year (if one can even obtain policies, especially in areas hit by catastrophic damage (hurricanes, flooding and wildfires, for example) and higher labor and materials costs to rebuild, again a hit to discretionary spending.
• Businesses, including those in the technology and manufacturing fields, are seeing slower sales and are not filling open positions and experiencing layoffs. Price value retailers (dollar stores and Walmart included) are seeing slowdowns in sales, citing lower traffic and transaction values, with a trend to a focus on essentials and opening price points.
• Pandemic money that funded new positions and programs over the past few years are depleted. Once these hires and new programs are in place, state and local governments fight to keep these in place; increased taxes are the new funding mechanisms.

But we don’t have to accept the premise that all these challenges, obstacles and uncertainties will have a negative impact on our sales or profits! I vividly recall when I led the floriculture/lawn and garden programs for a national mass merchandiser during a deep recession. As all of our competitors reported lower quarterly sales using the recession challenges to justify their lackluster performance, the company I worked with reported stellar sales and increased traffic. When asked by the financial community why our performance was strong while our competitors weren’t, our CEO acknowledged that we were operating in the same recession as our competitors; we simply chose not to participate in it.

While our competitors simply hunkered down and accepted the impact that the recession would have on their business model, my company did a deep dive to identify the recession impacts on the consumer, and developed solutions and responses to help our customers deal with the recession, and then created strategies, marketing tactics, assortment changes, brand messages, and increased communication. We used the recession as an opportunity to both help our customers work through it, and to differentiate ourselves from the competition. Simply put, my company took a completely different approach and had a different attitude in dealing with the same challenges and pressures; we focused on delivering positive solutions to customers’ challenges, while our competition focused on trying to protect their bottom line as best they could.

Navigating the Storm

You’ve seen this quote by William Arthur Ward from me before, but it’s even more applicable in today’s time of uncertainty, with the wind representing the approach to our challenges and obstacles: “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”

The pessimist would rather complain than seek solutions. The optimist’s approach is one of hope and expects everything to change to his advantage without proactively making any changes himself. And the realist takes a more practical approach by acknowledging the current situation, taking steps and developing solutions to effectively navigate through it.

As my favorite worldly philosopher Lawrence Peter “Yogi” Berra once said, “If you don’t know where you are going, you’ll end up someplace else.” You can produce the greatest ideas, solutions and answers to your and your customers’ challenges and uncertainties, but they won’t be realized if you don’t create a viable plan to implement and monitor your success in implementing them so you can adjust your sails. Doing the analysis to identify your customers’ issues and obstacles, creating solutions, developing goals, developing a plan that brings cohesiveness and identifies the implementation steps, and benchmarking your progress to achievement and being flexible and agile in making the small corrections will lead to success for you and your customers.

And as part of your plan, remember that there are only a few ways to generate sales:

1. Attract and retain new customers.
2. Get your existing customers to purchase more often and spend more money per transaction.
3. Raise prices.

(Note that in 2024, as an industry, we sold fewer plants at higher prices to generate a sales increase. This is not a sustainable pathway to long-term success! We need to protect our existing customer base AND bring in more new consumers AND increase transaction frequency AND transaction value to expand our potential.)

Here’s some great news: people genuinely like our products. But we have to sell more than just plants and flowers; we need to educate and give the consumer compelling reasons to buy our products — think wellness, physical and mental health benefits, quality of life, lifestyle. By communicating the benefits, not just the features, we open up a whole new market for product growth!

Every consumer and retailer will deal with the same challenges in 2025; the formula to success will be in your attitude and approach to finding and implementing solutions to help your customers work through their uncertainties. Have a plan, take good care of your customers, and they’ll take care of you.