Takeaways from TMA Webinar - Retail 2009

In my last blog post, I provided an overview of this TMA webinar. In this post, I want to list my major takeaways from the presentation by the panel:

1. The future for retailers lacking a compelling value proposition is very bleak. One of the panel members (it wasn't easy to follow who specifically was speaking) said the ultimate test is "if your store/brand went away, would people even care?"
2. Cash is king (in this and every other segment of the economy). Presume that this downturn will last years...do rigorous scenario planning...and stress test to understand under what scenarios cash runs out.
3. Plan for the worst (and be pleasantly surprised if things get better anytime soon).
4. Every retailer needs to be using a food retailer's mentality...watch the pennies. One of the panelists went so far as to suggest that C-level executives with this kind of mentality and experience would be welcome in forms of retailing that have not operated like this in the past.
5. Look to renegotiate leases and all other contracts. Challenge is how to do so when bankruptcy is not imminent???
6. If bankruptcy becomes the necessary option, get started with planning early. Obviously, nothing new about this very appropriate advice.

Running throughout all of the commentary was the notion that nobody really knows what to use as a base planning scenario. The combination of this uncertainty plus the distress makes every retailing situation extremely challenging.

I really admire the panel. Tough subject under any circumstances, and certainly challenging to condense into one hour. To a person, they did a fine job and my concise summary of takeaways does not do full justice to the thoughtfulness of their presentation.

My one surprise was that I did not come away from the presentation sensing that any of the panelists were championing the need for fundamental changes in the business model for retailers. I am a strong believer that:

virtually every industry will end up with fundamental changes in business model as a result of the severity and duration of this downturn.

Not only is that my expectation, but it is also my hope as I believe that such changes are critical to the United States regaining some of its competitive advantages.

Restructuring the business models of our many industries represents great opportunities for restructuring consultants with deep industry expertise and a commitment to avoid being blinded by all their years of experience in how an industry has traditionally operated. From the restructuring of business models comes the opportunity to create a compelling value proposition.

As opposed to the liquidations that have become the norm in the retail industry, a comprehensive restructuring provides an opportunity for skilled legal counsel to add value by facilitating the restructuring, and for skilled financial advisors to arrange appropriate financing for the restructured business.

Up Next: To stimulate the kind of thinking I believe needs to be done in every industry, I am going to suggest some things that I fully expect that the best of the Restructuring advisors will be working on with their retailing clients...or at least those retailers committed to prospering even in the down times. My post on The Future of Retailing follows here.