Retailers get tips to survive recession

In a bid to cheer up the struggling retail industry, accounting and business advisory firm Grant Thornton has come up with a list of reasons for businesses to be cheerful.

But some of the reasons on the list, while making some retailers a little more perky, could be a cause of even deeper gloom for others.

For instance, Grant Thornton pointed out that "good possibilities exist to acquire competitors at attractive prices", and "opportunities arise to recruit talented and experienced people".

Also in the list is the Darwinian observation that "the strong will survive so the sector will be more robust in the medium term" - possibly not that cheery for the retailing dodos out there.

A list of tips for survival was also included, and Grant Thornton business adviser Eugene Sparrow said retail, one of the sectors hardest hit by the recession, had as many opportunities as drawbacks in the current economic environment.

"We thought it important to make available publicly not only some guidance on how to get through the recession, but also how to take advantage of these testing times," Sparrow said.

Different parts of retailing were being affected in different ways, but the so-called Gloombuster Kit could be applied virtually across the sector.

"We do know that while retailers of consumer necessities are generally holding up well, they are in the minority as households curb spending - and this impact is exacerbated by the current downturn in tourism," he said.

"But we also know that some retailers are moving more to internet or mail-order offers to hold or increase market share. In some cases, internet sales are increasing very rapidly."

The list of reasons to be cheerful included the possibility that major supply contracts could be renegotiated on more favourable terms, as suppliers wanted to maintain continuity.

It also suggested the sector would become more efficient as companies were forced to examine their cost base and take action to cut costs.

Several of the tips for survival were of the straightforward, common-sense variety, such as cutting down on expenses and monitoring cash flow.

The survival list also suggested negotiating a potential rent holiday or rent reduction, disposing of non-core assets to ease cashflow problems, and considering sale and leaseback deals on any freehold properties.

- NZPA