When gloom and doom settle over the retail scene, as now, the natural response is for managements to succumb. Nautically, they batten down the hatches, unless, that is, they imitate animals and draw in their horns.
Actually, rather than metaphorically, they react like Marks & Spencer, and reconsider £380 million of annual investment. Advertising budgets are in the same line of fire as expansion. So are supposedly disposable items like training and development. The cutbacks are designed to limit financial losses, but involve other losses themselves.
Advertising money builds brands, which underpin long-term marketing strength. Training budgets build people, who hold the key to high levels of service quality and customer satisfaction. Investment enhances both the brand and service, while its expansionary element spreads the overhead over a greater number of outlets - national or global.
While recessions and slowdowns threaten the cash flow needed to finance expenditure, that is a challenge to management's powers of resilience. How much waste has accumulated in processes during the boom times? How many opportunities to raise revenues and margins have been missed? How many innovations have been left on the shelf (rather than put on the shelves)?
These defects should be tackled when the firm is riding high, to minimise the impact when markets turn - as they always do. But high boomtime revenues, profits and activities encourage conceit, emphasise short-term actions, and absorb management capacity. When the pressure falls, along with sales growth, time is freed for long-term programmes to improve the business fundamentally.
Slacker periods, for obvious example, enable the better-placed advertisers to increase their share of voice painlessly as the weaker competitors cut back. There is also more time and space to develop the service excellence which, according to Bob Tyrell and Tim Westall, is challenging the supremacy of the product or store brand.
Writing for NewSolutions, the pair argue that 'branded customer service' is at the end of the rainbow, combining the power of the brand with the 'customer knows best' ethic of servicing. That double whammy is so far from current practice that the time to start on the journey is now - recession or no recession.
