Before I lose the interest of my male readers, I should warn you I am going to talk about women’s handbags and there is a good business reason for me to do so. So please bear with me!
I read in the press the other day that the high-end, handbag retailer, Mulberry Ltd, has been forced to slash prices on its luxury handbags after admitting that its customers cannot afford them. The UK-based company has announced it is adjusting its strategy. As well as reducing the price of its cheapest bags from about $900 by around 15%, Mulberry said it would also be offering more products within this range. Mulberry’s interim chairman has quickly insisted that the quality of the handbags would not be affected by the price cuts and I believe him because if this were to be the case, Mulberry would cheapen its brand and lose its hard-won customer base.
The reason why I was interested to read this [was not because I am a Mulberry bag owner, which I am] but because Mulberry’s business strategy has been revisited in order to adapt to changed market conditions.
Changes in the marketplace
I wonder how many times there have been when you were so focused on one business direction that you failed to be aware of changes in the marketplace? Or if you were aware, then you ignored them in the erroneous belief that your business plan had worked in the past so it would be bound to work successfully in the future? Why diversify or re-evaluate your product line when it has sold so well in previous years?
The simple answer to that question is that the past is the past and although the future may be unknown, nevertheless we have a responsibility to make a forecast based on known facts and trends and to take calculated commercial risks. That is what business is!
So where do you start? Well, a good place to start is with the competition. What are they doing? How do they read the future? Are they expanding or contracting? What markets are they in and where are they going? We may not have the genius and creativity of the late Steve Jobs, from Apple, but we can do the next best thing which is to have the best team possible, around us – our ‘Dream Team’.
How do you choose your team?
Well firstly you need to know which essential skills you need in your Dream Team. Every company boardroom or executive committee should have within it those who will enhance and grow the business and/or strengthen the organisation. No CEO can possess every commercial and corporate quality necessary for success. That is why the vast majority of successful businesses are run by a board of directors instead of by just one man, or woman, who maybe be the original founder, or by one of his family members. They may be the majority shareholders but they will still need to bring in qualified, professional heads of department. The type of business will determine the diverse talents required: production, technical, finance, sales, marketing, HR, purchasing, design, quality control etc
During times of change, every organisation needs someone to say, ‘this is my vision for going forward’. The proposal may be provocative, it may mean changing direction and it may mean re-pricing or diversifying or re-structuring. As with Mulberry, they will need to ensure that their existing customers stay with them and that they can attract new, potential customers
It is always difficult to ‘let-go’ of what was successful in the past because it means that we may need to modify our vision for the future. ‘Letting go’ in order to adapt to changed market conditions is a necessary attribute of the smart professional. He, or she, knows that nothing stands still for long and that sales and profits are always moving targets.
Wouldn’t you rather sell a handbag for $750 and make a modest profit, rather than have the customer walk away to buy from your competitor instead and leave you with an expensive item of unsold stock? If you accumulate enough dead stock/ inventory, your business could die with it!
- A business that stands still, eventually lies down
- We all need a Dream Team
- A modest profit is better than any loss
Written by Carole Spiers and reprinted with the kind permission of Gulf News.
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