Hastings Entertainment has become another in a long line of major United States retail chains to bite the dust. Hastings’ long, drawn out death was inevitable. They hadn’t recognized when change was needed.
Advances in technology (e-books, digital music and movies, streaming services, and online shopping) has altered what Americans shop for and how Americans shop. In 2013, the revenue from DVD and Blue-ray sells plummeted while digital purchases and subscription services like Netflix and Hulu rose. In 2014, music streaming services like Spotify and Pandora caused chain store CD sells to drop 20%. In 2015, the number of adults that have switched entirely to e-books has risen to 27% of adults. And from 2015 to 2016, sales from online retailers shot up 10.7% cutting into sales from traditional stores.
The signs were there. The higher ups at the company waited far too long to begin implementing changes. While the company offered online shopping, the merchandise offered was still the entertainment products that the modern buyer was veering away from.
It wasn’t until the past year that many Hastings’ stores revamped their product lines to include more board games, entertainment merchandise, and geeky t-shirts. Hastings essentially tried to reinvent itself as a bigger and better Hot Topic. It might have worked if they hadn’t waited so long to make the change. The fact that Hastings waited until they were financially drowning to reinvent their merchandising strategy, meant that the lifesaving strategy simply plummeted the franchise further into debt.
The Earlier, The Better
Hastings failure to recognize the need for change and they’re inevitable bankruptcy is a warning to all small, medium, and large businesses. Knowledgeable individuals within the organization need to either annually or bi-annually evaluate the financial health and stability of the organization and the industry as a whole. If a company can proactively pivot at the first signs of trouble, they have a higher chance of remaining relevant in our rapidly changing world.
Why are early changes so important? According to How to Navigate Organizational Change, making necessary changes to a business while it is still performing within acceptable margins is far easier due to the fact that:
- – More resources are available to make the change.
- – It is easier receive extra financial backing to test out new strategies and initiatives.
- – Employees are more on board with changes.
Evaluating the Need for Change
How do you evaluate the short and long-term financial stability of your company?
All businesses, no matter the size, should start by evaluating their finances over the last year or two. Are you making a profit? Has that profit slowly been decreasing over the last few years? What products, if you have a variety, are not selling?
Keep an eye on the changes in the market as a whole for your industry. There are a variety of different market research organizations that evaluate how the market in a variety of industries has changed. Market research compiled by other organizations allows smaller businesses to dip their toes into utilizing big data to improve their company.
Evaluate if any of your competitors have adopted new, successful strategies that might be cutting into your profits. It’s important, even for small businesses, to understand how their competitors are wooing customers, so you can make changes to compete. Even if you can’t adopt the same strategy, you can adopt other strategies to woo back customers.
- – Albertsons unable to fulfill the low prices offered by Walmart, adopted a more customer friendly and helpful service experience.
- – Walmart, Fred Meyers, and Albertsons all hired personal shoppers to fill customer’s online orders and deliver them to their car or home.
Ensure knowledgeable individuals are doing the evaluations. Not all business owners have the business background to easily evaluate the current financial state of a company. Instead of diving into the evaluations themselves, business owners might want to discover if one of their current employees are more qualified to take on the project.
Not Taking Change Too Far
Changes to an organization should not be a fast, poorly thought out endeavor. Due to the expense, it can either lead the company to success or eventual financial troubles. Hastings isn’t the only company to try to utilize change as a growth agent only to have it backfire. Borders, for example, went bankrupt in 2011 after rapidly opening new stores and shifting their focus to selling CDs and DVDs as the rest of the industry went digital.
In order to prevent a catastrophic mistake, business owners, managers, and other leaders within the company should make these evaluations before they implement change:
- – How will the change benefit the company?
- – How much proposed change will cost?
- – Can the company realistically recoup the money invested in the change in a timely manner?
- – Does the proposed change, fix a problem or improve efficiency?
- – What are the potential downsides of the change?
Beginning to Implement Change
Once you’re sure the change will occur, I would recommend the managers within the company begin preparing employees for the change as soon as possible.
Business should explain:
- – what the change is.
- – why it is necessary for the long-term success of the company.
- – how it will impact the workflow of employees.
Employees adapt better to change if they have time to ask questions and mentally prepare themselves for that change. As an added bonus, being upfront about the change could lead to one of the employees thinking of a potential problem the change could create that management had not considered. Or employees might have additional useful ideas about how to integrate the change effectively.
Business should be willing to make larger announcements about the change and then field any questions in private meetings from concerned employees after that announcement. Remember: employee retention is vital to long-term business success. The last thing you want is to trade one financial problem for another.
Technology is constantly changing customer habits and expectations. Businesses cannot afford to be stagnant. If a company wants to remain in business long term, they need to keep apprised of how those changes affecting the market they are operating in. The sooner the business begins implementing carefully researches and planned changes, the higher the chance they will continue to be successful.
Image Source: Hastings, Flickr