Hero Image

When the neighborhood changes, you’d better change neighborhoods.

By John Malmo
March 10, 2020

undefined



This article is taken from the book “When on the mountain there is no tiger, Monkey is King”— a collection of articles written by our Chairman Emeritus John Malmo. While times have changed, most business and marketing principles have not. We invite you to take two minutes and brush up on some of the basics.



Most businessmen and businesswomen have heard at least once that their success will depend,
sooner or later, on their ability to manage change.

Say you’re in the retail business. You sell shoes or cakes or pizzas, laundering and dry cleaning,
whatever. Sales have peaked and begun to slide. It’s harder every month to make last year’s
numbers. Things have changed. The landscape has changed.

New streets and new residential neighborhoods are built every year. Zoning changes. Other
businesses relocate from old to new locations, in or out of the neighborhood. These factors
change population numbers, demographics and traffic patterns.

If you draw your customers from a limited radius of your store(s), as do most retailers, you’re in
big trouble. This kind of change is gradual, seldom dramatic, hard to spot.

Location often is the last thing that retailers look at when business starts to slide. You think
about advertising, pricing, merchandising — everything but location. Destination businesses
often survive these shifts, but destination businesses are rare.

Stores have growth cycles from day one. Similarly, virtually all retail locations peak and mature.
Ultimately, almost all follow some bell-shaped curve. What hastens the backside of the curve is
when competition is smarter and stays geographically relevant to the maker.

The businesses that suffer this kind of slow sales erosion are often small chains, decisions for
which are made outside their retail markets. The people who can make decisions about store
relocation and new store development come to town periodically and spend their time in their
own stores. They rivet their attention to store operations. They don’t have a clue what’s
happening in the city.

The real estate guy at headquarters says his job is taking care of existing real estate and leases.
The operations manager that comes into the market says operation of existing stores is her job.

It’s the marketing director’s job, but nobody told him. All he has to do is know is whether
customers come from a radius around the store or whether they’re intercepted going by the
store. He has to watch annual sales records for each store since its opening or the last 10 years,
and he has to understand how the market is evolving.

Few stores continue building retail sales indefinitely from the same base in the market. Stores
mature. Before changing advertising again and store managers for the seventh time, retailers
need to think about changing addresses. That has to be somebody’s job.

The first truism is that the landscape is always changing. The second is that somebody has to
know it’s his job to be the “lookout.”

About Archer Malmo

Archer Malmo, with offices in Memphis, Tennessee, and Austin, Texas, combines brand thinking, data and technology to help growing brands adapt to the digital and creative complexities of today. Since 1952, we’ve continually evolved to changes in the industry, helping level the competitive playing field for midsize companies. The agency’s combination of discipline specialists, strategic orientation, creativity and culture yields strong client relationships and business results. With more than 150 people,  Archer Malmo is one of the oldest independent agencies in the U.S. and has been recognized by Advertising Age and others as a “Best Place to Work” and has been named to the “Inc. 5000” list of fastest-growing private companies in America for five consecutive years.