Strategic Planning Information

Invalid Excuses for Poor Business Results - The Economy


Note to Rite Aid and CVS: It's not about the economy

When Bill Clinton successfully unset the first President Bush, he focused on a sign in his Little Rock office: "It's the Economy, Stupid". His point was to focus his campaign on economical issues. Although the president has an impact on the economy of the nation as a whole, blaming the economy for poor sales or lost profits is nothing more than unmerited whining.

In the state of Michigan, unemployment was the highest in the nation. At the same time, job growth was the lowest. This is not an economic scenario that normally leads one to invest heavily in a market.

CVS and Rite Aid decided to ride out Michigan's economic storm, setting aside little capital to revitalize or grow their Michigan stores. Although seemingly an intelligent viewpoint, it does not display a passion to compete and grow over the long haul.

Walgreen's Pharmacy saw Michigan through a different paradigm. They saw the opportunity to invest heavily in the state, taking advantage of the weak economy and depressed prices. Rochester Hills, Michigan, is an example of Walgreen's strategy. Only a few years ago, this city of 70,000 did not have one of their stores. By 2006, Walgreen's will complete a strategy to have four stores within city limits. The strategy was to locate stores using a parameter mentality, and a merchandise mix recognizing the local economy.

Both CVS and Rite Aid have experienced lost market share, greater than the increase in competition. Neither chain is growing in Rochester Hills, although CVS did move one store from the center of a strip shopping center to a new location in the parking lot.

According to high-ranking sources in Walgreen's Michigan region, there is a strong belief that by moving in now with the right merchandise mix and locations, the chain will be strongly positioned once the Michigan economy rebounds.

Where CVS and Rite Aid see a need for cautious survival strategies, Walgreen's sees an opportunity to grow and thrive. The lesson is obvious. Instead of whining about the economy, looks for ways to adjust your product offering to the times, and position yourself to thrive once the economy rebounds, or your competition succumbs on their unsuccessful pathway of survival.

Many Michigan-based companies are finding ways to attract out-of-state customers. At Max Impact, a human potential development company has made two strategic moves to thrive despite local economic conditions. The company has aligned itself with Macomb Community College to offer online customized corporate training programs, carrying CEU credits for the participants. They have also increased marketing of executive and professional coaching, which is done via the telephone, outside of Michigan. While many of their competitors struggle, the Max Impact is seeing double digit sales and profit growth.

It's not about the economy. It is about seeing the total business environment and developing a strategy to position for the present and future.

Rick Weaver is President of Max Impact, a national leadership and organization development company based in Rochester Hills, Michigan. Rick is an accomplished business executive with experience in retail, market analysis, supply chain and project management, team building, and process improvement. He has worked with hundreds of companies to improve sales, processes, and bottom-line results. MaxImpact offers leadership and organizational development services along with employee assessments and background checks. Contact Rick at 248-802-6138 or via email, rick@getmaximpact.com. MaxImpact is on the web at http://www.getmaximpact.com

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