15. Retail in a Squeeze - How Stores Can Still Thrive

Tactics for customer retention, product mix and leaner operations

1. Introduction

Retail in Aotearoa is under real pressure. Costs are rising, discretionary spend is down and many local shops are facing competition from both online giants and aggressive discount chains. It’s a tough time - but not a lost cause.

This article begins Pillar 5 - Sector Spotlights, offering practical guidance for different industries. We start with retail. While conditions are tight, many stores can still thrive by adapting their product mix, strengthening loyalty and running leaner without losing their character.

2. Representative Narrative

Arvind owns a small homeware store in Hamilton. His products are carefully sourced, locally made and beautifully presented. But foot traffic has slowed and average spend per visit is dropping. After covering costs, there's little left for reinvestment or growth.

He tried broad discounts but saw little return. Feeling stuck, he contacted John Luxton from RegenerationHQ, who had helped him restructure his stockroom processes two years ago.

John asked, “What’s selling well, what’s sitting on shelves and who are your most loyal customers?” That question kicked off a full rethink, not of the business itself, but of how it served the customers that still showed up.

3. Recommended Actions

• Focus on your core customers
  Identify your top 20–30 percent of spenders. What do they buy, when and why? Tailor your messaging, promotions and stock to them first.

• Trim your product range strategically
  Too much variety can confuse buyers and tie up cash. Streamline stock to focus on high-margin, high-velocity items.

• Enhance the customer experience
  Small touches - packaging, music, service style, lighting, shape how people feel in your store. Keep it warm, clean and memorable.

• Shift slow stock with purpose
  Bundle slow movers with popular items or offer them as loyalty perks. Avoid panic discounting unless it’s planned and contained.

• Introduce simple loyalty offers
  Cards, referral bonuses or seasonal previews for loyal customers can build repeat visits without heavy discounting.

4. Expected Outcomes as Narrative

With John’s help, Arvind cut his SKU count by 25 percent and focused on his top five-selling product lines. He moved slow stock through thoughtful bundling and stopped ordering low-margin giftware that sold infrequently.

He added a small loyalty stamp card and introduced a “Friday Friends” late opening just for subscribers. Within two months, his average sale increased and return visits rose. Stock levels were lower, but shelves looked fuller and better managed.

Arvind felt lighter. “I didn’t need more customers,” he said. “I needed to take better care of the ones I already had.”

5. Red Flags & Mitigating Strategies

Red Flag 1 - Discounting to drive foot traffic without a clear margin strategy
Mitigation - Always plan discounts with an end goal and know your breakeven

Red Flag 2 - Holding too much inventory that isn’t moving
Mitigation - Review sell-through rates monthly and act early

Red Flag 3 - Trying to be everything to everyone
Mitigation - Sharpen your niche and back your bestsellers

6. HR Best Practice

Retail staff are often under pressure too. Fewer customers can create boredom or anxiety. Help your team stay engaged -

• Involve them in layout, product choices and promotions

• Train them on the story behind the stock - people buy with their hearts

• Encourage small personal touches - remembering names, offering help

• Recognise their role in customer retention - not just transactions

 John often says, “Your staff are not just salespeople - they’re the face of your values.”

7. Psychological Perspective

Retail owners often take downturns personally. It’s easy to equate quiet days with failure. But economic patterns aren’t always within your control.

The key is to stay grounded. Focus on what you can shape - your offering, your service, your space and your message. John reminds owners that calm action, not constant reaction, creates resilience.

8. Recommended Owner's Mindset

Lead with resourceful focus. You don’t need to be louder, you need to be clearer. Refine, reinforce and reconnect with the people who already believe in your business.

9. Reflective Questions for the Owner

• What do my top customers consistently return for?

• What products tie up capital without delivering value?

• Is my store layout helping or hindering the experience?

• Have I had a conversation with a regular customer lately?

• Am I adjusting with intention - or reacting from fear?

10. Suggested Ongoing Actions

• Review your product mix monthly - look at margins, turns and stock age

• Track your top 10 items and ensure they’re always in stock

• Collect and review customer feedback quarterly

• Trial one small loyalty initiative - keep it simple and track impact

• Schedule a seasonal reset conversation with someone like John Luxton to reassess layout, offering and performance

Critical Takeaway - In retail, survival isn't about selling more - it's about selling better to those who already care.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.