I haven’t seen or heard of a lot of folks beyond some of the dollar stores and McDonalds that are growing revenue these days. Seems like everyone is doing some sort of aggressive discounting/promotions to try to get people into their restaurants and stores to combat lower visits, but this is killing their per visit revenue and % profits and isn’t increasing their cash by as much. Subway is a great example with their 5 dollar footlong blitz, which is definitely driving up revenue (although profit is another story). With all of the layoffs and everything I don’t see how this changes anytime soon as it seems like you’ve got the 8-10% unemployed that are going to conserve spending out of necessity and you’ve got the 70-80% employed but not set for life folks that have seen their portfolios drop 40% (not everyone saw it coming like John did and moved to cash 1 yr + ago) so aren’t spending as much either out of caution. I have no unique or insightful thoughts here really, I just don’t see anything that improves retail revenue in the next 2-3 quarters.
On retailer spending…
Bad news for all people that target retailers in 2009. 2009 budgets were set during the worst market panic in 75 years. While the resulting lower revenue targets are likely to be achievable and in some cases ridiculously low, the budgets/cash targets were pegged and approved at a time that was probably the most conservative in our lifetime. We saw this with both very healthy companies and with sick ones – budgets got whacked. Question now is what it would take to get them to change their budget, even if the top line went up unexpectedly. My guess is that 2009 is now somewhat predetermined to be low because only a few companies will have positive top-line surprises and of those not all of them will relax their budgets as a result.
On Envysion’s opportunity in Retail…
Good news for MVaaS providers. We have a couple of rays of hope in this environment. One, we are a small company and it doesn’t take much to grow for us. For example, we talked to one major retailer with 3000+ sites and he said “I’m not spending anything, no money to spend, not buying. Oh, but I do expect to replace 10% of my sites this year as they end of life.” A 300 site opportunity is still interesting to me, but he thinks he’s got no money b/c he can’t make a 3000 site decision this year. Two, back to the ROI argument – if you can demonstrate a strong ROI and minimal capital and IT impact, you at least get a shot at the CFO to make the case. Retailers that aren’t in a panic (freezing all spending despite the obvious perils of doing so on customer retention, etc) will still make sound business decisions, even in a crappy market. If we can prove we have a quick payback and strong ROI, we’ll do fine. Our sales, our funnel and our pilots are strong for exactly these reasons, even though the aggregate market spending is down.
At least that’s what it looks like from here…