In a retail winter, what matters most is not getting knocked out
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
August 2026 was probably a fairly dark month for Malaysian retail.
Over the past few days I went through a round of listed companies' quarterly results.
Parkson: RM505 million in a quarter, a loss of RM14.6 million.
Padini: RM366 million, a loss of RM9.6 million.
Senheng: RM236.7m, a loss of RM1.6m.
Berjaya Food: RM130 million, a loss of RM64.6 million.
Bonia: RM82 million, a loss of RM5.6 million.
Asia Brands and Carlo Rino lost money too.
Of course, not the whole retail market is losing money. MR DIY, AEON and Focus Point are still profitable. But looking down the list, fashion, department stores and discretionary retail in particular are clearly having a hard time.
And let's be honest: it isn't for us startups to teach the bosses of listed companies how to run a business.
Many of these companies have been around for decades. They have brands, experience and supply chains. They secured good retail locations long ago, possibly at rents we can't get today. Listed companies also have more funding options than we do; when real trouble comes, they have a balance sheet, banks and capital markets to lean on.
But if even they can lose money, those of us running young companies should ask ourselves all the more:
What makes us think it won't happen to us?
Adidas, M&S and Topshop
Retail history has always been like this.
Adidas went through a very painful stretch a few years ago. Too much inventory, too much discounting, the brand losing momentum, plus the Yeezy affair.
When new CEO Bjørn Gulden came in, there was no magic either.
Buy a bit less, bring inventory down, discount less, make the product good again, and look after retail partners again.
In 2023, Adidas cut inventory by nearly €1.5 billion in a year. By 2024, operating profit went from €268 million back to €1.34 billion.
Britain's Marks & Spencer is even more of a classic.
It didn't just fall for a year or two; it struggled for many years. Too many old stores, stores that were too big, a product range that wasn't focused enough, and online to catch up on.
The fix came slowly too.
Close the stores that needed closing, move the ones that needed moving, narrow the product range, and put the money back into core products, quality, value and the stores that were genuinely productive.
They have a line I really like:
Protect the magic of M&S, modernise the rest.
Not turning M&S into a different company, but first working out why customers still come to M&S. Then slowly changing the rest, the things that don't make money or don't fit the times.
Of course, not every brand gets the chance to come back.
Think how big Topshop once was.
The Oxford Street flagship, Kate Moss, young people queueing to buy. On the British high street it practically defined an era.
But Arcadia didn't keep up with online, digital marketing and changing consumers. The brand slowly lost relevance, and there were too many stores.
COVID was just the final push.
In 2020 the whole group went into administration. Topshop didn't even keep its own stores in the end, and the brand was sold to ASOS.
When conditions turn, everything surfaces
It isn't really about one boss being smarter, or someone doing something wrong.
Every time conditions worsen, retail is forced back to a few of the most basic questions.
Does anyone still want the product? Do customers still think it's worth the price? Is the inventory moving? Is the margin enough? Do the stores actually make money, or do they just look big? Is the online customer acquisition cost reasonable? Is the cash you end up with enough to carry you to the next round?
When the market is good, growth easily covers up these questions.
Sales keep rising, so opening a few more stores seems fine. A bit more inventory doesn't matter. Hiring a few more people, spending a bit more on marketing: it all seems like growth will sort it out sooner or later.
When conditions turn, everything surfaces.
There's no single trick that wins in retail.
Sometimes it's just pulling back a bit, slowing down a bit, sorting out inventory, protecting margin and taking care of customers.
Close what needs closing, and keep testing what's worth testing.
That's how Adidas made its way back, and how M&S slowly made its way back.
Pull it off, and it's a turnaround. Don't, and you may be the next Topshop.
Building a business is the same.
Lately I keep repeating one line:
Stay at the table.
Not because staying at the table means you'll definitely win, but because business has cycles.
Online has its winters, and offline has its winters too.
When the market is bad this round, you don't have to prove how clever you are.
Often the most important thing is just to look after the company and not get knocked out.
Because when the next round comes, you'll still be there.