This recession is exerting its effects on a number of different industries, and the pet supply industry is no exception. I remember hearing a story a while ago about how PetCetera was working to liquidate a lot of its inventory, because the company simply did not have enough cashflow coming through to pay its bills and to deal with its creditors. According to the story, this clearance sale would result in some products being sold at up to 70& off.

I’m not entirely sure how much truth there is to PetCetera’s situation, but this is probably a strategy that is for the best for the long-term viability of the company. From what I’ve heard, by putting out this sale and cutting deep into its profit margin, the pet supply store is able to generate some cash flow and this added liquidity is exactly what it needs to ride out this economic storm. Without the infusion of cash, the company may have to lay off many employees, cut expenses elsewhere, and possibly even file for bankruptcy protection.

As you look to your business and how it is going to survive the downturn in the current economy, you may have to consider the strategy of suffering a short-term loss in order to better your chances at a long-term gain and success. You may take on the same strategy of PetCetera, for example, if your short-term concern is related to issues of liquidity. If your short-term concerns are of a different nature, however, a 70% off sale may not be the best strategy, even if it result in added business. If each sale is below-cost, you’re looking at a negative proposition.

Has your company been adversely affected by the recession? What tactics have you employed to ensure the long-term viability of your business?