Your Shoppers Deserve to Know You Better

We hear it over and over. "Good business citizenship" matters to shoppers. They vote with their feet, their wallets, and their hearts, and increasingly choose those retailers who "do the right thing", whether it's how they source product, hire and pay employees, reduce environmental impacts, etc.

Followers of The Retail Owners Institute® know that one of our beliefs is that "Retail is a mirror of society."  And independent retailers, especially, are often in the forefront of "good business citizenship".

So, why not let your customers know?  As Joe Kefauver wrote in Retailing Today*:
  • "Is there a fun way to let people know how many employees at a certain location have gone from entry level to a management position?
  • "Can a company creatively communicate how many volunteer hours or non-profit dollars a certain establishment contributed to the community over the past year?
  • "How is a given unit and its larger company talking about the use of its culture of opportunity to help leaders in a city solve problems?"
These are the things that independent retailers do day in and day out, without perhaps even realizing how special they are!  And especially in today's world, these are your competitive edge!

  • Many of you are using social media to promote sales events, new product arrivals, etc.
  • You already are finding how to convey your store's personality when it comes to your merchandise.
  • Why not also use it to share how you do business? That is what increasingly matters to your customers.
  • As a retailer, you likely are one of the civic leaders in your community. It's okay to let people know.

---
* "What retailers can learn from Uber's playbook", Guest Viewpoint by Joe Kefauver. Retailing Today, February 3, 2016.

About Those Wal-Mart Store Closings

Perhaps you also have noticed the recent announcements that Wal-Mart will be closing 269 stores, 154 of which are in the U.S. In several breathless pieces about this announcement, much attention was focused on the negative impacts the closings will have on their respective communities. Perhaps so.

Maybe the spirit of The Retail Owners Institute® is misguided, or we're looking through rose-colored glasses, but we can see opportunities galore! Consider this:
    For every $1 million in sales that a closing Wal-Mart was doing, there's $500K of volume for each of two new or expanding merchants. So, closing a $10 million store might sprout 20 small businesses right down old Main Street!
    In most communities, there are several good merchants already. We can imagine those folks stepping up quickly to help fill the vacuum a closed Wal-Mart created by adding stores without adding much administrative overhead. One good bookkeeper can handle more than one store. Same with POS systems, for example.
    Or, a Wal-Mart closing can prompt new retailers, who can take advantage of the many in-the-cloud resources to reduce admin costs and introduce new retail concepts to a community.

Take That, Chicken Little! The Sky Is NOT Falling!

See, there well could be great opportunities out there. At least for those who are not distracted by the negativity. And retailers, more than most any other group of business owners, are incredibly optimistic. 

Before You Ask About the Economy....


Like us, many of you are watching with concern as the U.S. stock market starts the year in free fall, and the media pours kerosene on the fire. Additionally, the commercial world is wondering if China’s more modest growth is an aberration or the new normal.

For owners of retail operations, who were smashed by the recent Great Recession, these dark clouds are not welcome at all. And if consumer confidence were to plummet, so would sales, most likely. That would be painful!

Let’s be perfectly clear: we are called a lot of things, and answer to some. But we are NOT economists! Whew! 

But, before you ask, here is our amateur opinion of this downtown:
  • It won’t last long.
  • By the fourth quarter, most of the world’s economies will be feeling robust.
  • And independent retailers need to be prepared to take advantage. Hunker down now, but be ready for the rebound. 
My, aren’t we the cheery optimists?!

Oh. You want to know how we reached that glossy conclusion? Fair enough.

First, the remarkably depressed oil prices (a major contributor to balance sheet erosion worldwide) were caused by a glut of oil backing up. Finally, that glut will subside in order that suppliers can raise prices. Too much pressure to do otherwise.

In much the same manner, several other “gluts” are undergoing better management.
  • Consumer goods at deflationary prices is simply not sustainable economically. Third world producers are learning that, finally.
  • Millions of immigrants upsetting the economies of many countries. Those very countries will, we like to think, exert their diplomatic and political muscle to correct some of the reasons that cause the fleeing, beginning to reverse the flow. There are some sound leaders, after all!
  • Millennials worldwide are coming forward, and will influence economies, elections, the environment, and stability like no generation before. They’ve watched their parents and grandparents botch things up. They are one glut we all can applaud!

So, before you ask, we’ve offered our crystal ball gazing. Now, what’s yours??

Is This Bias in Pricing? Shrewdness? Or Just Being Clueless?

We were struck by this December 22 Washington Post column headlined "Why you should always buy the men's version of almost anything." 

According to reporter Danielle Paquette, the New York City Department of Consumer Affairs found that "Controlling for quality, items marketed to girls and women cost an average 7 percent more than similar products aimed at boys and men." 

Sounds preposterous, right? But, consider these specific examples from stores such as Target, Walgreens, Club Monaco, Levi's:

  • A red scooter for boys costs $29.95; the same scooter in pink "for girls" costs $49.95. 
  • Other gendered toys: Raskullz shark helmet $14.99;  Raskullz unicorn helmet $27.99.
  • Playmobil pirate ship $24.99; Playmobil fairy queen ship $37.99.
  • Personal care products: Schick Hydro 5 razor cartridges in a blue box, $14.99; Schick Hydro "Silk", in purple packaging, $18.49.
  • Apparel: Women's clothing costs from 24% to 28% more than men's at some specialty stores that sell both. 

Other specific examples abound in reports from the State of California, the University of Central Florida, and the Yale School of Management. 

So, What's Going On Here?


  • Is this a shrewdly intentional pricing strategy, reflecting what customers will pay? You know, "Price is not a function of cost."
  • Is it an historical artifact? "Well, we've always charged women for any alterations; men get tailoring for free. That's just the way it is."
  • Is it a reflection of decisions by the manufacturers? "Our retail prices are markups based on our costs from the vendors."
  • Or, is it all a conspiracy theory run amok? "There is no conscious effort to charge women more than men. That's just in how you sort the data. Pricing is very complex and dynamic."

Just a Caution

Before you dismiss it all as a "conspiracy theory" in search of a cause, do you even know whether any seeming patterns of gender bias (or other bias) might exist in your store's pricing?

  • It may behoove you to do some inquiries! Today's technology should readily yield some answers.
  • Then, be sure to show the findings to an array of folks. They may see "patterns" that could be construed as intentional.
  • Are there some appearances of "persistent surcharges" for ANY group of customers? Appearances DO matter!
  • And, IF there are such appearances, what should you - or could you - do about it?  

Ahh. Just another issue that only the owner can resolve. Maybe it should go to the top of the list of your New Year's Resolutions! 

Alert! The Amazon Books Store Is Just the Start


We have watched the opening of Amazon's first bricks-n-mortar specialty store with great interest. And here is our conclusion: Brace yourself!

In fact, we anticipate an onslaught of entire shopping centers of Amazon "specialty retail stores". (Zappos Shoe Store, anyone?!) All using the same data-centric efficiencies Amazon is testing at Amazon Books, its just-opened bricks-n-mortar bookstore.

  • Whether apparel, electronics, sporting goods, kitchenware, jewelry, hunting gear or whatever: Amazon has incredible customer data.
  • Now, imagine a center full of separate Amazon "specialty stores" of categories specifically tailored to that particular market: hunting and fishing gear in some places; hiking and backpacking gear in another market.

Breath taking, isn't it? But that is our prediction: "Earth's Biggest Store" will find you and others who shop like you, (or your customers and others who shop like them) and set up its own specialty shops.

Talk about target marketing! 

A Little Background

In early November, in a prominent location – complete with a brick facade – in an upscale shopping center in Seattle, Amazon opened the "real wooden doors" on Amazon Books, its bricks-n-mortar bookstore.

Hmm. Actually, Amazon Books has far more in common with Amazon.com than with bricks-n-mortar bookstores.

  1. First, it is VERY data-centric. The books they carry, Amazon says, "are selected based on Amazon.com customer ratings, pre-orders, sales, popularity on Goodreads, and our curators' assessments." And it's hyper-local; it represents the tastes and preferences of the readers in that local market.
  2. Second, they have inoculated themselves from price competition from "the web": all prices in the store are the same as on Amazon.com.
  3. Third, they are constantly gathering customer data. No prices are displayed at Amazon Books. Want to know the price? Just scan the barcode below each book. Be sure to do so with your Amazon app; for convenience, you know.
  4. And, it's true; they do not take cash! Yet another typical cost they have eliminated.

In our view, what they have opened is a new kind of category killer, but in a very small footprint.

  • They are using their vast storehouse of data to offer only the best turning inventory, to a targeted, localized market.
  • And, they have the pricing advantages that come from size. They are "earth's biggest bookstore", after all.
  • Their pricing is dynamic; e.g., $16.25 today, $17.85 tomorrow. What will it be next week? That's the marketplace dynamics in action. 
  • Their pricing also could be targeted to the particular shopper as well, based on that person's history with Amazon. Remember, the only way to get price info is by scanning with your Amazon app. ("Don't have one? We can set that up for you right now!")
  • And, it certainly continues Amazon's relentless pursuit to turn "the art of retailing into the science of retailing." No more need for judgment calls from the high-salary buyer; just follow the data! (The data isn't temperamental the way some buyers can be, either!)

Coming Soon to a Neighborhood Near You?

The issue is this: with its vast 20+ years of customer data, Amazon is showing its ability to again reinvent retailing. 

We believe they are poised to roll out collections of Amazon Specialty Shops. Each shop is targeted to that particular market, as is the mix of shops in a given center.

All, of course, would be highly data-driven, and able to exploit the same cost efficiencies that Amazon is testing at Amazon Books. 

Talk About a Time Crunch!

Well, the calendar seems to be wreaking a little havoc for retailers this year. 

First, Labor Day was “late”; that is, on  September 7 instead of the 2nd or 3rd.

  • That meant that the Back to School shopping that often occurs in August was pushed into September.
  • Plus, it was delayed even further by today’s shoppers, who seem to prefer “grazing” – our name for the tendency to shop closer to need – instead of concentrated shopping trips.

Next, looking ahead: Thanksgiving this year is also a little "late", on November 26. And, Christmas is on a Friday.



Why does this matter? Because Christmas Eve is just four weeks after Thanksgiving!

  • This means the fewest number of weekends - three! - between Thanksgiving and Christmas.
  • But, with Christmas Day on a Friday, that allows 2 full weekend days for those after-Christmas sales and returns.

Who Will Be Impacted?

Which retailers might be affected the most by these calendar-based realities? Online merchants!

  • It’s very likely that in a time crunch, customers will choose to do more of their shopping online, which puts increasing pressures on online merchants to meet delivery-by-Christmas schedules.
  • And this is happening as some of these larger retailers are facing difficulties finding seasonal workers for their warehouses.
  • Turns out that with employment rising, there simply aren’t as many folks willing to accept the demands of a warehouse job on just a short-term, seasonal basis. Hmm. Christmas shopper beware!

Meanwhile, even if your retail operation is more bricks-n-mortar than online, this calendar crunch still may affect you. Here’s how.

  • Seasoned retailers have observed that in-store shopping surges as each delivery-guaranteed-by-Christmas order date deadline is passed.
  • Make sure you know what those key deadlines are. Be prepared to reap the most benefit. Be proactive in scheduling your staff in anticipation!

All in all, the rest of 2015 promises to be pretty hectic!


Straight Talk from Retailers About Social Media "Effectiveness"



"Social Media". It's all around us. But what retailers want to know is this: "Is it effective? That is, does it raise sales?" 

So, we asked, and retailers answered. Did they ever! Retailers indeed are very active with social media! 

And we also confirmed that retailers – at least, those who responded to our survey – are very focused on accountability. They too keep examining "Is it working? Is it effective? Is it driving sales?!?" 

The survey gathered two kinds of feedback:

  1. Effectiveness ratings about each social media platform (from "Very Positive!" to "Not At All");
  2. Comments from the survey respondents (1/3rd of whom are multi-store operators). 
You can see all the findings here on The ROI site, including:


  • Verbatim recaps (yes, including those smartphone typos)  explaining why or why not social media is "effective" for retailers.
  • Explanations behind the ratings for each platform on the key question: "How has it INFLUENCED SALES?"
  • And, of course, the full results from the survey (Which promotional tools have declined in use? Is social media paid advertising being used? And more real-world insights and observations.)

We were certainly intrigued to see how and why independent retailers are using and/or experimenting with social media. We think you will be too.

Go here on The Retail Owners Institute® site for all the info.

Mid-Year Review: Here's Where to Look to Find the Surprises...and the Award Winners!

The end of June and the official start of summer is a great time to reflect on how the year's going so far.


And, just as a reminder that we DO "practice what we preach", we share with you one of our conclusions from our own mid-year review:

"Okay, Co-Founders. It's time to face reality.
You're not exactly rocket scientists."




So, all right. We cannot ALL be rocket scientists! Let's therefore pivot our thinking , and focus instead on how to recognize what HAS been accomplished!

For instance, think about your stores, your departments, your merchandise categories, even your vendors(!) Which ones  merit some "awards"?

No, Not About People This Time

While we typically think of people as recipients of recognition – and we trust you already are doing that, right? –  this is a different challenge.

This is a fun way for Owners to take a new look at your store's performance. Take advantage of all the analysis your POS system can offer you. We are confident you will find some surprises!

Of your merchandise, for example, which products are Award Winners?! Which would qualify as...

  • "MVP, Most Valuable Product"? (Hint: GMROI provides good indicators here)
  • "Rookie of the Season", e.g., Best New Product? (Is it what you expected?)
  • "Most Unsung Hero"?, or, the most unexpected top-performing product. (Who saw that coming?) 
  • "Most Deserving of a Farewell Tour"? Oops, under-performing once again. (Sidewalk Sales, here we come!) 

Now, Take Another Look at Your Vendors

Once you've reviewed your POS reports for products, take another look at them, and do the same analysis for your vendors. Really! There might be some real surprises there!
  • How many of your vendors are "award winners" for your stores?
  • Which vendors have the the best GMROI for your operation?
  • Which vendors are responsible for your merchandise "Award Winners", your Rookies of the Season merchandise? Your unsung heroes?
  • About that merchandise most deserving of a Farewell Tour; any concentrations among certain vendors?

Again, the goal here is to do a mid-year review from a little different perspective.
You WILL find some Award Winners! (And, some surprises!) What better time for them to get the recognition they deserve?


Restaurants: Look at Their Financials

Much of the world regards restaurants as retailers. And in fact, they are; they sell to the ultimate consumer. 

The Restaurant Sector, and its four restaurant "segments" defined by NAICS, has been added to Key Financial  Benchmarks section of The Retail Owners Institute®. 

Now we can get perspective on their financial performance. Whether they offer sit-down dining, fast food takeout, or are a neighborhood cafe, brewpub or juice bar, all have telling financial vital signs. 

And they are fascinating!


Here are some of our immediate takeaways as we examined the Five-Year Charts for these Restaurant Segments:

Higher Profits
Overall, the median-performing restaurants enjoy higher pre-tax profits than median-performing retailers. Pre-tax profits for the restaurant segments range from 4.1% to 7.3%, well above the retailers’ average profit of 3.5%. 

High Margin Businesses
Any wonder that some retailers are incorporating snack bars and/or beer, wine and even liquor bars in their stores? Changes the in-store experience, keeps customers there longer - and has sweet margins!  (Plus, they can absorb the operating expenses versus a stand-alone operator.)

But…Cash Crunch
The Current Ratio for these 4 restaurant segments is grim. Very grim. For each dollar they owe in the next year, they have less than a dollar in current assets. They are constantly in a cash crisis. 

Hmm. Is it any wonder that many “alternative lenders” welcome cafes and coffee shops as their customers?? 

And, Lots of Debt
That on-going cash crisis may explain why the Restaurant Sector has such breathtakingly-high Debt-to-Worth ratios. (And remember, as you look at the Five-Year Trends, the improvements - that is, the decline - in the Debt-to-Worth ratio is likely due to seeing the numbers for only the survivors, those places that are still in business.)

Revealing, Aren't They?
Yes, restaurants are retailers. But the overall financial picture of restaurants is decidedly different than most other retailers. 

To take a look for yourself, and see how your conclusions compare, go to the Restaurants Sector of The ROI's Key Ratio Benchmarks. Review all of the Five-Year Trend Charts for these restaurant segments:
  • Snack or Juice Bars, Espresso Bars
  • Limited-Service Restaurants
  • Drinking Places (alcoholic beverages)
  • Full-Service Restaurants