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Patricia M. Johnson & Richard F. Outcalt
Retail Strategists and Retail Turnaround Experts
Co-Founders, The Retail Owners Institute® • Business Strata:G®
You can’t open a business magazine—or your inbox—without seeing breathless headlines about AI. “Retail is being revolutionized!” “Predict your customer’s every move!” “Automate everything!”
Tempting? Sure. But here’s a gentle reminder:
Your biggest risks—and your biggest opportunities—are still right there on your shelves, in your reports, and on your balance sheet.
And, the biggest growth opportunity in retailing is between the ears of the owners. Keep learning!
Yes, AI might help with ordering or customer service someday. But right now, your business needs what only you can provide: your good judgment.
That’s why we’re urging you to stay focused on what you can control. Even small, well-informed adjustments—fewer SKUs, faster markdowns, cleaner buying plans—can create a cushion when things get bumpy.
And if you do decide to experiment with new tech? Great. Just make sure it’s solving a real operational problem—not just adding complexity with a new acronym.
It's a given that your sales volume is a very big deal. Granted, you are analyzing it every day. But here's a slightly different approach which you may find very revealing.
Let's start with a couple truisms.
The definition of retailing is “selling to the ultimate consumer.”
Retailing also is having "the right product at the right price at the right place at the right time for the right customer."
But, as retailers ponder how best to manage sales in the current consumer environment, does it really matter whether their "right customers" buy from them in-store or online?
Actually, it might! And here’s a simple, free "pilot project" to find out a little more.
A. First, gather your sales data for, say, the past month. Or, depending on your transaction volumes, maybe just a week. This is just a pilot project.
B. Then, using a spreadsheet like the example shown here, enter that sales data into these two categories:
HOW THEY SHOP with you: In-Store or Online
WHAT THEY BUY from you, both the merchandise department and what they paid.
C. Tally it up. For each column of HOW THEY SHOP, sort and tally purchases by merchandise department and dollar volume. (Remember to look at median values for transactions – half higher, half lower – not just average transaction.)
D. Look for the patterns. And the surprises (yes, there WILL be surprises!) And then, consider what that might mean.
For instance, it may confirm the purposefulness of your shoppers. They have a clear idea of what to buy from you online, and what they prefer to buy in-store.
Or, maybe it will illustrate how you have two very different kinds of shoppers. Here's what that might mean:
Do they demand/deserve different merchandise mixes?
What will it take to grow sales from each group?
Should one group have priority over the other?
Will you need other vendors?
Different marketing programs?
Or…? Or…?
Fun, isn't it? We think this exercise will stimulate your merchant thinking. And that of your key staff people as well.
Managing sales is such a big deal for retailers. And you really cannot know too much about where sales are coming from, and why. The art of being a merchant is enhanced by exercises like this.
We're big on the old saw, "Retailers need to work smarter, not harder."
WEBINAR Of The WEEK
All retailers want to increase productivity – of their stores, their employees, their advertising, their technology, etcetera. Right?
But, how about increasing the productivity of your largest asset? You know, your inventory!
"How?" you ask.
By using GMROI to help guide your decisions.
The ROI regards GMROI - Gross Margin Return on Inventory Investment - as the #1 Inventory Productivity Tool in retailing.
To learn more about why and how to use GMROI in your retail operation, be sure to take advantage of this lively – and free – Webinar of the Week with Pat Johnson and Dick Outcalt, Co-Founders of The ROI.
Consider a retailer doing one million dollars in annual sales with a 40% gross profit.
If over the course of a year that retailer were to raise inventory turns from 2 to 3...they would raise $100,000 in cash!
Same sales. Same gross margin. Just less inventory on hand soaking up cash.
RetailOwner.com
Avoid mistakes • Seize opportunities • Look ahead now
My boss arrived at work today in a brand new Ferrari.
I said “Wow! That’s an amazing car.”
He said “If you work hard, put all your hours in and strive for excellence, next year I’ll get another one.”
Makes you chuckle, doesn’t it?
Then comes the concern: given that all humor must contain enough truth for the punch line to land, “Is that what my employees think about me?!”
Today’s economically volatile times can be a new challenge for many owners. It’s seemingly a constant scramble to make good decisions as you juggle the impacts of tariffs and increasing expenses with potentially lower sales from worried consumers.
And now perhaps your employees think you’re getting rich? At their expense?? Consider teaching this and/or printing out a hard copy to post in your lunch room.
Make sure everybody in your organization understands that…
Net profits go directly into the equity as part of balancing the Balance Sheet.
More equity means either more inventory or less debt.
Profits do not go directly to owners.
Of course, you also may want to cancel your Ferrari order.
Are you an Owner? Or aspire to be an Owner?
Be prepared; there will be many decisions ahead! The challenge: How to make them decisively, with confidence?
Pat Johnson and Dick Outcalt, Co-Founders of The Retail Owners Institute® have identified three basic steps to make informed and strategic business decisions. And they are pleased to share “the secret recipe” with you.
Step #1.
Understand the cause-effect financial connections (what we call the "four financial wheels under every retail business") and how to control them
Step #2.
Easily monitor the "telltale" warning indicators in your business
Step #3.
Need to adjust? (Of course! This is retailing!)
Thanks to The ROI's remarkable 3-in-1 INTEGRATED Cash Flow Calculator, every retailer can see and compare their financial choices...in advance! On demand.
In this Webinar of the Week, Pat and Dick show how every retailer can be informed and strategic as you deal with crucial financial decisions about the business. You also will see the 3-in-1 Calculator in action.
Be sure to take advantage of this lively, provocative and empowering how-to webinar, available only from The ROI. And free!
What would happen to your cash flow if you ordered more inventory?
What if you raised prices?
What if you got a bank loan?
With The ROI’s “What If…?” projeting calculators, you can test out these potential actions before you make any decisions. For instance,
Adjust inventory levels and see how it impacts cash flow.
Experiment with different price points and instantly see profit projections.
Plan inventory buys based on turns—and see the differences in GMROI
These powerful tools are built for busy retail owners who need fast, reliable answers to stay competitive. And because everything is cloud-based, you can log in any time, from anywhere.
Don’t miss out on these retailer-exclusive calculators designed to make your life easier and your business stronger.
The tenth of each month, for most retailers, is a critical "payables day". Do not miss taking cash discounts, i.e., 2/10/EOM.
Consider this:
When a payable due on the 10th of the month is not paid until the 30th, it loses the 2/10/EOM cash discount.
That means it "costs" the equivalent of a 36% annual interest rate. (The 20 days taken is 1/18th of a 360 day year, times 2%, equals 36% equivalent interest.) 👀
That's why bank loans are relatively cheap.
The Retail Owners Institute® has been empowering retailers since 1999 to "Turn on their financial headlights!" Our tools and resources are trusted by thousands of store owners to help grow profitable, resilient businesses.