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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®
We once knew a lady who steadfastly championed the idea that Labor Day should be considered New Year's Eve, and the Tuesday after Labor Day as the start of the New Year. (Yes, she was ahead of her time in many other ways as well.)
Here's her reasoning about the "real" New Year's Eve: as summer fades away and vacations end, the new school year starts up; the baseball season pennant race is on; football games begin.
As all this happens, she explained, most people take on a renewed sense of energy.
The promise of a fresh start is everywhere. Optimism abounds!
Time to embrace that “New Year state of mind!” And shed some of the "we’ve always done it that way" practices.
Remember, your best shoppers always want to know "What's new?"
The better job you do of sharing the joy of all that newness with your shoppers, the better it will be.
Here is how you might start: think about any and all the changes in your stores in recent months. Sure enough. Lots of good answers to “What’s new?” Celebrate them!
A new look to the store.
New hours.
New ways of taking payment.
New ways of offering merchandise (online; in-store; personal shoppers; subscription)
New ways of reaching out to your customers.
New staff members.
New events, promotions, savings, etc
Likely some new vendors.
New ways of buying your merchandise (online trade shows; online wholesalers, etc.)
New ways of getting purchases to the customers, whether literally by mail or courier, or curbside pickup, or in-store.
Time to celebrate that New Year state of mind! Go for it! (And yes, work on those New Year's resolutions, too!)
Make your stores the ones brimming with the good vibes of “Look what’s new!”
All retailers want to increase productivity – of their stores, their employees, their advertising, their technology, etcetera.
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.
To learn more about why and how to use GMROI in your retail operation, be sure to take advantage of this lively – and free – TOPICAL TUESDAYS Webinar.
Online 24/7. Nothing to download or install. They just work!
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Whether you are a retailer, or you work with retailers, The Retail Owners Institute® makes it easy for you to get a quick financial health assessment of any retail business.
The ROI's Retail Benchmarks Five-Year Trend Charts offer a snapshot view of the financial health and viability of all 45 retail segments.
We make these available for free, so that retailers worldwide can benefit from the insights and perspective they provide.
Here are the answers to some of the most Frequently Asked Questions about these unique charts.
The segments featured by The ROI reflect the definitions and designations of the North American Industrial Classification System – NAICS. (We don't make this stuff up!) The top of each Retail Segment Page includes the NAICS code and the NAICS definition for that industry segment.
Retailers may need to examine the benchmark numbers in more than one segment to get perspective on your own store's performance, particularly if your store does not exactly fit the NAICS category.
Oh no, not at all. There are an abundance of ratios that accountants are more than happy to calculate!
The ROI has identified 6 Key Retail Ratios for retailers to regularly monitor and manage:
Pre-Tax Profit
Gross Margin
Inventory Turnover
Debt-to-Worth Ratio
Current Ratio
GMROI
We focus on these because they represent "controllable variables" for retailers. Also, they are most relevant to the business management decisions facing retailers.
Everything on The ROI site teaches to these 6 key ratios.
Yes, Pre-Tax Profit % and Gross Margin % are most everyone’s first stop.
However…the Debt-to-Worth Ratio and Current Ratio are the most significant regarding your financial strength.
And here’s the key: Turnover and GMROI help to explain why those four are what they are.
As is noted on each Benchmarks page, the source data is Risk Management Association's Annual Statement Studies. RMA collects financial statements from banks, and aggregates the findings for all industries, not just retailing.
RMA presents their data in 3 sections: the Top Quartile, the Middle Quartiles, the Bottom Quartile. Based on the Middle Quartiles results, The ROI calculates GMROI for each segment, and then prepares our Five Year Trend Charts for each of the 6 Key Ratios for each segment.
For perspective. Calculate these ratios for your own business, and then see how you compare to your retail industry segment. Then, use these benchmarks when you are setting your own target ratios for the next year.
And, for negotiating with lenders and vendors. When you are seeking a bank loan for your business, the bankers will look at these industry benchmarks as they assess your store's performance. Knowing how your store's performance compares enables you to make your best case.
Go to the “How does my retail business compare?” section on The ROI site. There you will find:
Links to the benchmark charts for all retail segments
The ROI’s Key Ratios Calculator to quickly calculate your business’s key ratios
Link to The ROI’s Retail Benchmarks Resource Center
And of course, the entirety of The ROI that is available 24/7 to those with active Member-Access subscriptions.
And here are the best tools available for each crucial step.
Key reminders:
The systems you already have in place, particularly your accounting system and your POS system, are for the Measure process. They provide the inputs for the Strata:G® Key Ratios Calculator to measure the “vital signs” of the business.
For the other three steps – Plan, Monitor, Adjust – you need the proprietary Strata:G calculators, built specifically for projecting, not accounting. They’re for looking ahead, doing financial modeling, playing "What if...?"
The Business Strata-G site has the tools that have empowered retailers worldwide since 1999. And The Retail Owners Institute provides all the training one needs to take full advantage.
Thanks to this approach and Strata:G, you can get more strategic value from your accounting and POS systems. And sleep better at night!
The friendly Strata:G Way.
Fresh perspective. New insights. Timely business decisions.
Use The Retailer-Friendly Strata:G Calculators!
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The only thing you have to lose is… your opportunity!!
More info here
Since 1999, empowering retailers and store owners to "Turn on your financial headlights!"