PERSPECTIVES

In today's financial climate, how in the world can independent retailers (that's the 92% that are not publicly traded) get financing? 

In most cases banks are not lending (even as they run ads proclaiming their "support for small businesses.") Landlords aren't more lenient, nor are many vendors. Even mothers-in-law are asking tougher questions! 

So, what should a retail owner do? Just give up on the idea of getting financing? Or, worse, accept the cash offers from vendors, payment processors, or POS providers who take their "payments" right off the top of your daily sales?

Well, it is maddening, but The ROI recommends an easy exercise that may be of great help.

Think about the prominent characteristics of today's shopping experience:

• More "self-service" for the customers (that is, less staff on the floor.)
• Self check-out by the customer.
• Reduced in-store merchandise selection; "Just check our website."
• Limited in-store signage or knowledgeable staff.
• Presumptions that customers will search online for product information, reviews, etc.
• Automated, "menu-driven" phone systems replacing "real people."  

Hmm.  

• Are these providing more "convenience" for shoppers?
• Improving their shopping experience?
• Or – just shifting the work to them?!

Convenience Retailer vs. Destination Retailer: Decision Time

Throughout the pandemic, millions of shoppers – including the older Baby Boomers – discovered the benefits of online shopping. Then, as brick-n-mortar retailers scrambled to survive, the increased availability of delivery, curbside pickup, BOPIS (Buy Online, Pickup In Store) and BORIS (Buy Online, Return In Store) was well received by a broad swath of consumers. 

We see that this has brought heightened awareness of two different retail strategies: Convenience Retailing versus Destination Retailing. 

And here's the deal: retailers now must choose either one or the other of those two strategies. You cannot have one foot on the dock and one foot in the boat. You DO have to decide! 

• That uncertain/undecided middle ground is not a viable choice. 
• Those who end up there by default – by choosing to not choose  are on their first step to being former retailers!

We're sure you'll agree. Misinformation can be very harmful. Retailers surely don't need more harmful anythings!

Just last week, we came across the proverbial straw that broke the camel's back. It was a post on the Intuit Quickbooks site*, titled "Inventory Turnover Ratio." And the explanatory article was accompanied by an "Inventory Turnover Calculator."

What do we take exception to? The misleading and/or incorrect information it provides. For example, their "Inventory turnover calculator" requires two entries. 

• First, "enter the total costs involved in selling your products."

We must take exception. "Total costs involved in selling your products" is NOT the same as Cost of Goods Sold. Nor do they specify that it should be for a 12-month period of time. 

• The second entry they request: "Average inventory cost."

We must take exception. What they surely meant to say is inventory @cost. 

• Plus, they simply refer to "12 months of ending inventory balances," without specifying that it should be for the same 12 months for the previous entry.

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.

Ahh yes, yet another flexibility test. The first quarter of 2023 was full of some major events, nationally and internationally, that disrupted many business plans.

As you contemplate where you are now with your retail operation, compared to where you intended to be, don't despair! Even more important, just like you do with the GPS system in your car, disregard "returning to the prescribed route."

This is retail, after all. Change is the name of the game!

Successfully "doing retail" has always been a challenging and fascinating and evolving exercise. As the old Chinese proverb states, “It’s easy to open a store. However, it’s tough to keep it open.”

And today, seemingly more than ever, third party organizations, more than individual entrepreneurs, seem to be drawn to retailing. Consider:

• Vendors and manufacturers who decided that they would rather open their own stores than continuing to deal with “failing” retailers. It would be so much easier.
   
• Online-only operators choosing to offer customers a hands-on experience with their product. (And then, those pesky customers were in their stores, but "Just looking, thank you." Who knew?)

These and others fit into our category of “retail-as-added-use.” "It looks easy. Why don't we open stores?"

But, retailing is not their core competency; they are manufacturers or direct marketers, or wholesalers, or importers, or whatever.

Are we alone, or have you also noticed it?

Everything seems to be kind of stalled right now. Maybe that's for good reason. Or maybe this period of malaise is a great opportunity for the bold. Whatever, it seems weird.

Look at these examples: 

• Sure, now the Silicon Valley Bank has been sold. Finally. But the fragileness of the entire banking system hasn't been corrected. So, if a retailer needs something from a lender, expect to hear "Let's just wait to see how this shakes out."
   
• On the world stage, all sorts of powerful players are jostling for attention and position. It can be unsettling. Whether it's Russia, China, North Korea, Brazil, Israel or whomever, it's happening daily. And it seems to have many observers saying, "Let's just wait to see how this plays out."