From The Co-Founders


Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

The Opportunities of a Crisis: Don't Miss 'Em!

Each of us, our households, businesses and communities are in different stages of shutdown due to the coronavirus.

While we cannot speak to when this will end, we do have some ideas for dealing with the "fog of uncertainty" that hangs over us all.

There are some steps you can be taking right now that can be thought of as Spring Cleaning. 

Foremost among those: clearing out inventory. You cannot wait. You must be taking steps now to reduce your inventory

  • Your customers want "steak, cheap" not "cheap steak." Your fresh merchandise at substantial markdowns can be very appealing. 
  • Make your prices compelling. Markdowns must be significant. This is not the time to worry about margins; you must generate cash. 
  • If you've not already done so, cancel any open orders.
  • Send back what merchandise you can (yes, even if you have to pay the freight.) 
  • Accept telephone orders! And remind people you can do this (a new variation on "Throwback Thursday?")
  • See your merchandise in new ways. People are in their homes 24/7 with their families and pets. Which of your products – or new combinations of products – might offer a heightened appeal? "Gift baskets" or "activity baskets" that can be picked up curbside?

Here's an idea: Take that really old, out-of-season merchandise and sell it online to a whole new batch of customers. 

If you haven't already been set up to sell online, or even if you have, a new online outlet can be a great opportunity to "dump merchandise" at very steep markdowns away from your present clientele.

  • For example, check out the eBay "Up & Running" program, "an accelerator program specifically designed to help retailers without an e-commerce presence transition to selling online, pledging up to $100 million in support for small businesses across North America." (We have no financial relationship with this.) 

Okay, start looking ahead to after the shutdown. This will not be back to normal/business as usual! 

In fact, in our minds, do not think of it as re-opening your store; think of it as a New Store Opening. And that means some major rethinking. 

Who is your target customer?

  • It likely will not be the same customers as before. At least not in the same proportions. Everyone's financial circumstances have been affected by COVID-19. And that affects their shopping priorities. 
  • It's not what folks will WANT to spend money on; what are they ABLE to spend money on?  
  • What does that mean about your merchandise mix? 
  • Are there categories you should reduce or eliminate? 

​Best to have thought this through now. It makes a big difference in how you go about clearing out your inventory, AND in what orders you place going forward.

This might be a good time to consider a new layout for your store.  (Here's a plus: Often when store layouts are changed, even long time customers "discover" merchandise for the first time.)

  • Customers will expect the sense of more open space. 
  • Improved lighting or a fresh coat of paint could help a lot, as could reducing the number of fixtures on the floor.
  • Could any of your aisles become one-way?
  • How else might the in-store traffic patterns be improved?
  • How can you create more space around your cash wrap?
  • Might you showcase how customers can Buy Online, PickUp Instore by having racks upfront with already-bagged merchandise awaiting pickup? 


Here is where you can take advantage of the unlimited free access to The ROI's 3-in-1 Cash Flow Calculator for retailers. There are just a few numbers you will need for inputs in order to get a first draft. From there, the 3-in-1 Calculator can do all the number-crunching for you. 

Remember, customers will be very price conscious (what one economist described as "prone to thrift." Gee, really?!) 

There will be clearance sales or Going Out of Business sales all around you. (Another reason to have been aggressive in your Spring Cleaning clearance efforts! You need to beat the rush.)

Think of this as a new store.  The first few months (indeed, the first year) will not be what you would expect from your present operation. Do not expect to just pick up from where you left off. 

Ready? Here we go. 

  • Expected Monthly Sales. Don't let this stump you too much. For example, just start with June as the first month you really will be open. What would June sales be? Not what they were last year, for sure.
  • Then, put in a maintained Gross Margin (after markdowns) for each month.
  • As for Expenses, you make just one entry for the full year. Selling Expenses will be calculated as a percent of sales (you can use the percentage from prior years as a guide).
  • The other expenses are so-called Fixed Expenses, averaging the same amount each month. If you have negotiated some rent relief from your landlord, that would be reflected here. Administrative Expenses – e.g., travel to trade shows; some staff salaries; etc – are likely to be reduced as well. 

Don't linger too long over the profit and losses for these first 12 months; it likely will be grim. (It's a New Store, remember? Cut it some slack!)

Importantly, with just a couple more entries from you, the 3-in-1 Cash Flow Calculator will produce an Open-to-Buy inventory buying plan, AND a cash flow projection. 

And those are the two areas that deserve your attention and good judgment. 

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