The Retail Industry's #1 Need Right Now | What Really Drives Sales? | How To Reduce Growing Pains | Dependent on Independent Retailers?
Wednesday, March 6, 2024

From The Co-Founders

Patricia M. Johnson & Richard F. Outcalt
Outcalt & Johnson: Retail Strategists, LLC  •  Retail Turnaround Experts

We've Been Wondering...


What's the #1 thing that the retail industry needs now more than anything else?

More towns. 

That's right, more towns and villages. Look, towns tend to be more residential, even slower and more relaxed. Even the word conjures up warmth. 

And towns, and the people who love towns, are a mecca for the vibrancy of retailing. Think about it: the retail industry needs more towns!

And it's already trending in that direction. Macys, Whole Foods, Nordstrom Rack, and Walmart have announced rolling out small formats, seeking locations closer to residential areas. They recognize that's where their customers are and will prefer to be. 

Conversely, there are way too many cities. Every city is struggling with half-empty medium and tall buildings envisioned back when nobody had heard nor respected the influence that the internet would have.

Now, many cities must reinvent themselves into, perhaps, a cluster of separate "towns." A downsizing, yes, but actually a realization that "Bigger may not be better, but better is better!"

Clearly, "city" has lost much of its appeal, especially with the traditional office workers. To recapture some appeal, cities must focus on their residential and tourist markets, especially with unique destination retailers. But this trend may be slow to materialize.

There's three quarters of this century remaining, The retail industry and all of society would benefit greatly if many more towns flourished, and many out-of-date cities dissolved, or more likely, shrank to a better-is-better size. Customers rule, and they want towns and villages.

Seventy-five years should do it. (That allows time for the vast amount of zoning changes that will be needed in today's cities and towns to allow for the new mix of people and land uses heading their way.) But the opportunities for retailers have never been greater!

That's what we've been thinking about. How about you?
 
Tips • Tactics • Strategic Insights • Commentary
 
Want more of the strategic retailing observations from Outcalt and Johnson?  Prior commentary From The Co-Founders  is available under PERSPECTIVES on The ROI site.  ➡️
 

Dynamics of Retail Growth 

 
The Four (Only!) Ways to Grow

For retailers, there are Four (Only!) Ways to Grow, based on the two fundamental variables for managing growth.
  • One is your Merchandise;
  • The other is your Customers.
The chart above shows how those intersect (see a more detailed discussion here on The ROI site.)

Why does this matter? Each of these four fundamental Growth Modes demands different amounts and kinds of changes.

Change = "stress." Even "good change" involves added stress.

Change affects – "stresses" – all of your resources. Financial capital, and especially human capital, will be impacted.

Go here for perspective on how to reduce your stress as you grow your business.
 
Reduce Growing Pains
 
Great for Trade Associations • Buying Groups • Chambers of Commerce • Suppliers • SBDCs • Other Organizations
Now, here's an easy, low-cost, no-risk way for your organization to help your retailers help themselves.

SPONSOR their unlimited Member Access Privileges at The Retail Owners Institute.
 As a Sponsor, you unlock the gates to the entirety of The ROI.

 
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How To Find Your Best – Most Profitable! – Customer

 
 

The "Retail Strata:G® Wheel." What's that??

It's stuff you think about and work on all the time. It "connects the dots" for you. And is it ever powerful!  

This proprietary concept from The ROI merges strategic marketing planning with strategic financial planning.

It's the cause-effect connection between your best customers and your financial management. Or, in other words, it substantiates how marketing and sales plans "pencil out". 

This lively – and free! – webinar with Pat Johnson & Dick Outcalt, Co-Founders of The Retail Owners Institute, will
  • introduce this strategic way of thinking, managing, and "connecting the dots"
  • walk through the step-by-step process for you to turn your existing customer data into useful management information.
The Retail Strata:G® Business Wheel, developed by the Co-Founders, is exclusive to The Retail Owners Institute. It has helped thousands of retailers sleep better at night!

This is a fast-paced, fun session. Be sure to take advantage!
 
FREE Access • WEBINARS By The CO-FOUNDERS
 
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Let other retailers (and those who care about retailing) know about The ROI. 
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Getting Smarter About Productivity | Fresh perspectives; New insights | In Decline? Or...In Denial | Dependent on Independent Retailers?
Wednesday, February 21, 2024

From The Co-Founders

Patricia M. Johnson & Richard F. Outcalt
Outcalt & Johnson: Retail Strategists, LLC  •  Retail Turnaround Experts

Focus on Productivity

The Most Dynamic Management Tool for Retailers


What is the "return on investment" of a retailer's largest investment? The GMROI calculation is the tool for the job!

GMROI – Gross Margin Return on Inventory Investment – indicates how much Gross Margin you get back for each dollar “invested” in inventory over a year. 

No other formula, no other calculation, simultaneously impacts both Gross Margin and Cash Flow. No wonder we consider GMROI as the #1 measure of inventory productivity.

And since inventory represents between 65%-80% of a retailer's total assets, it deserves a lot of management attention.

Let's start with a little "window shopping." Check below for the GMROI Benchmarks for just a few retail segments. 
  • First, there's a lot of variation. In 2023, for instance, results range from $1.90 to $7.50. That's the point of GMROI, to compare performance. You'll see how useful it is for comparing stores, or departments, or vendors(!) in your operation.
     
  • Now look at the GMROI chart for each of these 6 segments. A few ups and downs over the last 5 years, eh? Just not the same ups and downs for everybody.
    Note: GMROI's that are going up are sure preferable!
There's lots more charts where these came from. Go here to find the Benchmarks for your retail segment, plus to see all 40+ retail segments for which data is available.
To calculate your own GMROI and find out more about GMROI, go here on The ROI site. What is your GMROI for 2023? Is it better than the year before? 

But most important, what are you going to do to improve GMROI this year? Now's the time to get started!

And if that's not one of your main priorities, then you really should consider getting out of retail. 


For ROI Members, there's much more info available, from a GMROI Calculator to an online self-paced training course, on-demand access to webinars, more in-depth articles, GMROI Guide e-book, and more.
 
Tips • Tactics • Strategic Insights • Commentary
 
Want more of the strategic retailing observations from Outcalt and Johnson?  Prior commentary From The Co-Founders  is available under PERSPECTIVES on The ROI site.  ➡️
 

Fresh Perspectives. New Insights.


Have you noticed? Successful retailers seem to be those who are continually open to fresh perspectives, and the new insights those can prompt. 

In that spirit, here are some potentially new ways of thinking about or responding to the demands of retailing. 
  • First-time customers have no idea what to expect when they walk into your store.
    Look out. If you offer only price-and-item information, you may lose those first timers. Instead, take advantage of graphics and signage to educate about your merchandise, and to persuade why your store should be preferred.
     
  • Music is a great way to create an inviting atmosphere in your store.
  • But be careful – music should always be selected to appeal to the customer, not the staff.
     
  • Customers naturally gravitate toward new merchandise.
    Take advantage of that tendency; pair older merchandise with new arrivals!
     
  •  More than one-third of the retail businesses that fail are profitable(!)
    Their problem? They ran out of cash as their creditors ran out of patience. As the owner, focus on cash flow as much or more than sales and profits.
     
  • The best displays are those that actually sell the merchandise.
    Even right off of the display! You are not running a museum (are you?) 
     
  • For retailers, the name of the game is inventory turnover.
    Higher is better. 
     
  • Studies show that only 20% of customers are true price hounds who always chase the lowest price.
    The other 80% – that is, the vast majority! – care more about what else your store offers. What value can you deliver to these folks? Don't let that fickle 20% distract you.
     
  • Look at your sales results from a variety of productivity measures.
    Besides total sales volume, monitor total number of transactions and items per transactions, both for your total operation as well as by category.
     
  • The best time to take markdowns is just before the sales peak, not just after.
    While your past sales records will be indicators, there are new post-pandemic patterns emerging. Keep this tell-tale sign in mind: when your suppliers start offering deals, it's time to start cutting prices!

Have some examples of your own re-thinking "how we do things around here?" that have made a difference? We'd love to hear about them! Just email us here.
 
 
Great for Trade Associations • Buying Groups • Chambers of Commerce • Suppliers • SBDCs • Other Organizations
Now, here's an easy, low-cost, no-risk way for you to help your retailers help themselves: SPONSOR their unlimited Member Access Privileges at The Retail Owners Institute.

As a Sponsor, you unlock the gates to the entirety of The ROI.


It's easy and fast (and very cost-effective) for your organization to become a SPONSOR of The ROI. Start this new benefit for your retailers. Go here to find out more.
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Retail's Stages of Decline webinar
 

Based on their strategic turnaround and growth management work with retailers, Pat Johnson and Dick Outcalt, Co-Founders of The ROI, have developed a specialized technique to quickly assess whether a retail business is thriving, or in decline.

They will share this with you in this week's TOPICAL TUESDAYS Webinar of the Week.

Retailing is all about adjusting, and this webinar session can give you a head start on the priorities of the most critically-needed adjustments.
  • To SPOT decline in its early stages, meet Outcalt & Johnson's proprietary Three Stages of Decline Assessment technique.
     
  • To STOP decline if it has begun, hear 25 specific action steps you can take to stop the decline.
     
  • To AVOID decline in the first place, Pat and Dick will identify 9 strategies of decline prevention specifically for retailers.

"Being in decline is not the problem.
Being in denial is!"
FREE Access • WEBINARS By The CO-FOUNDERS
 
Sharing is good!
Let other retailers (and those who care about retailing) know about The ROI. 
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