From the Co-Founders of The Retail Owners Institute.Tips | Tactics | Insights on the Business of Retailing.
Here's a revealing factoid from Bloomberg News: "Of the people who use social media, one in three makes a purchase every month through a platform such as Instagram, Facebook, Pinterest or Snapchat."
It's a trend you may not like, but heads up, folks. It's a tsunami!
Here's why it matters. Since that is where the customers are going, so too are savvy retailers.
• Some retailers are adding this channel to their existing operation;
• Other retailers – aka, "disruptors" – are using it to launch and rapidly grow their low-overhead retail operations.
Consider Anissa Kheloufi, a 21 year old who founded an apparel company (after tiring of law school). Now with a web store as well as boutiques in Casablanca and Paris, she reports revenues for her startup of nearly $40,000 a month.
And note this: 90% of those revenues flow through Instagram!
How does this happen? Online marketplaces are hustling to make their platforms smartphone-friendly.
Have you checked out these social media-friendly marketplaces recently? It's definitely worth it to spend some time on sites such as Shopify or Tictail. See how easy they make it appear to launch your own shop. As Bloomberg News notes, "Ultimately, social shopping platforms are bulldozing yet another of retail’s barriers to entry." And they don't stop there. "We knew there were several platforms out there already, but our idea is an evolution of the e-commerce concept," says Carl Waldekranz, co-founder of Tictail. "We don't focus on just starting a store, but on its first six months -- how to get traffic, follow up with old customers and give out deals." Here's What This Really Means
"Handheld retail" meets "handholding of retailers."
Pretty remarkable. One more example of our oft-stated view: "Retail is a mirror of society."
REI, the $2.62 billion outdoor equipment retailer with over 150 stores, has announced rigorous new standards...for their suppliers!
Those suppliers who can't or won't meet REI's standards? Their products will not even be considered for REI's store shelves, even if that will affect sales. REI's stated standards are an effort to "match its environmental impact to the values espoused by many of its customers." Or, in other words, REI has chosen to be an agent for the customer, rather than appear as an agent for the suppliers. REI's chief executive Jerry Stritzke calls the standards "maybe one of the most transformative things" the 80-year-old co-op has done. "At some point you get to a tipping point where it's expected by consumers," he added.
"No business has ever failed with happy customers." ---Warren Buffett, CEO, Berkshire-Hathaway
Buffett's logic is very straightforward: people like to indulge themselves. For some observers, this helps to explain Buffett's investments in "junk food" – from Coke, to See's Candy, Dairy Queen, etc. "The CEO of Berkshire-Hathaway invests in bad food and his diet reflects it: he drinks Coke at breakfast and ice cream is an occasional accompaniment," writes Kyle Stock of Bloomberg News. "When asked about his diet, Buffett has said he aims to eat like a 6-year-old because that's the age at which mortality is least likely."
Of course you do! Doesn't everybody?
But as pressures grow to raise wages, increase benefits, renew leases, improve technology, and oh yes, pay taxes, many businesses find their profits diminishing.
But retailers have a special advantage. An often under-utilized pocket of profit growth potential. Yes, we're talking about your inventory!
For each $100 of inventory @cost, as it sells, its markup (margin dollars) helps cover expenses and adds to profit.
Even a modest increase in inventory turnover rates per year can yield a dramatic increase in margin dollars and net profits. (For the formula for turnover and more perspective, see the Retail Benchmarks section at The ROI.)
Take a look at this chart.
As we often discuss, retailing is a very dynamic industry, constantly changing and evolving. To be successful, retailers must pass frequent flexibility tests. So we paid particular attention to this recent headline in the New York Times*: "The freshest ideas are in small grocery stores."
A new consumer confidence study based on monthly interviews with 9,000 respondents (versus the 500 or so polled in the University of Michigan consumer sentiment study) finds that the the key difference/predictor in people's attitude about the economy (and shopping!) is their political views. That's right. What seems to matter more today may not be whether you're in a mall or strip center. When it comes to location, apparently what really matters is, Red State or Blue State?
You've seen all those comments, right? All the dire news about the demise of retailing?
It was 20 years ago this week that Amazon went public. Twenty years. And now they are valued at twice the value of Walmart.
As an independent retailer, this is certainly not news to you. The domination of retail first by Walmart and then Amazon is all-too-well known.
Look, we are not fond of what Amazon has done to independent retailers. But, we were struck by a comment by Jeff Bezos in a 2013 interview with Charlie Rose which we had missed earlier.
Pat Johnson and Dick Outcalt, The Co-Founders of The Retail Owners Institute®, have been called "The Zen masters of retail finance!" Since 1999, they have been assembling their proprietary content into a unique self-help website. The Retail Owners Institute is an unmatched resource that assists retailers worldwide with basic financial training, assistance and easy-to-use tools. Their engaging and empowering how-to resources about the financial levers in retailing are informative, fun(!), and retailer-friendly. Their promise: "Everyone will 'get it'!" Pat and Dick are recognized experts in strategic retailing. Working only as a team – Outcalt & Johnson: Retail Strategists, LLC – they have been consulting, publishing, and speaking professionally throughout North America since 1990. They focus exclusively on retail, or wherever retail is involved. They work with CEOs, CFOs, boards and owners of retail operations, as well as manufacturers or wholesalers expanding into retail. And they also are Retail Turnaround Experts.
Since 1999, empowering retailers and store owners to "Turn on your financial headlights!"