From the Co-Founders of The Retail Owners Institute.Tips | Tactics | Insights on the Business of Retailing.
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."
"As big supermarkets struggle," continued the article, "a new crop of local grocers are innovating to serve niche audiences and advance social causes."
Among the examples cited is the Farmhouse Market in New Prague, Minnesota (population around 7,600). This grocery store, inspired by a nearby 24-hour fitness center, is basically non-staffed.
"These rural communities need new business models," explains the owner.
Yes, a decidedly new "business model" – that is proving to be successful. Food for thought for other retailers?
Or, consider the Open Book shop in Wigtown, Scotland.** Located a couple hours drive south of Glasgow, Wigtown is considered "Scotland's book town," with more than 10 bookstores for its 1,000 residents.
When faced with the prospect that one of those shops was about to close, a novel (ahem) solution to keep it operating was instituted.
And get this. This "bookshop holiday" is booked up through 2020!
It's a fact: Independent retailers always have been imaginative, risk taking, entrepreneurial, and experimental. Shoppers worldwide need them now more than ever.
Many retailers, maybe even in your community, are sensing the opportunities that appeal to shoppers and fill a niche in an innovative way. We encourage you to be one of them!
What ideas are between your ears? Or between the ears of your staff? Let's get cracking!
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* Kim Severson, The freshest ideas are in small grocery stores, New York Times, July 31, 2018.
** Unique Airbnb is a book-lovers dream come true. CBS News, January 13, 2018.
"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."
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.
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?
What especially intrigued us, however, is this new feature Boxed has announced: group orders.
Customers can now do a group order online by sending links to others to collaborate on an order.
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.
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!
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!"