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From the Co-Founders of The Retail Owners Institute.Tips | Tactics | Insights on the Business of Retailing.
How disruptive has the "digital revolution" been for your business?
We just came across this fascinating white paper – "How to Win in a Digital World Where Technology Is Rewriting the Rules of Retail" – produced by SAP, the very large global self-described "market leader in enterprise application software."
We heartily concur with their initial assertion: "You can't fight your way through today's challenges by simply working harder." They then provide a compelling overview of the digital transformation that is well underway.
And, with the certainty of an outside advisor, they are very insistent that retailers must "reimagine everything."
But, they offer some glimpses of retailers that are effectively doing so.
For instance, they point out that consumers, especially Millennials and Generation Z, expect a new kind of shopping experience: "one that is individual where commerce is seamless and where technology is invisible."
Not to be overlooked is the impact on your employees.
Yes, SAP deals with the very Big Guys in retailing.
But, where customers shop – often with those Big Guys, right? – affects their expectations for all retailers. Including your stores.
That's why we found it to be such a thought-provoking read.*
Here's an important reminder: independent retailers are well-positioned to be able to adjust and adapt quickly. You know, the ski boat versus the ocean liner theory.
There is a lot to be gleaned from what the Big Guys are doing.
Whether this relentless digital revolution has a ripple effect for your stores, or becomes an overwhelming tsunami, is up to you.
--- * How to Win in a Digital World Where Technology Is Rewriting the Rules of Retail, SAP
The ROI NEWS asked retailers this question about the effectiveness of Social Media: “Does it raise sales?!”
We invited retailers to take a short, quick, 6-question survey about their use of promotional tools in general, and, in particular, “Social Media”: Facebook, Twitter, Pinterest, Instagram, LinkedIn, Other.
We asked, and you answered!
You quickly confirmed that “social media” is in fact a hot topic among retailers!
And, you are willing to share your experience with it with others, and for that we say, Thank You!!
"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."
The High Costs of Excess Inventory
As a retail owner, one of your primary goals is to boost profit margins—right?
You know that good inventory management is essential to producing top-notch profits.
You also know that bad inventory management can cause big problems with profit.
However, do you know there is a cause-effect chain reaction on your profits of carrying too much inventory?
After watching consumers being riveted on chaotic national affairs for almost a year, we now have put a label on it: “Distracted Customer Syndrome”. And it seems, sadly, to be unrelenting. It started during the 2016 Presidential election campaign. Nothing about that was typical. It made for good television theater, and the networks certainly obliged.
And, we ascribed the sluggish retail sales in the fall to demands of this new American spectator sport.
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!"