Perspectives

From The Co-Founders

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

Back-of-the-envelope cash flow

Here we are, in the first week of December, in this tumultuous pandemic year of 2020.

Maybe more than ever, you need to have a grip on your cash flow! What will you cash flow look like during December, January and February?

Since you must be able to make informed decisions about your business, every day, an up-to-date cash flow calculation is essential. Remember, profits are interesting, but it's cash flow that's significant!

Cash flow doesn't have to be fancy. In fact, what most owners need is just to have the basics on the back of an envelope. The savvy ones always have that with them.

Usually at this time of year, we would be encouraging you to remember that "the lull" is about to arrive. 

That is, that time span from Black Friday/Cyber Monday through early December is typically much slower for retailers. 

And then, come December 10th or so, the Christmas sprint begins! 

Ahh yes. That was then. And this is, well, 2020. 

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Believe it! A second chance to make a good first impression!


Yes, the shoppers WILL be returning. But boy, have they learned a lot during these pandemic times. 

They are far more comfortable with online shopping, and in many cases, eager to continue that. And the convenience of "contactless" features like curbside pickup and BOPIS (Buy Online, Pickup In Store) are welcomed.

In fact, an extensive survey from McKinsey & Company* provides considerable detail about the newly-learned online shopping behaviors of customers, and their expectations of continuing to use these new-found skills. 

Particular changes with presumed staying power: 

  • More online shopping
  • Less brand loyalty
  • Need for "hygiene transparency"
  • Back to basics & value
  • Rise of the homebody economy

But hold it. Wait just a minute. Our countervailing view is that the "homebody economy" will wear thin. And while customers do care even more about basics and value, especially when it comes to Holiday shopping, they will want "special." 

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We once knew a lady of an earlier generation who steadfastly championed the idea that Labor Day should be considered New Year's Eve, and the Tuesday after Labor Day as the start of the New Year. (Yes, she was ahead of her time in many other ways as well.)

Here's her reasoning about the "real" New Year's Eve: as summer fades away and vacations end, the new school year starts up; the baseball season pennant race is on; football games begin. As all this happens, she explained, most people take on a renewed sense of energy. 

The promise of a fresh start is everywhere. Optimism abounds!  

Wouldn't 2020 be a great year to cut short? Aren't we all ready to turn the page on it?

Well, while we cannot do it officially, we can embrace that New Year state of mind. 

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Since Labor Day in the US is the first Monday in September, this year it happens as late as possible. Labor Day will not be celebrated until next Monday, September 7. 

Most years, most folks would be perfectly happy to have August stretched out even longer. Ahh, those lazy, hazy, crazy days of summer, right?

  • Well, we DO have the "crazy" part down pretty well. And "hazy" rings true too, as the fog of uncertainty persists.
  • And now, imagine it: a Zoom Thanksgiving... OMG!

And so, meanwhile, we regard Consumer Confidence as THE key indicator of consumer spending. Just last week, the Conference Board reported that Consumer confidence is at a six year low*. Ouch!

But, was that a surprise to retailers? Not really. Most retailers are well along in coping with these challenges. 

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"Of course I want it today. If I wanted it tomorrow, I would have come in tomorrow." 

That's what we call "retail time." Retailers are comfortable with that pace; they enjoy the variety; they welcome the need to change and adjust. 

But, instead of just keeping life interesting, 2020 seems to have gone overboard in bringing changes and disruption to us all. The triple pandemic of the virus, the economy, and the civil unrest. And oh yes, it's also an election year. Enough already, right?

We think the most challenging part of this is the effect on our sense of time.

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Maybe you know someone like this. Or are related to them. Or are looking at them each day in the mirror.

You know; the restless, impatient ones. The entrepreneurs; the risk takers.  Those who want to be their own boss. "Do it myself!"

Our theory is that the changes spawned from these triple pandemics – the coronavirus, the economic meltdown, and the civil unrest – will also be evident in new business startups. And that includes all kind of new retail concepts. 

Out of this period of unprecedented frustration can come new-found backbones. 

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Have you noticed? "Covid fatigue" has been spreading lately. It seems to be almost as contagious as the virus itself. Ugh!

And small wonder. Even as parts of the economy strive to re-open, they only remind us of how different everything is.
  • Major League Baseball played in stadiums of cardboard cutouts of fans. The U.S. Open Golf Tournament with no spectators. Professional basketball teams in "the bubble" at Disney World. 
  • And some colleges preparing to resume fall classes have been described as "a cross between a seminary and a minimum-security prison."
Meanwhile, the U.S. Congress cannot agree on what should be done next. A nasty election campaign season looms. Protests are still happening in many locations. 

Remember this: all these things that contribute to our Covid fatigue, what we have called the "Pandemic Trifecta of 2020" – the virus, the economic meltdown, the national protests – all of these are uncontrollables. We all are victims of all three pandemics. 

But, you CAN control what you choose to do with your business going forward. Will you choose Door A, Door B or Door C?