If 2020 was the year of pandemic disruption and scramble-to-survive mode for retailers, 2021 may be the year of relentless Retail Is Detail reminders. Many of you may well have benefitted from one or more rounds of PPP loans and their potential "forgiveness." Now comes the reminders that you must seek forgiveness. In writing. From the bank that loaned you the funds. And there are some time deadlines involved. Yikes. Oh, and total forgiveness may not be forthcoming. It depends. (See below for these guides* and disclaimers from the SBA.) Then there are the so-called "bookkeeping details" surrounding all this.
We often caution that many vendors are so much better trained at selling than retailers are trained at buying. In their eagerness to grow sales, and the associated promise of thereby growing profits, it is all too easy for retailers to become overbought. Instead of higher profits, they can find themselves in a cash flow crunch. And that was in Before Times, before the pandemics. Throughout 2020 and continuing now, vendors and retailers alike have increased their online capabilities. Ordering online brought new challenges to buyers and sales reps, but also saved time and improved access.
We have applauded these advances in technology, but...
There's a lot of optimism in the air these days. Covid-19 lockdown restrictions are being eased. More people are becoming vaccinated. Upbeat economic news is reported. Unemployment figures are improving. Restaurants are preparing for diners to return. And of course, given that we are now starting to compare sales results to the meltdowns of 2020, dramatic percentage growth is being reported and forecast for the balance of the year. These positive and optimistic news reports all are very welcome. Retailers are eager to see customers return. But what should retailers expect? To brace yourself for the myriad changes.
About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix."
As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."
Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.*
Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome.
Isn't it great? Headlines and the media world seem to be in unison; the dastardly COVID pandemic is being arrested. And, if we can believe the pundits, pent-up shoppers are about to buy all sorts of products and services with abandon. But, will they? Given this exuberance, many retailers could be building up excess inventory. Retailers once again need to be true merchants. That is, the #1 responsibility of retail senior managements must always be to control inventory. (It's the only thing that makes money, but it soaks up cash.)
Boy, are we ever impressed. We've known for years that those who are following and/or involved with The Retail Owners Institute® are resolute, hungry, and determined. But wow! The challenges of the last year have brought out the very best in many of you. We've heard back some of the most resourceful survival stores that we've ever heard. Here are just a few examples:
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.
As the global efforts to "flatten the curve" of the coronavirus pandemic continue, there is another curve that is being flattened. That would be the seasonality of retail sales. And this may prove to be what really defines the New Normal for retailers. The customary peaks of retail spending have been flattened.
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