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

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Is 2022 Really That Confounding?

Embracing Uncertainty: The Essence of Retailing

"The mantra of 2022 should really be: No one knows anything," opined a business reporter.* "It’s stunning how little we understand about how the pandemic has changed our lives and our country. It’s not clear whether the U.S. economy is hot or not, or if big cities will be forever scarred." 
  • "The future of our online shopping habits is another unknown. This is not just a nerdy debate. Our collective buying behavior sways trillion-dollar companies, millions of retail jobs and the health of the U.S. economy." 

  • "The uncertainty about the direction of online shopping is one of the biggest questions facing the tech industry and financial markets right now."
Well yes, of course. The tech industry and the financial markets do prefer predictability. The uncertainties of retailing always have bedeviled them. And now, with Amazon's recent retrenching, backing off some expansion, their crystal balls have turned cloudy. 
 

Retailers, whether online, storefront, or DTC, certainly understand that "buying behavior is not just a nerdy debate"; it is everything to a retailer! However, given that the mantra of retailers is Plan - Monitor - Adjust - Repeat, there likely are many who would ask "How is 2022 that much different than any other year in retailing?" 

And which retailers can exhibit the most calm? Those who have done their homework, their game planning. Those who have always known that the essence of retailing is flexibility, to be quick on their feet. 

More specifically, those who have seen the financial implications – that is, inventory buying plans and cash flow results – of different scenarios. 

  • What if sales are off this much? 

  • Or expenses up this much? 

  • What would our buying plan look like then? What about our cash flow? 

Here at The ROI, we have the tools and resources for retailers to do all that for themselves; to project the financial implications of each "what if...?" scenario. But, to achieve that sense of calm, you do have to use these tools!

And now is the time. Go here for more about the 3-in-1 Integrated Calculator.

  • Remember, if you bog down while using the 3-in-1 Calculator, we will be happy to walk you through it. Just click the link in the "Still have questions?" section on the 3-in-1 Calculator access page to schedule a free video working session with us. 

There is no reason to not be prepared for whatever the rest of 2022 has in store. There is one certainty, however: there will be more flexibility tests!

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* "Online Shopping Is Bananas Confusing" On Tech with Shira Ovide, New York Times, July 13, 2022. 

Related Articles

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    Listening? What Customers Really Want (and Don't Want)

    The constant challenge for retailers is to anticipate what their customers really want.  And this year, there seem to be plenty of choices available.

    • A "frictionless" checkout procedure? 
    • One hour delivery? 
    • Buy Now, Pay Later?
    • "This particular item in this particular color and size. Right now!?"
    • Etcetera

    It is all part of the on-going challenge of retail; the art and craft of being a merchant. 

    Then there are the customers who are reacting to the constant drumbeat of news about supply chain issues, merchandise shortages, and looming price increases by starting their shopping early. 

    Adding to this stampede, some major chains were launching their Black Friday specials before Halloween!

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    Hats Off to 2021! But Caution Advised for 2022

    You've gotten through the Holiday season, likely enjoyed some vacation time, and perhaps even have your own financial statements in hand. 

    For many retailers, 2021 proved to be a very profitable year. Congratulations!

    In fact, go here to check out the pre-tax profit trends for the past two years for the median performers in 50+ retail segments. To borrow a phrase,  everybody (almost) is above average!

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    Time for That Springtime (Upbeat) State of Mind

    According to the calendar, as of March 21, it officially is springtime. No matter what the weather is doing.

    Well, it's time to bring the calendar to real life! Spring is really a state of mind! The dark winter has passed. Even the rain is warmer in the spring. And new growth is beginning to sprout; leaves are coming out. It's a wonderful, fresh outlook.

    And that of course means it is a wonderful opportunity for retailers to refresh and reenergize their stores. 

    No matter what merchandise you sell - whether it's tires, apparel, books, housewares, office supplies, whatever - every retailer is in the fashion business.

    And that means that your customers are wanting what is new and fresh.You know; "in fashion."

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    It's not just the clocks that changed

    "Retail is a mirror of society."

    Yes, Daylight Savings began a couple weeks ago. But it's not just the time on the clocks that changed; the times themselves have substantially changed. 

    Followers of The ROI has heard us assert many times that "Retail is a mirror of society." As we reflect on the first quarter of 2022, we are struck by how much has changed in just those three months. And retailers must adapt – yes, again! – to this rapidly changing environment.

    Think about it. Consider the assumptions you made just a few months ago, in late December and early January about 2022. 
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    Pursuing That Wily Perspective

    Keeping Perspective

    Is there a more difficult everyday challenge?

    As owners of businesses, we've got all of the issues of the times right on our plates. Think about it:

    • Every family has ups and downs. In fact, every person does.
    • And it seems that all of our constituencies – family, friends, neighbors, customers, employees, landlords, lenders, vendors – look to us for answers, for leadership. "Well, after all, you are the owner!"
    • Meanwhile, the covid turbulence has magnified the fact that there's really no how-to manual for dealing with a wily once-in-a-century pandemic.

    Is there a more difficult every day challenge than maintaining perspective? We don't think so.

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    Expecting judgment from computer forecasts? Really?

    "How are sales?" is essentially the international greeting between retailers. 

    And because of the seasonality of retail sales, most retailers will respond by explaining whether sales this month are up or down versus the same month last year, not just the previous month. 

    All this is well and fine in a normal year. But, since 2020, retailers have not been experiencing anything close to normal. And boy, does that show up in the 6-month retail sales trend charts that The ROI posts each month.
    • In sector after sector, December, January & February sales versus the prior year are markedly different than the March-April-May results. In some cases, these are quite dramatic. 

    Your results are likely to be consistent with these patterns.



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