Perspectives

From The Co-Founders

rss

Strategic insights and commentary from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

Once again, "Retailing ain't for sissies!"

"Buy low. Sell high. Collect early. Pay late."

That's the essence of retailing, right? But now, in the early summer of 2021, retailing more than ever demands a strong dose of good judgment.

It's shouted everywhere: "Look out! The inflation tsunami is coming!"

Yikes! It's buying season for many retailers, and the pressures to buy more, now, at these-low-prices-that-won't-last are mounting. And this is only the beginning.

  • Grocers are already anticipating this, stocking up now on inventory. As reported by the Wall Street Journal*, "Supermarkets are stocking up on everything from sugar to frozen meats before they get more pricey, girding for what some executives anticipate will be some of the highest price increases in recent memory."
     
  • Meanwhile, some retailers are being cleverly pro-active, alerting their customers to up-coming price increases from their vendors. The implicit threat: our retail prices will also be rising, so here's your chance to buy now. 

Retailers aren't the only ones under pressure, of course. Vendors are under increasing competition from online marketplaces. Trade shows are eager to resume the in-person experience, and likely pressuring their exhibitors to offer more enticing "show only" deals to bring in the retailers (who may still be reluctant to travel, or put off by the increased travel costs.)

Plus, every retailer is confronted with balancing the advantage of buying more now to enjoy better margins, with the uncertainty surrounding putting any price increases in place.

  • Will your customers buy at those higher prices?
  • What will your competitors do? 
  • What happens if we buy in quantity now, to lock in prices, but then can't sell it? Can we really afford to be overbought?
  • What markdowns would it take to attract the customers back? Would that even work?

It's a constant stream of "what if...?" and "yeah but..." considerations for every retailer, with endless opportunities for second-guessing. None of this is new, of course. But it is particularly heightened in these post-pandemic times with the threat of looming inflation.

And it is no time for the faint of heart. You must be prepared to make some decisions, to seize the small opportunities, and keep moving. 

Yes, you will make some "wrong" decisions. Some merchandise just doesn't sell like you thought it would. Who knew?? (And what else is new?) 

Nobody ever brings something in, saying ahead of time "This is really going to be a dog." Customers are very unpredictable, and everyone's crystal ball this year is especially murky.

But, the show must go on. Decisions must continue to be made. 
 
Your goal: stay very flexible. Remember that cash is the best answer for every flexibility test. Money can't buy happiness, but it can buy choices. Every week, those retailers with the most cash will have the most choices.

The old adage still applies: "Buy low. Sell high Collect early. Pay late." 


---
* Jaewon Kang, "Supermarkets Are Stockpiling Inventory as Food Costs Rise." The Wall Street Journal, July 6, 2021.



Comments are closed.