PERSPECTIVES

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  The Fatigue of Uncertainty

  Have you noticed? That persisting Plague of Uncertainty that keeps hanging around?

  • The troubling issues in Ukraine and the potential repercussions.
  • Inflation now includes an even greater hike in oil and gasoline prices because of the Ukraine situation.
  • Unresolved supply chain issues, particularly impacting smaller businesses with less clout.
  • Employee unrest, union organizing, the "Great Resignation." 
  • Stock market declines, which seem to foster even more talk of unrest and uncertainty.
  • Not to mention the extended Farewell Tour of Covid and The Variants. 

  And amidst all this relentless uncertainty, you still have a business to run, employees to motivate, customers to satisfy, vendors to deal with, creditors to pay, etc, etc.  
  
  Here are some ideas on how to approach that.

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  What Digital-First Brands Are Discovering About Physical Retail

  The basic definition of retailing is "selling to the ultimate consumer." 
  
  As you know, HOW that is done, and in what location or format, continues to change and evolve. 
  
  So, we were intrigued by this recent post on the Shopify Retail Blog: The Future of Physical Retail in a Digital-First World.*

  • The "retail digital-first world", of course, is either the "pure play e-commerce retailers," those who sell only online, or the "brands" (what we used to call manufacturers) who have embraced the "DTC model," selling direct-to-consumer. 
     
  • And as you know, Shopify is one of the largest platforms for e-commerce businesses. Definitely a leader of the retail digital-first world.

  To us, the blog post was essentially a wide-ranging journey of discovery(and perhaps even some new-found respect for those "physical retailers".)

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  Beware the Perils of Exuberance

  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.)

• But, we must take exception....

  We're sure you'll agree. Misinformation can be very harmful. Retailers surely don't need more harmful anythings!

  Just last week, we came across the proverbial straw that broke the camel's back. It was a post on the Intuit Quickbooks site*, titled "Inventory Turnover Ratio." And the explanatory article was accompanied by an "Inventory Turnover Calculator."

  What do we take exception to? The misleading and/or incorrect information it provides. For example, their "Inventory turnover calculator" requires two entries. 

  • First, "enter the total costs involved in selling your products."

  We must take exception. "Total costs involved in selling your products" is NOT the same as Cost of Goods Sold. Nor do they specify that it should be for a 12-month period of time. 

  • The second entry they request: "Average inventory cost."

  We must take exception. What they surely meant to say is inventory @cost. 

  • Plus, they simply refer to "12 months of ending inventory balances," without specifying that it should be for the same 12 months for the previous entry.

  Only the Beginning
  Turns out, this is only the beginning of the misleading information.
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  The New Dynamics of Merchandise Mix

  The Retail Owners Institute® has developed a retail strategy for "Inventory Management Going Forward." 
  
  As we often do, it was recapped as an unassuming chart (see above) identifying the Five Stages of Merchandise Mix Management, from "Before COVID-19" to the "New Normal?"

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  Is Being First Smart?

  A few years ago, during a planning session in our office, we drew a quick diagram on a whiteboard. It showed three shapes. 

  • The large rectangle at the top was labeled "What we COULD do" Lots of good ideas deserved a place in this box!
  • The much smaller rectangle below it was labeled "What  we SHOULD do" Ahh yes, those pesky obligations. 
  • And finally, at the bottom, was a tiny little square: "What we WILL do!" 

  Out of all of the potential things we could do, which ones truly warrant our time, energy, and resources?

  That picture keeps coming to mind as the COVID-19 shutdown orders on retailers of "non-essential" goods are starting to be lifted.