"The Hacker Way" at Facebook: Sounds a Lot Like a "True Merchant"

In the 197 page prospectus for Facebook's IPO is a "letter" from founder Mark Zuckerberg. He devotes nearly one-third of his letter to explaining what he calls "The Hacker Way" at Facebook.

• "In reality, hacking just means building something quickly or testing the boundaries of what can be done."

• "Hacking is also an inherently hands-on and active discipline. Instead of debating for days whether a new idea is possible or what the best way to build something is, hackers would rather just prototype something and see what works." 

Parallels to Retailing: "The Merchant Way"

Zuckerberg goes on to explain how The Hacker Way affects the product development and management style at Facebook (where "Done is better than perfect" is painted on the walls.) Given the magnitude of Facebook's $5 Billion IPO, we will be hearing much more about The Hacker Way.

As we read about it, we were struck with its parallels to retailing. In our view, anybody can be a retailer, whether they are running a garage sale, selling on eBay, or owning their own shop.

But only a few in retailing are true merchants.  Perhaps this should now be known as "The Merchant Way"?  

First, merchants have a bias for action. That is a signature characteristic of merchants. "Get the merchandise out on the floor (or up on the site). Let's see what the customers like...ASAP!" 

Then, just as important, the need to continually adapt and adjust. And to be dispassionate about it! "Hmm...that didn't sell like we thought it would. But - look what we ran out of over here!  Who knew?? Okay, here's what we're going to do. No matter what we thought of the first item, it's a dog. Mark it down. Get it out of here!  Now, whether we personally like it or not, let's re-order this hot item."

Merchants also show relentless resilience, adaptability, and optimism. 

We encourage those who celebrate "The Hacker Way" to also pay their respects to all the true merchants among us, those who practice The Merchant Way in retailing.

Get Perspective - Now! Latest Benchmarks for 6 Key Ratios, plus GMROI

The Retail Owners Institute is known for its display of key business performance benchmark data for 50+ retail segments, from hardware stores to bookstores, to clothing stores, gift shops, wine stores, music stores, furniture stores, tire dealers, and more. These now have been updated with the latest figures for 2011.

The Institute has identified the 6 Key Ratios that are most important for retailers to monitor. And, it has charted and graphed the 5-year trends of each of these key ratios for each retail segment.  

• Turnover
• Gross Margin %
• Pre-Tax Profit %
• Debt-to-Worth Ratio
• Current Ratio
• Return on Assets %

Go here to see benchmark trends for your retail segment.

Plus, The ROI has calculated GMROI (Gross Margin Return on Inventory Investment, the #1 measure of inventory productivity) for each of the 50+ retail segments. Go here. Find the GMROI for your retail segment. How does your inventory productivity compare?? 

How Can These Benchmark Numbers Be Used?

First, for perspective! Caculate these ratios for your own business, and then see how you compare to your retail industry segment.

Second, use these benchmarks when you are setting your own target ratios for the next year.

And third, you should know that whenever you are seeking a bank loan for your business, the bankers will look at industry benchmarks such as these as they assess your store's performance.

Go here to see how your store compares!

"How high is up?" Moreover, "How LONG is up?"

In the world of retailing, every December is fascinating, challenging, and  - especially when the results are positive! - even thrilling. And this December is no exception.

For whatever reasons, the all-important consumer confidence index continues to rise.  And retail sales are far stronger than expected just months ago. In fact, November was the 6th consecutive monthly increase in retail sales!  It now appears as though they will maintain this robust nature through the end of this month.  

Retailers are basking in this "It's all good!" moment. And, with sales being up more than expected and inventories held in check, margins are likely to be higher. All in all, one of the best Holiday Seasons in years. 

So, we ask, "How high is up?"

Our estimate today is "Not very high."  But more to the point, "How long is up?"  That is, can this level of growth be sustained? 

We think not. We anticipate that the first two quarters of 2012 will look a lot like the first two quarters of 2011, bleak for retailers. Retailers should relish this fine Holiday Season, but must go into Q1 and Q2 of 2012 with discipline and restraint.

• It has been noted that consumers, who on the whole have had more debt than assets for awhile, got religion from recession-fear. For the last 2 years, they have steadily reduced their family debt burden. 
• Then, this Fall, while incomes have been stagnant, consumers started to put more spending on credit than they paid off. And apparently they are continuing that trend through the Holiday Season. My, what short memories we have!
• The unresolved European debt crisis is looking very, shall we say, "European". It lacks a needed sense of urgency. 
• For every job opening in this country now, there are, on average, 4.25 applicants. In healthy times, it's closer to a 2:1 ratio. 
• Moreover, those folks in Disneyland-on-the-Potomac seem frozen in a "Wait for the election!" mentality.

All in all, very disappointing. Especially for retailers as we start a new year. We expect the optimistic consumer confidence to be ephemeral. 

Enjoy it while you can, but don't get too used to it.

Tired of the Mystery and Voodoo Around Open-to-Buy? So Are We!

Most retailers have heard of the inventory managing tool "Open-to-Buy". (BTW, "Open-to-Buy" is slang for a budget for how much inventory to bring in, and when.) But all too often, Open-to-Buy has been shrouded in mystery. Too complex and/or too expensive.

Those days are over! The Retail Owners Institute is on a crusade to spread the word: Managing and controlling inventory IS within the reach of all retailers.

Here's the deal: Open-to-Buy is just a 4-part formula!  And any retailer, anywhere, can put that formula to work, on their own!

What can an Open-to-Buy do for a retail operation?
    •    improve margins
    •    improve cash flow
    •    reduce the time spent on inventory management
    •    help have the right merchandise in your store at the right time
    •    avoid excess inventory
    •    invaluable when delegating to buyers
    •    help you sleep at night!

How Does The ROI Take Away the Open-to-Buy Mystery? Here Are Four Answers!
The ROI is the foremost resource for retail financial training and know-how. The Institute is dedicated to taking away the mystery of retail finance. Retailers CAN control the cause-effect connections between sales, margins, expenses, profits, inventory turns, and cash flow.

Here are 4 different ways (free or very low cost) that you (or your staff) can learn more about controlling inventory with an Open-to-Buy plan.

#1. Free TOPICAL TUESDAY webinar
November 15. 10 am Pacific Time/ 1 pm Eastern Time
"Back by Popular Demand: CONTROLLING INVENTORY LEVELS"
Free registration • Go here
About 80% of retailers are over-inventoried some or all of the time.  As we approach this particular Holiday Season, having excess inventory may be especially treacherous.

Right now, controlling inventory is the #1 job of the CEO or owner. This live TOPICAL TUESDAY webinar with Pat Johnson & Dick Outcalt, Co-Founders of The Retail Owners Institute, will review the basics of inventory management, and show how The ROI's online multi-department Open-to-Buy Calculator automates the number-crunching for you. 

There will be plenty of time for Q&A, so bring your questions (and your buyers!!)  Go here to register for free

#2. On-demand info on The ROI site: CONTROLLING PROFITS, INVENTORY & CASH FLOW
This is an entire section at The ROI, dedicated to this major responsibility of retailing. Available online, 24/7, on-demand. Explanatory how-to articles that reduce the mystery. Short videos that teach, explain, and illustrate. Online calculators that automate the process (nothing to download or install; they just work!)

#3. The OPEN-TO-BUY CENTER
This is one of the new "special purpose portals" of The ROI: an entire website dedicated to Open-to-Buy! The remarkable multi-department Open-to-Buy Calculator is hosted here. Any retailer, anywhere, can do their own Open-to-Buy plans in just minutes. (Try it yourself! 1st month is just $4.95!) 

And, if you need some refresher, the Open-to-Buy Center includes articles and videos. Just look under the RESOURCES tab.

#4. BASICS of OPEN-TO-BUY eLearning Kit & Calculator
Want more structured training? Need to train your staff in Open-to-Buy? Here's the perfect answer!
The BASICS of Open-to-Buy is a self-paced, online eLearning "KIT": a step-by-step how-to training course, and an online "calculator" that automates the cause-effect number crunching.

Talk about doing away with the mystery! And it's needed more now than ever before! Go to The ROI's eLearning portal for details about this new management training tool for retailers and buyers. (Be sure to watch the short video about the BUYING PLAN Forecaster!)   "Learn it. Do it. Profit from it!"

There you have it. Four different ways that you and your staff can make Open-to-Buy planning your new best friend! Just depends on how you like to take in information. But the key: no more mystery about how much to buy, and when. (And, no more intimidation by "the experts".)

Who's Job Is Growing? The CUSTOMER's Job!

Think about cost-savings programs in stores - e.g., less staff on the selling floor and more "self-service". Self check-out by the customer. Online searches by the customer for product information. Online shopping.  

Don't each of these actually shift the work to the customer? 

The "job" of being the customer just keeps growing. (In fact, some grocery stores are starting to experiment with programs "allowing" the customer to scan the merchandise, place it into their shopping bag in their grocery cart, and then automatically ring up the total charge and pay via debit card - all using the customer's time, effort, and smart phone! "Attention Shoppers: Bring your own cash register.")  

Where is the "value" for the customer in all this?  

Reflect for a moment on the definition of "value".  Value: Benefits received, for the burdens endured.  

Certainly, many of the shopping burdens have been shifted to the customer, especially with the onslaught of new technology. But, what benefit does your customer receive for the increased "burdens" they now endure?

Some enjoy cost savings. Others like the increased sense of control. Still others may relish the time savings, or at least not having to wait for service.  But of course, not every customer has the same concept of a "burden".  

Want to deliver more "value" to your customers?  Start by understanding what your best customers consider the burdens of shopping with you.  Then, as a competitive edge, unburden them the best way you can! 

Retailers: Have questions? Want answers? Join online TOPICAL TUESDAYS webinars - FREE

Success in retailing demands a competitive edge, and there are many ways to do that: product selection; pricing; customer service; location; instore "experience"; services; etcetera; etcetera.

But, retailers fail for only one reason: financial.

For eleven years, The Retail Owners Institute has been dedicated to providing any retailer, anywhere, with financial management know-how to avert financial failure. 

And now, that effort continues in yet another way. We are launching a series of TOPICAL TUESDAYS webinars for retailers. Led by Pat Johnson and Dick Outcalt, Co-Founders of The Retail Owners Institute, these are timely and interactive. And FREE!  

Free Registration is Now Open
Here are the upcoming topics. Register now for as many as you wish. Let your friends and colleagues know about them. And be sure to bring your questions!  

"Make More with Less! The Power of GMROI"
Tuesday, September 13 10 a.m. Pacific Time/ 1 p.m. Eastern Time/ 6 p.m. in London
click here for details &  free registration  

"Is My Store Failing, Or Am I Failing My Store?"
Tuesday, September 20 10 a.m. Pacific Time/ 1 p.m. Eastern Time/ 6 p.m. in London
click here for details & free registration  

"The BASICS of Open-to-Buy"
Tuesday, September 27 10 a.m. Pacific Time/ 1 p.m. Eastern Time/ 6 p.m. in London
click here for details & free registration  

"Will you have a profit…or a loss?! How to Know"
Tuesday, October 4 10 a.m. Pacific Time/ 1 p.m. Eastern Time/ 6 p.m. in London
click here for details & free registration

Timing Is Everything!

The current economic meltdown, while fearful, is beautifully timed for retailers!

Sure, consumer confidence is down. Businesses aren't hiring. Nobody is lending money. But so what?!

The first ten days of August - unless you sell beer - are the absolute dog days of the retail year. As long as world leaders are getting their abrupt comeuppance regarding their fiscal irresponsibility, the timing for retailers is perfect.

Consumer confidence, although presently in the tank, is fickle. In six weeks, or by the holiday selling season, it could be at the highest in years. This kind of crisis brings leaders worldwide to a new sense of urgency. And we have high hopes that they all have gotten the message.

Retailers - be grateful for this timing. And reassure others to do likewise.

Creative Crisis Management Must "Pencil Out"!

The Internet for Retailers: "The Arab Spring of the Commercial World"

There's a major sea change affecting retailing right now, whether we're ready for it or not.

Sea changes have hit retailing in the past, of course.

• Department stores once ruled retailing. Ah, but they didn't die. Instead, they went horizontal. They became known as Wal-Mart, Costco, Target, etc.
• Then "big box" stores, like Circuit City, Borders, Toys R Us, etcetera, stole the thunder from malls.
• In fact, there was a time when malls essentially had no vacancies. Now, they are being "re-purposed". Retirement homes, anyone? Charter schools?

But the current upheaval affecting retailing may be the most game-changing of all: the Internet. It continues to dramatically change the retail industry, at an increasingly fast pace. It's the Arab Spring of the commercial world! 

All those things that specialty retailers prided themselves on delivering in-store, in-person, are now available on-demand, 24/7 to the shopper via their smartphones.

No matter which consumer segment you target, they are increasingly web-reliant. They depend on the web to give them product information, shopping recommendations, price comparisons, store reviews, and more.

For hints of the future, watch the Millennial Generation. Yes, the "Digital Natives". The ones we know only from the tops of their heads, as they are busily texting.

That group now is larger and more influential than the storied Baby Boom generation that drove so many adjustments during the last 50 years. Watch every shopping decision they make: how, where, when and what they shop.

But don't stop there. All other consumer segments are being affected by the sea change as well. Grandmas buying off tablets? Baby Boomers checking prices from INSIDE a store on their smart phone?!

In fact, the fastest growing group of Facebook users is now the over-50 age group. So much so, that the teenagers are deciding to move away from Facebook. Where will they land?

So, which will it be for you?
There are three kinds of retailers:

1. Those who make things happen.
2. Those who watch things happen.
3. And those who say, "Uhh, what happened?!?"

Don't let the internet - the Arab Spring of the commercial world - turn you into retailer type #3.