On Wednesday, the 13th, in Anaheim we are speaking to "the best of the best" in the music retailing industry. We believe the topic of our 90-minute presentation is SPOT-ON, as they say.
After considerable discussion with the group's leadership, it surfaced that the greatest threat to these retailers was not all the issues that get media attention, but was a rather spooky surprise: Mid-management people, those who must execute better and/or differently, often don't truly understand WHY they should embrace change.
What's needed now is balance sheet appreciation. Survival is balance sheet strength; nothing matters more. Nothing! And mid-management that does not clearly understand how to improve a Debt-to-Worth ratio should be rapidly trained or more rapidly replaced. It's as simple and urgent as that.
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About The ROI's Co-Founders
Since 1997, the retail consulting team of Pat Johnson and Dick Outcalt (Outcalt & Johnson: Retail Strategists, LLC) have been assembling a unique self-help website to assist retailers worldwide with basic financial training, assistance and easy-to-use tools. It’s much like a WebMD for retailers. Amazingly, last year 200,000+ retailers accessed it!
The website is called The Retail Owners Institute® (“The ROI”), and its URL is www.RetailOwner.com. It provides a wealth of information about cash flow, Open-to-Buy, turnaround strategies, financial statements, bank negotiations, etc, specifically for retailers (especially those who may be accounting-averse!) The ROI continues to be the go-to, how-to resource on retail owner issues.
Pat and Dick decided to start this Re-Inventing Retail blog for two main reasons: (1) enable a dialogue with the owners who visit The ROI; and, more important (2) allow retail owners to have discussions among themselves on the tough owner issues.
Pat and Dick welcome your comments and participation!
The website is called The Retail Owners Institute® (“The ROI”), and its URL is www.RetailOwner.com. It provides a wealth of information about cash flow, Open-to-Buy, turnaround strategies, financial statements, bank negotiations, etc, specifically for retailers (especially those who may be accounting-averse!) The ROI continues to be the go-to, how-to resource on retail owner issues.
Pat and Dick decided to start this Re-Inventing Retail blog for two main reasons: (1) enable a dialogue with the owners who visit The ROI; and, more important (2) allow retail owners to have discussions among themselves on the tough owner issues.
Pat and Dick welcome your comments and participation!
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3 comments:
So what is it that they do not understand? You infer that they do not appreciate the balance sheet reality. What are the changes and improvements that mid-management must execute to turn it around? I only find it curious that top leadership holds mid-management responsible for adapting to a changing industry and their survival. I'm sure retailers in many categories can learn from this niche. I'd like to hear more. http://twitter.com/retailposexpert
"So what is it that they [mid-management] do not understand?", you ask.
Yes, we not only imply that retail mid-managers do not appreciate the balance sheet reality, in our opinion they too frequently are arguing against it. Productivity of assets really means "do more with less"; obviously, inventory productivity (GMROI) is a major component. "Well, so what?", they wonder.
Leadership by the CEO is needed to explain clearly and forcefully that the higher the GMROI, the lower the Debt-to Worth ratio (the #1 measurement of a retailer's financial strength) and therefore the stronger the company. All of the decision makers MUST understand this cause-effect-cause-effect relationship. Everyone must understand how and WHY they can help.
Of course, if retail owners and/or their advisers don't understand this either, we've located the main contributor to the high failure rate of retailers.
Our mission is to teach retailers how to teach these business fundamentals in 90 minutes or less, and before it's too late.
I only find it curious that top leadership holds mid-management responsible for adapting to a changing industry and their survival.
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