New Kind of "Exit Strategy"?

"Retirement" looming? Ready to reduce hassles and worries, but not really ready for a rocking chair? Here’s a retail concept to consider.

We just heard about a new kind of “mixed-use development” (you know, retail shops on the ground floor, residences up above.) Some of the new townhouses being sold in a planned resort community come with a first-floor retail shop. The owner of the townhouse owns the shop space as well!

• The retail space and a powder room on the ground floor total 753 square feet.
• The two upper floors provide 1,935 square feet of living space (3 bedrooms, 2.5 baths). 
• A carport in the back contains the stairway leading to the living space. 
• A balcony on the second level overhangs the retail entrance on the street. 
• The townhouse owner can then choose to operate a shop in “their” space, or, be a landlord, and rent it out to another retailer. 

While a 3-bedroom condo might not be your idea of “downsizing”, the opportunity to also own the retail space offers some intriguing opportunities.

• Maybe you still want to run a small shop (perhaps a smaller version of what you’ve been doing for many years.) 
• The internet could balance out the seasonality of being in a resort community.
• Or, you rent out the space to another retailer, and receive the rental income. 

In any event, you still have a place to live, plus equity in the property, and could benefit from any appreciation in its value over time. 

As we thought about it more, this may be a concept that already is happening in a variety of settings other than a resort community. 

• Perhaps a college town? 
• Or, in one of the “lifestyle centers” that are being built/redeveloped in suburban communities? 
• Or, maybe in the town where you already live?

We think it's a fun new wrinkle on an issue facing many owners. All part of “making the business work for you!”

Might it be "an exit strategy" to look into?

NPR – "Never Pay Retail" – Is Everywhere!

A new consumer study by First Insight confirmed: “Today’s consumers expect discounts every time they shop.”  

The documentation of this phenomenon – what we often refer to as “NPR: Never Pay Retail” – is  sobering. Maybe not surprising to you, but nevertheless, quite sobering.

First Insight reported: "Percentage of consumers who expect discounts when shopping in these categories:"

• Electronics - 90%
• Appliances - 88%
• Furniture - 85%
• Smartphones - 83%
• Vehicles - 80%

(Note: These are the only categories reported on so far.)

Their study further revealed that Baby Boomers are the most resistant to paying full price. Three out of four Baby Boomers would “definitely not” or “probably not” buy at full price.

Among Millennials, however, purchase decisions seem to be driven by factors other than price. Only 35-40% would choose not to purchase at full price. 

The Pricing Credibility Crisis

However, a strong caution. (Why do we need to be reminded of this?)

In the battle to deliver "what the customers want", there is one more thing: Discounts offered have to be real! 

Yes, even if your name is Amazon!

A just-released study by the non-profit Consumer Watchdog reports that Amazon is posting “misleading list prices” on their site that significantly overstate the “discounts” Amazon shoppers receive.

From Consumer Watchdog's recap of their major findings (supporting the lawsuit they filed in California):

• “Amazon continues to include reference prices on more than a quarter of its stock”
• “About 40 percent of Amazon’s reference prices are greater than the highest price charged by any known competitor.”
• "On average, Amazon’s reference prices overstate the median market prices by $22, or about 20%.”
• "Amazon Marketplace vendors also post reference prices in excess of the prevailing market price, but they do so less frequently and to a lesser degree than Amazon itself.”

Ugh! What’s a retailer to do? 

Is “pricing credibility” even possible? Especially when virtually every consumer expects a discount? Or, relies on Amazon for pricing information?

Our conclusion (we know; not all will agree): In this "crisis of credibility", independent retailers are very well-positioned to seize this opportunity! 

Since the rise of Wal-Mart, then category killers, then Amazon, your competitive edge - your “value proposition” - likely has not been ”lowest price.” 

• Instead, you offer better selection
• more specialized merchandise
• more knowledgeable sales staff
• more personal customer service
• or other benefits that do matter to your best customers.

That's what has enabled you to survive. 

But to continue, you need to be even better. So, sharpen that "competitive edge" all the more! 

If Baby Boomers predominate in your stores, an “every day low price” strategy is unlikely to be compelling.

• To retain Baby Boomer customers, your competitive edge must be attuned to offering "discounts". 
• Just make sure that they work for you, too: a loyalty program perhaps (which also provides more customer data), or “special shopper” events, etc.

Focused on Millennials? Clarifying a total “value proposition” that matters to them is imperative.

Price always matters, of course. 

But credibility and fairness can still be your competitive edge!

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Links to these studies:

First Insight, discount expectations

Consumer Watchdog, Amazon's "misleading" discounts

Cannibalizing Sales? Or, Growing Your Customer Base?

"Are retailers eating themselves alive?" 

That was the provocative headline we recently saw. Then this followed: “Retailers' rising e-commerce sales are taking a big bite out of their brick-and-mortar revenues – a wide-ranging problem.” Other pundits we've seen call it “an untenable dynamic for these retailers.”

“Huh?”, we scoffed, as we read this about major retailers.

The definition of retailing is “selling to the ultimate consumer.” Why does it really matter whether they buy from you in-store or online?

Moreover, our rant continued, retailing also is having the right product at the right price at the right place at the right time for the right customer.

If that "right customer" wants to buy online instead of in-store, kudos to the retailers who figure that out!

But then we paused. Maybe there IS something to be considered here. Something about  the focus on that “right customer.” 

Easy – and free – fact-finding project

So, here’s a simple, free project to try. Choose a short period of time, like one month, to try it out. Just gather your sales data for that past month.

A. Make a simple tally sheet of two columns. One column is for In-Store sales, the other is for Online sales. 

Then, for each sale, enter these bits of info into the appropriate column on your tally sheet: 

• Total dollar amount of the sale
• What they bought (by major merchandise category)

B. Next, add it up. Get a total dollar amount for each column. And, maybe a total dollar amount for each merchandise category in each column. 

C. Look for the patterns. And the surprises (yes, there WILL be surprises!) 

D. Then, consider what that might mean. (This is a great time to involve your key staff people as well.)

For instance, it may confirm the purposefulness of your shoppers. Do they seem to have a clear idea of what to buy from you online, and what they prefer to buy in-store?

Or, maybe it will illustrate how you have two very different kinds of shoppers. One group likes to shop in-store; another likes to shop online. 

Would that make any difference in your operation? Should it? For instance,

• Do they demand/deserve different merchandise mixes? 
• What will it take to grow sales from each group? 
• Should one group have priority over the other?
• Will you need other vendors?
• Different marketing programs?
• Or…?  Or…?

Or, maybe it's telling you about your merchandise mix. Some might be better suited to online shopping. And how might the merchandise your customers seem to prefer to buy in-store be presented more effectively?

Fun, isn't it? We think this exercise will stimulate the merchant thinking for you and your people.

Is "cannibalizing" a concern?

So, should you be concerned about “cannibalizing” your business by offering products online? We doubt it, but you should find out for yourself!

1. Quickly gather the data. (It's free, remember?) 
2. Serve it up as some great food for thought. 
3. And then feast on it!

"And Many Happy Returns"

We just learned of a study that quantified the effects of “free and easy” return policies.

• But first, some (reassuring) background: Apparently 48% of shoppers say that their top reason for choosing a retailer is a flexible returns policy. But, as is true in many instances, perception is everything! That is, according to a 2016 Holiday Shopping Trends survey from the National Retail Federation, “On average, two-thirds of consumers say that they didn’t return any of their gifts.”

So, how important is it to have - and brag about - a “free and easy” return policy? 

• A Washington & Lee University study compared two similar online retailers; one offered free shipping on returns, and the other required the customer to pay shipping costs to return items. 
• What happened? Over a two-year period, average spending per customer was four times greater ($2,500 versus $620) for the retailer offering “free and easy” returns!

Wow! That's impressive, isn't it?

Lessons for ALL Retailers

The lessons from this apply to brick-and-mortar retailers as well. What about your store's return policy? Does it seem “free and easy”, or is it restrictive? 

• If you require that items must be returned within a very short window of time, or can only be returned for “store credit”, you may be protecting yourself from being “ripped off”.
• But you also may be assuring yourself of missing out on future sales.
• Bigger yet, customers that trust you as a retailer are very likely to shop with you more frequently, and tell others.

Are there costs? Of course. Some customers will abuse it. Some merchandise will not be able to be returned to your shelves. For that, consider Ebay or Amazon for liquidating it yourself, or use some of the so-called “return services” to recoup costs. 

But consider the cost/benefit comparison. What does a “free and easy” return policy really do? 

It builds confidence and trust with your customer. It keeps them coming back, and spending more! ($2,500 vs $620, remember?) 

Hmm. Maybe it’s time to quit focusing on returned merchandise. Concentrate instead on those “returning customers”! 

And do whatever it takes to have many happy customer returns!

"Food for Thought" from McDonald's and 7-Eleven

Recent strategic changes by two global firms – McDonald's and 7-Eleven – provide good reminders for us all. Each business is making news by its focus on what they are known for. 

For 7-Eleven, that would be convenience and low prices. Granted, it is still a habit for many to stop at the corner store on the way to and from work, school and play. But for 7-Eleven to remain relevant, it needed an updated definition of “convenience” for its best customers: Millennials. 

Their research revealed that today, people are eating five and six times a day; over 40% of adults are eating alone and on-the-go. So 7-Eleven expanded its private label brands into portable, snack-sized “healthy and fresh foods”, geared especially to their Millennial shoppers.

• Their Go!Smart brand offers an array of fresh foods especially appealing to women shoppers (small portions of turkey chili and cornbread, kale and quinoa salads, hummus, all labeled with nutritional info).
• Their branded items also include gourmet nut and fruit snacks.

So far, it has been a winner! Sales of their private brands have grown smartly (30% in both 2015 and 2016). Since over 50% of their customers are Millennials – who now are old enough to buy beer and wine – the future looks bright as well. 

7-Eleven: Updated, but back to its basic convenience premise.


Similarly, McDonald's is returning its focus to delivering what it’s known for. In their case, of course, it is burgers and fries.  At low prices, from clean stores, and fast. (Oh yes, Egg McMuffins - how about all day long?)

Through their research, they discovered that fewer people were coming into their stores each year. Definitely not a recipe for success! 

Their new goal: “A better McDonald’s, not a different McDonald’s.” 

• They are simplifying the menu, to reduce the complexity of ordering and preparing (saving costs and time.) 
• They still offer choices to the customer. But not of different items (wraps? salads?), but more choices about the burgers. 
• Their focus is on what customers expect and want when they go to McDonald's. “You want fries with that?” 

Ahh yes. Back to your roots. The value of going back to the basics of what you are primarily known for. 

So, once upon a time...What were your stores known for?

• What about your stores do customers really know and love? 
• Does that still matter to today’s customers? 
• If yes, how do you make it even better for that customer?
• And then, Get cracking!

Ready for this? Most shoppers prefer to buy from stores, not online

But – gulp! – there's a catch!

Despite the ease and convenience of online shopping, “the majority of American consumers still choose brick-and-mortar stores over e-commerce.”

Why? According to Retail Dive’s Consumer Survey* of 1,425 U.S. consumers, there are three main reasons:

1. “To see, touch, feel and try out items” is the top reason 
2. Shoppers also want it now and want it fast; they want “to take items home immediately.” 
3. One in five consumers cites easy returns  

Refreshing, isn't it? Shoppers want a shopping experience, in a real store. And it confirms that Amazon is nowhere close to being the only game in retailing. (If only everyone would quit hyperventilating.)

But, there is a far more sobering message here about today's very demanding shoppers. Retailers are expected to deliver on ALL fundamentals of retailing (the "right product", "right price", etc), ALL the time!

Assuring customers that "we can get that for you in just a couple days" won't satisfy. (After all, they have the web for that!) You must be in stock, with exactly what the customer is  looking for, whenever she comes into your store. 

And oh yes, be sure it is offered in a compelling shopping experience!

Yikes! Some may call these expectations crazy. Or call the shoppers entitled. 

We call it the New Normal. And like it or not, relish the challenge – or close the doors.

• Time to be nimble and quick.
• Have much better inventory control.
• Raise turns.
• Be smart about markdowns.
• Make all your stores compelling places to be.
• And above all else, keep having fun!

However, who better to meet that challenge than independent retailers? 

---

Retail Dive's Consumer Survey, sponsored by iQmetrix

Noticed Sales Ticking Upwards?

Why it matters to know "Why?"

How to pick up the pace even more

Many retailers now are being buoyed by gradual upticks in sales. 

If you are one of those, we encourage you to give some thought to "Why?" your business is experiencing sales increases.

You will find that it will be for one of these three fundamental reasons.

• More customers, or  
• Higher prices, or
• More items-per-transaction 

But, The ROI suggests that, when you analyze your results, you will quickly eliminate reasons 1 and 2.

"More customers"? That's a stretch.

Few places are experiencing growth in population. Plus, with the proliferation of online shopping, while your customers don't need to be geographically close, they also have many more choices when they are ready to buy. Your competition may be growing faster than the market of customers.  

Higher prices? Just not in the cards these days.

This is not an environment where many margins are increasing.

Inflation likely will not be a major factor. Plus, not only are retailers expanding online, so are many vendors, so price pressures continue to be downward. 

So, what IS driving sales increases? We think you will find that it is is all about transactions: 

• more items-per-transaction; or,
• more transactions

Whether at the grocery store, gift shop, lawn and garden center, sporting goods store, or wherever they are shopping, many customers are giving themselves permission to buy more, or to replace ("Finally!") those things they've had for several seasons.  

• Shoppers are feeling some more confidence, and have a decided case of "frugal fatigue". Enough already, they're saying. There are things we have not bought for a very long time.
• Shoppers are increasingly purposeful in their shopping. When they go to a store (or a website), they have an intent to purchase. The traffic you do receive should yield higher conversion rates.

And all that is very good news. These are shopper behaviors that you can focus on, and increase!

• Your sales staff can focus on add-on sales, to increase the items-per-transaction.
• Your buyers can bring in more "impulse items" and more complementary products that lend themselves to add-on sales.
• Your sales staff also can work on improving their conversion rate of "just looking" browsers to actual paying customers.    

Of course, be grateful for sales increases. Who wouldn't be?

But by analyzing and discovering "WHY?" sales are increasing, you can make them even better. Jump on this chance; it's unique!

Who will win? Who will survive?

"Competing" and "winning" in business and trade has been much in the news as the Trump administration begins.

Meanwhile, at the NRF's BIG Show 2017, where technology dominated (510 retail tech exhibitors!) it was reported that in 2016, "Amazon spent more than $15 billion on innovation, which is more than the top 20 retailers (excluding Walmart) combined." 

Yikes! How is an independent retailer to "compete" and "win" in that environment?

Well, consider this perspective: 

• A lion and a gazelle wake up on the Serengeti. The gazelle knows that to outrun the lion, it need not be the fastest gazelle. It only has to be the second slowest.

The good news for many retailers is that you don't need to outinvest or even beat Amazon. (Whew!) You just need to outperform your weakest competitor! 

• Amazon is unquestionably a relentless competitor and growth machine. So too was Wal-Mart. And before that, the "category killers" like Barnes & Noble, Office Depot and Toys 'R Us. And before that, regional malls. Department stores. And on and on.
• The Big Guys will come and go. There always will be another one emerging.

Through all that, independent retailers who stay focused on their own survival – keeping their own competitive edge, knowing their real competitors – those retailers have continued to have a place in the community. And that is truly a win!

Great opportunity for local retailers?

In mid-January, the Wall Street Journal reported that a real estate investment trust that runs class B and C malls across the country "is allocating a portion of space in its portfolio of about 70 million square feet to pop-up stores". These pop-up stores offer 60- to 90-day leases. The REIT is "targeting new merchants, including those that started their business online." 

• Crocker Galleria, in downtown San Francisco, has a 1,700 square foot Storenvy Popup that began in 2013 as a venue for new merchants. They cite one example of a women's clothing retailer that "started out in a 'fashion truck' in a parking lot, moved to the pop-up space, and now occupies a retail storefront in the three-story mall."

However, we see a great opportunity for an established retailer – like you, perhaps? The mall business is very tough right now, and few landlords are in a position of strength. That means that more of them are open to considering new ideas.

As an independent retailer, maybe you can be very nimble in setting up and operating a 90-day pop-up shop. 

Plus, as an established retailer, versus a new merchant, you could draw in foot traffic, coveted by mall landlords.

• Maybe you want to experiment with a new concept.
• Or, close out of a category of goods.
• Or, reach out to a new market segment.
• Or...?

Few landlords have retailers clamoring for long-term leases. For them, the opportunity to get some revenue – and its accompanying foot traffic to their property – could have a great deal of appeal. 

Even better, it's a fine way for you to be able to experiment, innovate, and maybe even re-energize your operation. 

Might a grim situation for some landlords be a golden opportunity for you? Something to consider.

What do customers really want? More control

We are living in unsettling times of rapid change and news cycle drama, now accentuated by a U.S. President-elect who values being “unpredictable.” 

Whether it’s the latest natural disasters, international conflicts, aging parents, unexpected expenses, or just trying to open a new bottle of aspirin, life can seem more out of control than normal. Especially during this upcoming holiday season.

This anxiety and frustration can be unsettling to many folks, some of whom undoubtedly are your customers. 

And frankly, as the frustrations grow of having less control, some people will seek more control wherever they can.

Where would that be? That’s right. Your stores. You and your staff must be ready.

“Give the customer what they want” has been a long-standing directive in retailing. Especially for today's customers, it's not about price or selection. What they want today is control. 

This holiday season, many consumers will turn with a vengeance to a new kind of “retail therapy”. Shopping is one place where they still are in charge! But it's not how much merchandise they acquire; it's how much control they can exercise.

How might you and your stores be better able to serve these seekers of "retail therapy" Among ideas for you and your staff to consider:

• Choose and use technology that gives your shoppers more control (versus just having the gee-whiz “latest technology”).
• Be more willing to explain “why?” There are reasons behind your careful editing of assortments (or what’s known today as “curating”). Explain how the merchandise in your stores meets your standards. (And why you don’t have everything that is available on the web.)
• Alas, some customers will abuse this power. They can be rude, or leave merchandise on the fitting room floor, or challenge return policies. It is important to avoid a tug-of-war with such customers. They want less confrontation!

Today's new "retail therapists" – that is, those retailers who understand and cater to customers who want more control –  will be better able to weather today’s tumultuous times. And to help their customers do so as well.

Millennials prefer L-A-T-T-E. Maybe you should too!

The Millennial generation - now ages 17 through 34 - represents nearly a quarter of the U.S. population, and a significant portion of annual consumer spending. 

We recently read of a study that has identified a set of attributes "that overwhelmingly resonate with this age bracket."  In fact, when making shopping decisions, Millennials are 20% more likely than other generations to consider these elements.

As these studies so often do, an acronym has been created to help us remember those attributes: L-A-T-T-E. 

• Local
• Authentic
• Transparent
• Traceable
• Ethical.

While each of these attributes provides the means to differentiate your stores, in our view, many independent retailers can leverage ALL of them!

Moreover, in our opinion, these L-A-T-T-E qualities not only resonate with Millennials, but with many others (your customers? your neighbors? You?) who share these same values. 

• It is not just demographics (quantitative data); it's also psychographics (qualitative data). And the L-A-T-T-E attributes certainly point to qualitative measures.

We think this offers two significant opportunities for independent and local retailers. 
With the L-A-T-T-E attributes, independents are uniquely positioned to take the lead, and make it known that Local - Authentic - Traceable - Transparent - Ethical have long been in your DNA. 

Especially in today's environment, winning the hearts and minds of shoppers is the challenge confronting all retailers. Sharing your love for L-A-T-T-E is an important step!

Your stores: places to BE? Or just places to buy things?

One of Retailing’s Hottest Trends: Selling Experiences

“After years of choosing the speed and wide selection offered by big-box retailers such as Home Depot or online merchants like Amazon.com, customers are demanding higher engagement if they’re going to buy something in a store,” reports Lindsey Rupp of BloombergBusinessweek.* Stores must be “exciting destinations rather than places to make a quick purchase.” 

Some brands or chains, Rupp reports, already are selling experiences along with their goods. Consider:

• Lululemon Athletica offers yoga classes in its stores
• Apple holds in-store digital art and video workshops
• Some Cabela’s (outdoor outfitters) stores have indoor archery ranges
• PetSmart opened its first Pet Spa store, focused on the “pet lifestyle experience” for pets and their pet owners
• Teen retailer Urban Outfitters last year bought a pizza chain

Beyond "Product Demos"

In our view, each of these examples goes well beyond the merchandise, and focuses on actively engaging the customer.

• These experiences are not “product demos”. Instead, they showcase and celebrate using and enjoying the merchandise.
• Plus, customers engage not only with “experts” who use the products (those leading the sessions), they engage with other customers (people like themselves?) who also use the products.

In other words, compelling reasons to come to your store! Hands-on participation and involvement are essential for today's customers. So, what are you waiting for?

• Specialty retailers are well-positioned to deliver these in-store experiences. You have the product knowledge, the love of the merchandise, the respect for your customers. 
• And what a great way to energize your staff! Ask for their ideas, and try them all! Test different times of the week: What appeals during a weekday? How about weekends? Or evenings?

For retailers, synergism and involvement is the new competitive edge.

---

* Pizza, Parks, and Pet Spas: Shoppers Will Pay More for Retail Experiences. Lindsey Rupp, BloombergBusinessweek, October 19, 2016.

Stealing their hearts and minds

Who goes to the grocery store to buy, well, groceries? What we want is DINNER! 

But, can you go into a grocery and find “dinner”? Or “breakfast”? Or, “great lunches”? Not very easily.

• Instead, there is a produce section. And then a canned goods section. And then the frozen foods section. All with an overwhelming assortment of choices, whether it is mustards or pickles or pasta or….
• Plus, it takes a lot of time to navigate all the aisles, avoid the other shoppers and carts, and then check out. Which may be fine for those who do grocery shopping for the social experience as well as getting their groceries. But for many time pressed folks...

That's why the true disruptions in the grocery industry aren't coming from smaller format stores, or even grocery delivery services. Instead, the meal-in-a-kit services – e.g., Blue Apron, Plated, HelloFresh  – are far more disruptive. 
Why? They solve the real problems of many customers.

• Here's how: Folks sign up online; they receive a special  icebox on their doorstep containing the fresh, raw ingredients for 3 to 5 meals, all in the proper proportions (whether 3 tablespoons of cooking wine or 1 carrot, there is no wasted food or languishing jars of spices); step-by-step instructions (with pictures) are included; customers do the assembly and cooking, and in 35 minutes or so, sit down to a home-cooked meal.

All without the time-consuming demands of meal planning or traditional “grocery shopping." No fuss, no muss, no waste.

• Remember, “value” for customers is "benefits received for the burdens endured." In our view, these meal-kit delivery services are delivering great burden-reducing value to their customers! And, they are reinventing (or "disrupting") the grocery industry in the process.

Time to think beyond Amazon?

We believe this offers, ahem, much food for thought for all retailers. As you consider how to serve your customers better and stay ahead of competitive pressures, it's time to think like your problem-solving customers.

1. What problems are they trying to solve?
2. Anything keeping them from getting those solutions from your stores?
3. And in today's "new normal", who IS solving your customers' most important concerns – and maybe stealing their hearts and minds as well?  (Hint: as grocers are finding out, it may not be Amazon!)

Finally! The 4th Quarter is HERE

October 1 marks the beginning of the 4th quarter of the calendar year. The beginning of the home stretch. And yes, there is good reason for retailers to cheer. Consider:

Halloween will be HUGE 

According to the National Retail Federation, Halloween spending is expected to reach a record high of $8.4 Billion on costumes, decorations and candy.

• More than two-thirds of Americans plan to buy costumes this year. For themselves, their kids, or their pets!  
• This year’s most coveted costume? As reported by the Washington Post, “So far, it’s superheroes across the board: For kids, for adults, for pets,” said Lorenzo Caltagirone, owner of Total Fright, a year-round costume shop in Arlington, VA.
• After 11 years of being the most popular choice, princess costumes have been dethroned. “The female superhero in particular has really taken off. This is the year of girl power.”
• Political costumes rank third on the list of popular options for adults 35 and older, bested only by more traditional witch and pirate get-ups.
• About those costumes for pets? Pumpkins, hot dogs, and bumblebees. 

The Election will be OVER!

And so will the election angst.

• According to CNBC News, “If history is any indication, retailers could see a double-digit sales lift in November and December, as shoppers focus on the holidays and release pent-up demand.”
• This post-election sales spike is likely to occur no matter which candidate wins.
• According to analysis by Alix Partners, “in the 2004 and 2012 presidential election years, year-over-year sales growth slowed an average of 22 percent in September and October, as compared with the prior eight months. It then bounced back an average 16 percent in November and December.” 

Despite the Hanjin Shipping bankruptcy, merchandise WILL be in stores for holiday

• According to the National Retail Federation, “import cargo volume at the nation’s major retail container ports should be at near-peak levels for September.” While much merchandise is still in limbo, “retailers are working hard to make sure it ends up on store shelves in time for the holidays.”

What Black Friday surprises this year? How About The NEW Normal?

• Remember last Thanksgiving? Some retailers stepped back from opening on Thanksgiving Day. REI made news by closing its stores on Thursday and Friday.
• How does all that affect customer expectations for this year?
• And what approach are you planning for your stores for this year? 

Not easy questions. But a sure sign that retailers may indeed be able to get back to The NEW Normal.

Ahh Yes, Christmas

This year, Christmas Day falls on a Sunday.

• That means offices that typically shut down starting at mid-day on Christmas Eve may instead be doing that on Friday the 23rd, inviting a late shoppers bonanza.
• Of course, the After-Christmas events will then start on a Monday. How convenient!

Wow, what gifts! 


Especially in retail, timing IS everything. Enjoy the arrival of this year's 4th quarter.

"Entry Exam" for New Items in Your Stores

Question: "We must keep bringing in new items. But, how do we keep from being over-bought?" 

Answer: "Very carefully!"

Ahh, the appeal of new items. Or, your customer's ever-growing "wish list" items. But, when you are also trying to control inventory, and keep turns up, the challenge is, "Really, which should you buy?" 

• As many retailers are only too aware, if you are not vigilant, you may experience bloated inventories, which can cascade very quickly into cash flow problems.

Here are 6 key questions for you and your buyers to ask yourselves as you consider new items. We think of it as an "entry exam" for merchandise. It's a very quick way to identify which items actually deserve to be in your store.

#1. Can my customers get this item at other stores in my market area? 
If yes, it probably has no pulling power.

#2. Is this a good margin item, or is it subject to a lot of price competition? 
Slow turners with weak margins are double trouble.

#3. Does having this item in stock help me sell other higher-margin merchandise? 
If not, you may not need it.

#4. Can I get faster delivery on this item than I am now getting? 
If yes, you may be able to cut back on your stock.

#5. Do I order larger quantities of this item than I actually need in order to take advantage of price breaks? 
If yes, you may be coming out on the short end when you figure in all your carrying costs.

#6 Do I have an emotional attachment to this item that reflects my personal taste rather than a business-like response to my customer’s desires? 
If yes, get rid of it!

Go here in the Library for Owners at The Retail Owners Institute(R) for more useful and practical insights and tactics about protecting your store from inventory bloat. See how quickly you can achieve greater control of your inventory!

New items? Oh my, yes. 

Too much or too many? Not any more!

What your customers really like about your store might be...your customers!

Recently, we heard how the cafe/bar in the recently-opened Whole Foods store in downtown Los Angeles had a live jazz combo playing on a Friday night. "And the place was packed! Can you believe it? All the cool clubs in downtown LA, and people come to the Whole Foods for live music?!? A grocery store??"

Actually, yes. We CAN believe it. Here's why.

• These folks trust Whole Foods because of the customers it attracts. They know they will be comfortable there; they want to be around people like themselves.
• And, they may not know much about who they might find in any of the "cool clubs".

Specialty stores are particularly suited to expand on this kind of engagement with your customers. You already have been selecting and editing product assortments - what's known today as "curating" - that speaks to a certain taste level. And attracts a particular group of shoppers.

And thereby, you have also been "curating customers"! You see, it's your customers – not just your merchandise – that really make your stores "special".

And these folks - your "best customers" - might like to hang out with each other when they are NOT shopping. 

• This is your opportunity to engage in real life(or IRL, as they say) with those who care about your merchandise - and what it represents - the same way you do.
• Make your stores more than a great place to shop. (Remember, there is the internet, after all.)
• What experience can you offer that will make your stores the place to be for folks like your very best customers? (They're what really make your stores "special." And don't they love to hear that about themselves?!)

We believe you will find it energizing! One more way to put the fun back into retailing!

Must owners pass through the "Valley of Bankruptcy?"

Recently we received an email from a long-time follower of The Retail Owners Institute®. It included a comment and a question that you, too, may have wondered:

How do you go about changing the mindset of the owner/CEO about GMROI, inventory management best ideas, etc? 

Our CEO stills buys by intuition, hunch, seat-of-the-pants. He likes to use phrases like: stack-em-high, watch-em-fly. One-to-show, one-to-go.

Can CEO's go from mediocre to great, or do they have to pass through the valley of bankruptcy first? 

Wow! Quite a question, speaking volumes about the underlying concerns.

Those Owners & CEOs who still "stack-em-high, watch-em-fly", who buy by hunch and intuition are in fact disappearing. It's what we call "Retail Darwinism". But, must owners pass through the "valley of bankruptcy" in order to change?

Every case is different, of course. In our work with retailers in "turnaround" situations, we've found that the fear of impending failure, the acceptance of being on the brink of bankruptcy, can prompt changes. Unfortunately, sometimes it is too little, too late.

So, how can Owners and CEOs be motivated to change?

• It starts with increasing their financial skillset and confidence.
• Enabling them to have a positive answer to "Am I running this business…or is it running me?!"  
• Doing integrated financial projections can be eye-opening.
• Knowledge IS power!  

Occasionally, however, fear is more paralyzing than motivating.

• These retailers simply do not appreciate how much control they could have! 
• Not able to recognize their alternatives, they become frozen in the headlights.
• This is especially true for those who have delegated the "accounting and financial stuff."

That's not to say that Owners & CEOs need to do all of the accounting and bookkeeping themselves. Far from it!

But since Owners are responsible for projections, for playing "what if…?" about their business, they must understand the cause-effect financial levers in their business.

That's how they can be empowered, better able to respond as the business environment changes.

Emails such as that one cause us to redouble our dedication at The ROI to help any retailer, anywhere be able to look ahead, compare potential outcomes of their own financial projections, and then use those insights to inform their judgment and decisions.

Or in other words, empower retailers to "Turn on their financial headlights!" 

Who's Really Paying the Freight for Amazon's "Free" Shipping?

A recent study by consulting firm Shipware LLC documented the commanding advantage Amazon has established in shipping. The "big shippers" - so-called Mega-Retailers like Amazon, Target & Wal-Mart - get dramatically more favorable rates from carriers such as FedEx and United Parcel because their volume is "guaranteed and predictable." 

As a result, the costs absorbed by the Mega-Retailers to provide "free shipping" are breath-takingly less than those for their smaller competitors.

Shipware estimated the shipping costs that would be incurred by each type of merchant to ship a 10-inch square box weighing 3 pounds from New York City to a suburban residence in Atlanta.

But are the shippers relying on this "guaranteed and predictable volume" to offset the discounts they offer? Or, are the shippers looking to their smaller customers - with far less negotiating power - to bear a disproportionate share of the costs?

• For the mega-retailers, free shipping drives tremendous volume (and customer loyalty) while also enabling greater and greater negotiating strength with the shippers. A powerful dynamic: the big get bigger.
• And for the smaller merchants? Matching the mega-retailers' online prices and absorbing the "free" shipping costs are much higher hurdles. They represent the opposite but equally powerful dynamic, the downward spiral....

Will there be any relief for the Small-Medium Retailers as Amazon grows its own shipping fleets? That is, faced with reduced volume from Amazon, might FedEx and UPS be more willing to offer better rates to all the other customers?  

SIgh. We wouldn't count on it.  

Or, given this huge discrepancy in costs, might other shipping services emerge to fill this vacuum? Perhaps consolidaters of some sort? Or...???

"Smart Appliances". Smart for Who?

The Internet of Things (IoT) – all the web-enabled devices for the home – is a dynamic and fascinating arena. One of the latest devices is the Family Hub, the "Smart Refrigerator" from Samsung. 

The Family Hub has 3 cameras inside the fridge and a 21 inch touchscreen on the front that connects to the web. Samsung says they want to move your refrigerator beyond storage, and bring your kitchen into the digital age.

For that, the Family Hub comes complete with...its own family! (And you thought it was about your family.) It's all about the "home shopping vertical." 

So, when you wonder (or are being asked), "What's for dinner?", the Family Hub has lots of partner-enabled help for you. 

• First, you can look inside your refrigerator – from anywhere with an internet connection – and see what’s in it right now, including expiration dates.
• Meanwhile, the Groceries by MasterCard app has been studying your habits, and offers a grocery list of suggestions on specific items and brands.
• AllRecipes has recipes, cooking tips and suggestions for you (complete with shopping lists).
• Others in the household have been adding to the grocery list too.
• Once you approve your shopping list, items are added to a cart at a FreshDirect or ShopRite location, the payment is processed by the MasterCard app, and the groceries are delivered by Instacart.

Whew! It's giving a whole new meaning to "food chain", isn't it?

Our questions: Are these smart fridges - and all their connections - really cool? Or, really chilling?

• Is this a time-saving, technological break-through? The perfect blend of technology, merchandising, and convenience for today's consumers?
• Or, despite the amazing connections the technology can allow, Is it even solving a real problem?
• Meanwhile, as with all these technology advances,  who actually will own all the valuable data these smart refrigerators are collecting? 

It will be fun to watch, for sure. 

And who knows? With the web-connected video screen on the refrigerator, the Family Hub may give a whole new meaning to “binge watching”!!

In-Store Customer Analytics...from the Ground Up!

"How do you do analytics in such a way you don't become creepy?" asked Jill Standish, Senior Managing Director of Retail at Accenture Consulting.

And her answer? A technology that looks at the shoes of customers as they walk in the store.

"You can actually get a lot of pretty accurate demographic information about the customer based on their shoes, such as their age, whether they are male or female, and even their income status. And it's not that intrusive, unlike facial recognition." 

Revealing "Foot Traffic"

That got us wondering: even without that technology, what might you be able to learn about your customers by looking at their shoes?!

• For example, with just the camera on your phone, get some pictures of the shoes on the shoppers entering your store. Then, take pictures of the customer's shoes at your cash wrap counter.
  
  Now compare those sets of pictures. How much consistency is there between the folks coming into your stores, and the ones actually buying from you?


• Considering a new location? Or a different location in a mall? Supplement your research with some "ground up" analysis. What can you discern about the "foot traffic" available in that new location? And how well does that match up with your present customers?

Intriguing, isn't it? It won't take much time, or even an investment in technology. (And it might be a great project for one of your newer and/or younger staff members.) You will undoubtedly find some surprises – and more opportunities!

Just a little time and effort can reward you with some revealing and useful insights. All free, too! One more way that independent retailers can work smarter, not just harder.