Retailers...Don't Be MYTH-LED!

As Retail Strategists, we follow retailing trends and their impacts on 55 retail segments. In so doing, we've identified that some of the accepted "truisms" in retailing actually are myths. We are exposing them as myths, to prevent retailers from being myth-led.

Here are three examples:
Amazon will eventually run all retailers out of business.

Don't Be Myth-Led! The customer has the final say. 

Until Amazon solves the fact that 90% of customers want to touch, feel, test, try on or taste before buying, their growth from retailing will be limited.

Because of the soft and disappointing Back-to-School sales, 2013 Holiday sales are commonly predicted to be lackluster.

Don't Be Myth-Led! What matters is how consumers are spending.

BTS results were affected by the uptick in sales of homes and cars. In November and December, houses and cars will not suck disposable dollars away from Holiday spending.

Struggling malls can be turned around as the economy improves.

Don't Be Myth-Led!  Probably 15-20% of them have no future as malls.

How to get the highest and best use from that real estate? Retrofit them into retirement homes!

Is Cash Going the Way of the Rotary Dial Phone?

In many stores, cash registers already have gone the way of the rotary dial phone. Is cash itself the next thing to go?

One merchant we know had a customer pay for a very large purchase in cash. Literally.  Stacks and stacks of $100 dollar bills! 

It was such an unusual occurrence (and such a substantial amount of cash), he actually posted pictures of the cash on his Facebook page! (And then nervously walked the deposit to the bank.)

The Mobile Payment revolution is just beginning

Keeping up with accepting cash, checks, credit cards and debit cards is just part of doing business as a retailer.

And now, the ever-expanding capabilities of technology, plus shoppers' growing comfort level and confidence with online payments and virtual payments, has opened up the floodgates of new ways to pay that do not involve a traditional account from a financial institution.

For example, some retailers accept "payments" when the customer provides their phone number and PIN. The retailer receives "payment" without seeing a bank account or credit card account number. 

Instead, that "linkage" has occurred between the customer and their payment processor...which is not necessarily a financial institution!

With this new technology comes a new wave of companies eager - and able - to be the new payment processors. 

The social media platforms, retailers, technology firms, telecom companies and others - Amazon to Apple, Google, Facebook, Square - are leveraging their customer base, their Big Data, and their rapid-fire pace of innovation.

• For example, last  week it was announced that Intuit and Square have teamed up to allow merchants to quickly link their transactions via Square to their QuickBooks accounting.
• And, PayPal (eBay subsidiary) acquired a mobile payments startup - Braintree - for $800 Million, as they try to catch up in the mobile payments world.

Meanwhile, some retailers scoff at the notion that customers will pay via their smartphone or some kind of electronic wallet. 

• They cite studies such as this: 63% of Americans use their phones for only two things: talking(!) and texting. 
• Most customers, these retailers reassure themselves, will need a lot of education and preparation for the "mobile payment" revolution. 

Actually, that education has begun! Customers learn by doing. They're getting their practice at places with high volumes of small transactions (think Starbucks). Then, when they are trying to pay for higher value purchases (think your stores!), they expect the same level of  technology sophistication.

Postponing these changes and adjustments in stores is not the answer. Retailers have no choice; they must be accepting of these technology "advances", in order to keep pace with their customers' expectations. 

The harsh lesson, once again: Even if it is an arm's race that just keeps escalating, you must keep up with the flow of technology...or get run over!

Deciding Where & How to Cut Inventory?

"But, I Can't Sell from an Empty Wagon."

Obviously, there's truth in the basic retailing maxim that "you can't sell from an empty wagon." If you don't have an appealing assortment of goods your customers need, they have no reason to visit your store. 

However, today, you may have to redefine "full wagon". 

Here are some questions to ask about each item added to your store:

Q. Can my customers get this item at other stores in my market area?
Yes?  It probably has no pulling power.

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

Q. Does having this item in stock help me sell other higher-margin merchandise?
No? You may not need it.

Q. Can I get faster delivery on this item than I am now getting?
Yes? Sweet! You may be able to cut back on your stock.

Q. Do I order larger quantities of this item than I actually need in order to take advantage of price breaks?
Yes? Be careful! You may be coming out on the short end when you figure in all your carrying costs.

Q. 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?
Yes? Get rid of it!

Time for Retailers to Shop Around...for Customers!

All retailers have been going through this lengthy recession, and it has been ever so painful to many.

In order to survive, most retailers have needed to market frantically, to garner as much sales volume as possible. That approach was what it has taken to survive.

But, perhaps you have sensed it. The media certainly has been trumpeting it. The recovery in the economy seems to be happening.

It's now time for retailers to change tactics. 

Retailers must do to your customers what your customers have been doing to you for years: you must "shop around" for customers. 

Not all customers are good for you. And you must give yourself permission to lose the bad ones!

You see, it's not just the customers who have many choices of where to shop. Retailers can - and should! - be just as choosy about who they want as customers!

Now is the time for you to "trade-in" some of those more troublesome (and costly) shoppers.  Now that you have survived the recession, you must focus only on your best, most profitable customers. 

What will be the defining characteristic of successful retailers in 2013 and 2014? Those with the most profitable customers. And now's the time to start shopping around for them!

Want to know more about this? Go here on The ROI site to see how you can identify and focus on your best, most profitable customers.

Back-to-School Results "Soft". Hmm...Really?!

We were taken aback a bit by seeing that early Back-to-School sales are viewed as "softer than expected." 

Then, in contrast to that negativity, we saw this report:

"In August, American consumers were the most upbeat in more than five years. The Bloomberg Consumer Comfort Index rose to its strongest reading since January 2008."

So, what's happening? 

Well, for one thing, the glut of apparel and small electronics available at deflationary prices continues to lower the average unit sale in most stores.

"Oh, so if sales are down 2-4%, I might actually be even with L.Y. in units sold?"  Right! 

A second "Big Picture" factor: basic demographics. Who produced that BTS market of 6 to 22 year olds? 

Oh yes! They are Generation X, born between 1962 and 1978. That small group born after the Baby Boomers and before the Millennial Generation. Generation X is a decidedly smaller group than those before or after them.

"Back-to-School sales are disappointing." Oh really?! Maybe they are actually darn good! 

And maybe all these converging trends help explain why retailing is forever challenging. And so much fun!!