That Haunting Halloween Question (and January Payables....)

As Halloween arrives, here's a really spooky thought:
Will you have enough cash to get you through the next 3 months? 

How to answer that? With a quick cash flow calculation. No retailer should ever be without it! 

And don't worry. This does not have to be hard. A Cash Flow plan has just 3 parts:

1. Cash coming in
2. Cash going out
3. The difference

And now, any retailer can know in minutes whether they will have enough cash to get through November and December and those January payables. 

• Go to our online "Speedy Form for Cash Control." It is available free at our Banks4Retailers.com microsite. 
• Then, fill it in for the next few months. It's like shining a light on that (Halloween) monster in the closet!

Then, one of two things will happen:

1. You'll discover that you will be "cash flow positive"! Sweet! You can sleep at night!
2. Or - gulp! - you will see that you will have a cash shortfall. But, better to know in advance, isn't it?! 

In either event, you still have time to make some adjustments.

Yes, You Have Choices

• As you start filling in our Online Speedy Cash Flow form, you will see that you can put in numbers for up to 6 months. 
• Or, choose to focus on a shorter time frame.
• Or, disregard the column labels and have each column represent a week.
• Or, you could choose to do it with The ROI's 3-in-1 INTEGRATED Cash Flow Calculator.  The choice is yours.

Depend on The Retail Owners Institute

Whenever you are haunted by cash flow questions, depend on The ROI. 

Nowhere else can retailers so easily look ahead, and "Turn on your financial headlights!" 

Time for Your "Inner Merchant" to Shine

As we have taught for years, anyone selling something to the ultimate consumer is a "retailer." 

However, only a small portion of these retailers are truly "merchants".

And now is the time the merchants can shine!

While we certainly are not economists (among other things), we are sensing that consumer confidence is generally stronger now than it has been in many Holiday seasons. 

And merchants recognize there is an opportunity to benefit greatly from a few carefully-selected additional markups this Holiday Season, and perhaps into the first quarter of 2015 as well. 

Don't by shy! If you have discovered unique merchandise and brought it in, do not undervalue your discerning choices!

• Identify that unique, non-commodity merchandise you have. (Perhaps 5%-10% of the total.)
• If you haven't already, take a markup that is bit higher on those carefully-selected items.

What's the worst that can happen? It ends up being marked down in 7 weeks?! Hmmm.

• During that time, those 5–10 days before Christmas, all true merchants will be "dumping" (that's understood, right?) merchandise they do not want come December 26. 
• So what if you still have some of this specialized merchandise at that time; you still are likely to generate some revenue from it.

But, between now and then, get that extra markup wherever you can! This is not the time to leave money on the table.

The merchants of the world assure you: this is not being greedy. It is being strategic! 

You know, like a merchant!!

Who REALLY Has First Dibs on Your Customer's Wallet?

Quick: Who are your major competitors? Amazon? Target? Wal-Mart? Other specialty store retailers in your market? 

Yes, all those and more.

But, what about the "stealth competitors" affecting every retailer – whether you are selling apparel, furniture, motorcycles, books, smart phones, or whatever?

These competitors are hiding in plain sight. And, in our view, they significantly impact – and reduce – retail sales.

What are they? The monthly recurring charges that support our digital lifestyle.

Just think about it:

• There are the monthly cell phone data plans, for every member of the household. (Yes, even the grade schoolers. And, maybe even Grandma & Grandpa.)
• Then, the monthly cable TV charges.
• Plus, the monthly charges for high speed internet access in your home.
• Of course, there are the monthly charges for "streaming" online entertainment services, such as Netflix, Amazon, now Wal-Mart, and others.
• And, monthly online access to newspapers, magazines, etcetera

We call these kinds of monthly expenses "the enablers" of our digital lifestyles. And for retailers, each one represents a major "stealth competitor."
 
For many households, these monthly charges can add up to hundreds of dollars! And today, essentially no one can avoid them; they are treated like another "utility" charge. Is it any wonder consumers feel like they have less "spending money"?

The High Cost of Connectivity: Erosion of Retail Spending

All of this connectivity comes at a cost to retailers. Money that is being dedicated to these monthly enabling charges is not available to be spent "at retail."

• Traditional "disposable income" is significantly eroded. And that happens every month, essentially out of sight. And to almost every household. 
• Overall retail sales, by definition, are reduced. That is, "retail spending" tracks sales of merchandise, not services.

Enabling Our Digital Lives
So, given the stealth competition of enabling our digital life, can Holiday retail sales meet the predictions of some prognosticators to be up 4%-5% over last year? If so, that would represent quite a feat.

Or, more likely, consumer spending will be up, but... spending on what?!

Amazon's "Store" In New York City – Our Contrarian View

Not a Store, But a Brilliant Service Center

There has been a bit of a buzz about Amazon's plans to open a "store" in New York City, on 34th Street. This storefront will enable customers to pick up their Amazon purchases, versus having them shipped; to return merchandise; and, likely, to see and purchase Amazon products such as the Kindle Fire, etc.

• We imagine that Amazon will have a real "Wow!" effect available at this location. Perhaps digital displays of their television programming? Showcasing of their products. Demonstrations of how to use their various shopping apps. And no doubt, a special line/faster service for their Amazon Prime customers.

Some pundits claim Amazon is trying to emulate Apple; others compare it to e-commerce specialists like Warby Parker opening brick-n-mortar locations. 

But our comments, when contacted by the American Business Journals, revealed a far different perspective. In our view, what Amazon is opening, on 34th Street, is a service center, NOT a "store."

• That location is at the confluence of virtually all of the transit choices in NYC: Penn State, Grand Central Station, major subway stops, and of course, taxis. Perfect for commuters to pick up their items on the way to their train.
• If Amazon really wanted to "do retail", it would have selected a retail location: SoHo, or Madison Avenue north of 57th; etc.
• By offering this service, Amazon is able to promote "same day delivery" without having a fleet of delivery trucks entangled in NYC traffic. (NY traffic cops and – cabbies – will be delighted with that news!)

Maybe a Defensive Move?

Here's another thought: this could be viewed as a defensive move by Amazon, in response to other retailers' in-store pick up programs. (Also known as "click-n-pick", where the customer orders online, and picks up from the store.) 

As always in retailing, this will be fun to watch!

With That Inventory...What Could/Should/Would Your Sales Be?

The Retail Owners Institute® has just added another online "gadget" that is kind of fun. Quick and easy to use, of course.

1. You enter your inventory on hand (@ cost);
2. You choose which retail segment you are in;
3. It immediately shows you the annual sales of the "median-performing retailer" in your segment

Here's an example for an owner of a women's boutique.

"Your Mileage May Vary"

Of course, this only means something when you compare the sales volume in your segment to your own sales results. Are your sales usually better than that? Or not?

And, if your sales from that level of inventory are significantly lower, does that mean that you should make changes?

Remember, there is no one "right answer". If there are differences, you get to decide what, if anything, you want to do about it. 

• If you want to concentrate on growing sales, you have a target for the increase.
• Or, if you elect to raise turns to reduce inventory on hand, you have perspective on what is reasonable for your retail segment.
• And, of course, you have 12 month's time to realize the effects of any changes.

Every retailer will have different answers, depending on their particular stores and situation. 

That is the whole point! 

This is another free, time-saving tool from The ROI to enable you to compare your choices, and apply your best judgment.

So have fun with it! Go here to check it out for yourself.