Lost Your "Competitive Edge"? Then, It's Time to Get Out of Retailing!

For retailers worldwide, January is a month of reflection. Cold, hard-nosed reflection. 

• "As I consider restocking, and go through the process of assessing 2012, I keep wondering, 'WHY am I doing this?!'"

• "Sure, I love my merchandise and the customers who love this merchandise. But, my results just are not good."

• "My staff and others are telling me that some of our best customers are going to a competitor. Hmmm...." 

Do some of these thoughts and concerns sound (all-too) painfully familiar?

If so, The Retail Owners Institute would suggest that all of these concerns reflect the same missing ingredient: you have lost your Competitive Edge. 

The solution? Re-discover and establish a distinctive and compelling Competitive Edge! Fast!!

Ask yourself, "What do we offer that separates us from all our competitors?" 

• Absolutely the lowest prices?

• Absolutely the broadest inventory assortment?

• Absolutely the very best location?

• Absolutely the wanted lines that no one else has?

• Absolutely the best e-commerce operation in your market?

• Absolutely the services for customers that are unique and special?

• Absolutely the most efficient and frugal operation around?

• Absolutely the biggest outlet for your merchandise anywhere? 

And of course, "absolutely" means without question, obvious to everyone. That is the only way any of these strategies represents a true Competitive Edge.

What if you do NOT have a true Competitive Edge? 

Then, absolutely, you should consider cutting your losses and closing down!

Kidding yourself that you are okay regarding a Competitive Edge is one of the tell-tale signs of a retailer in decline.

Reflection time is over. 

It's time to commit. Act now! Reclaim your Competitive Edge!

Holiday 2012 "Crunch Time"

Ready for This Season's Special Finale?

Ahh yes, the "Season Finale": that special time between December 26 and New Year's Day.

Savvy retailers know that the post-Christmas time will determine the overall outcome of their 2012 Holiday Season. Which will it be for your stores?

• A full "Ho! Ho! Ho!"
• Cut back? Just a "Ho! Ho!"
• Or - yikes! - just a "Ho Hum"

This is a unique period of time, and a tremendous opportunity. Many retailers find they net more from this time than any earlier stretch of 6 - 10 days!

Why? Because of the many opportunities to reduce expenses. Less advertising cost. Less staff. Fewer hours than the pre-Christmas stretch. And, the opportunity to clear out seasonal merchandise, generate cash, and move on to the New Year.

• Special merchandise buys, in readiness for those After-Christmas Price Hounds;
• Special customer service perks for those shoppers using Gift Certificates;
• Renewed emphasis on capturing customers' email addresses;
• Special incentives to bring the customers back. Liberally give out coupons - bag stuffers! - such as "15% off February Purchases".

The goal: NO seasonal goods left after the season is over. 
The clock is ticking. The customers will be there.

"It's not how you start; it's how you finish!" is especially true for retailers. To make the most of your 2012 Holiday Season, focus every effort on finishing strong.

Have Retailers Lost Their Minds? Or Just Their Way?

What is it about egos and market-share-at-all-costs that suppresses judgment?! Are the "Big Guys" nuts?!

This Thanksgiving weekend exposed the worst strategic thinking by retail CEO's that we've ever witnessed. In fact, we call this phenomenon "The Bezos Laugh-A-Thon." Jeff and his Amazon team must have sore sides by now.

So spooked are major retailers about Amazon's growing market share that common sense seems to have evaporated. Just imagine all the additional direct and indirect expenses that opening on Thanksgiving Day must have generated. All to protect their market share! 

Remember, "the pie isn't getting bigger!" All this has done is "time shift" that shopping.  The media loved it, but the shareholders should be appalled.

Two outcomes of this misjudgment seem predictable:

• Continuing a recent trend, sales over the next two weeks will be much lower than last year. Customers have just so much to spend, especially in this difficult economy. 

• Each year, no publicly-traded retailer can tolerate sales being lower than last year. For shame! So next year, look for openings at noon(!) on Thanksgiving.

Bottom line: Advantage, Independent Retailers

Those who keep working smarter will benefit greatly by the "Big Guys" errors.  Enjoy it!

Pro-Active Response to "Showrooming"

Have you experienced "showrooming" in your stores? You know, you spot a customer in your store who is price-checking your merchandise, and is actually on the ecommerce website of an online retailer. 

Here's how one retailer we know is dealing with it. Approach the "showrooming" customer, and encourage the customer to put the product into the online Shopping Cart. 

Why? Because only then can the customer see what the total cost would be of buying it online. Only after the product is in the Shopping Cart are the costs of shipping and sales tax added in. That is the true "comparison" price.

So, this retailer encourages the customer to get complete price information. And, at that point, when both the customer and retailer see the total online price, then an actual comparison can be made. Some customers discover that they won't be saving much, if anything, by buying online

. 

Essentially, this retailer uses showrooming as a "teaching moment." He helps the customer discover for themselves what their actual cost would be.

Even Better: Shelf Talkers Do the Showrooming FOR the Customer!

What if you can't intercept every showrooming customer? After all, they often try to be discreet about it! Or, it might feel too confrontational for you. Here's an idea: provide the price comparison for them! 

• Pick a product that you feel is most vulnerable to being showroomed. 
• Go online, find that same product, and put it in the Shopping Cart, as if you were going to purchase it.
• Use a local ZIP code for the shipping address.
• Proceed to Checkout, so you can see the total actual price (including shipping, tax, etc).
• Take a screen shot of the Checkout screen.
• Use the screen shot to create a "shelf talker" to display alongside the product in your store.

This is what the big guys call "price transparency." You're  giving the customers what they want, which in this case, is the facts about whether they could save money by buying online.  

We call it another example of how retailers can work smarter, not just harder. Happy "Proactive Showrooming"!!

Must Retailers Pass Through the "Valley of Bankruptcy" in Order to Change?

Last week, we received an email from a long-time follower of The ROI. 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?" 

Quite a question, isn't it? Speaks volumes about the underlying concerns.

Thanks to what we call "Retail Darwinism", those Owners & CEOs who still "stack-em-high, watch-em-fly", who buy by hunch and intuition, are in fact disappearing.  They are not making the "mediocre to great" transition. Is the "valley of bankruptcy" the only alternative?

"Am I running this business...or is it running me?!?" 

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.  Of course, sometimes it is too little, too late.

Then there are the times that 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."

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?!"  Knowledge IS power! 

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 this one cause us to redouble our dedication at The Retail Owners Institute® to help retailers "Turn on their financial headlights!"  The ROI's goal remains: "Eradicate retail bankruptcies!"