The frontlines of retailing teach every surviving retailer street-smart techniques and insights of retail management—how to negotiate with suppliers, choose among job applicants, set profitable prices, resolve employee disputes, send messages to competitors, design motivational incentive plans, fire employees, attract bankers, and many more. These aren't taught in business school, but are gathered one-at-a-time, in the trenches, under-fire, and with considerable costs and consequences.
Here are 427 "Retail Truths," each learned the painful and expensive way—on the battlefield of retail management.
Rent a space, order some merchandise, run an ad, and operate the cash register. Anybody can do that!
Apparently not. Estimates of the retailing failure rate range as high as 95 percent. And for those who fail, not only are their hard work and long hours unrewarded but, in most cases, their precious bets—usually their life savings—are lost.
Easy work and guaranteed returns are not in the description of retail management.
The challenge isn’t in merely offering products the public wants to buy; we’ve got to do it better than all of our competitors.
Each shopper chooses only one store for his purchase, the one he feels offers the best value—not just quality and price but convenience, selection, security, atmosphere, etc.
The winner takes all. Second place gets nothing, no matter how great the effort or how close the race.
Ultimately there is only one way we can succeed in retail management: provide products our customers want better than all of our competitors.
But there are countless ways we can get into trouble—uncontrolled expenses, buying mistakes, theft and fraud, unmotivated personnel, inadequate collection, poor people-management, pricing too high, pricing too low, bad product selection, ignorance of laws, too many or too few employees, inaccurate financial projections, overly optimistic expansions …. All the world conspires against retail management.
With profits typically 1-3 percent of sales, the margin for error is frighteningly small. Every mistake is serious; combinations can be fatal.
Once conceived, an improvement can’t be made soon enough; if it’s a good idea, we should have already done it. Delays are simply intolerable.
We no sooner finish one project than we undertake the next, all with a sense of emergency. (This do-it-now urgency is a great source of frustration to those we charge with implementing our seemingly endless stream of brainchildren.)
There’s pride in each accomplishment, but there’s just no time to dwell on it—we’ve discovered other imperfections and opportunities and so much remains to be done.
Expenses typically absorb 97-99 percent of retail revenue. The 1-3 percent that remains as profit is tiny by comparison (but infinitely more desirable than the sea of red numbers that are possible).
We don’t have to get all the details right, but each one we miss comes directly off the bottom line. And it doesn’t take many missed details to turn the numbers red.
Perhaps most people wouldn’t consider a retail store a work of art. But a store is indeed an artistic creation, emanating from the founder’s vision, interpreted and shaped according to his talents and skills, and made inevitably unique in its innumerable details.
The individual character of a store develops and evolves gradually—the accumulation of many large and small decisions we make (or ignore) over the course of its existence.
We rarely step back during the process to recognize the creation accruing from our daily retail management. But eventually every characteristic of the store—location, décor, staff, products, displays, organization, policies, methods, marketing, etc.—has been determined, directly or indirectly, by its owner.
The owner’s vision is adopted by the staff, his priorities become the goals, his habits become the standards, and his style becomes the culture. Despite his (politically savvy) protests that many people play roles, he is indeed the producer and the product is his.
If you want to know the owner, walk through his store.
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