PERSPECTIVES

There are many ways to succeed in retailing, many ways to assert your competitive edge, whether location, pricing, merchandise selection, knowledgeable staff, etc. 

But there is only one way that retail businesses fail: they fail financially. So the key to success? Have a competitive edge, and take charge of the financial demands of the business. 

Where Do I Start?

As a retailer, navigating your financials can feel overwhelming. That’s why we’ve created a suite of online calculators designed specifically for independent retailers like you. No spreadsheets, no guesswork—just fast, clear insights for your next business decision.

Here’s how and when to use five of our powerful tools:

Why Close Does NOT Count In Physical Inventories

It’s very common for retailers to have their fiscal year end be January 31. It’s after the Holiday season, and inventories are generally low.

Likewise, it’s also very common that retailers are taking (or having a service take) physical inventory this weekend or soon thereafter.

As we all know, counting inventory by hand is tedious, boring, expensive and, frankly, no fun at all. However, whether by hand, by barcode, by any method of technology, the inventory count matters, and it matters a lot!

Let’s review the Big Picture for this business doing $700,000 in revenue, with $290,000 in total operating expenses.

• It’s in their blood. It’s what makes them and their stores successful. That drive. That perseverance. That goal-driven focus. 

In today's financial climate, how in the world can independent retailers (that's the 92% that are not publicly traded) get financing? 

In most cases banks are not lending (even as they run ads proclaiming their "support for small businesses.") Landlords aren't more lenient, nor are many vendors. Even mothers-in-law are asking tougher questions! 

So, what should a retail owner do? Just give up on the idea of getting financing? Or, worse, accept the cash offers from vendors, payment processors, or POS providers who take their "payments" right off the top of your daily sales?

Well, it is maddening, but The ROI recommends an easy exercise that may be of great help.

How's Everybody Doing?

The Retail Owners Institute® makes it easy for you to get a quick financial health assessment of your own stores, as well as the retail industry, and every vertical within it. 

From farm stores to apparel stores, wine stores to tire dealers, gift shops to convenience stores; all 45 verticals.

Here's how to get started.

• Go to the Retail Benchmarks page of The ROI site.


• Scroll down the page to see the links to all 45 retail verticals.


• Choose the vertical that includes your stores; immediately go to that vertical's Benchmarks page. 


• See the results for each of 6 key ratios for the past five years. To get a better look, just click each image to make it larger. 

Quite a picture, isn't it? Which ratios are trending up? Down? Any suggest some shaky times ahead? Any surprises? But most importantly, how will yours compare?

People don't go into retailing to be financiers. 

• They love the merchandise they sell, and/or they love the people who buy the merchandise. (Think book stores, sporting goods stores, gift shops, etc.) 
   
• Others love the "theater", the excitement of retailing. 
   
• Still others want to be their own boss. 

But few are attracted to the financial part. 

Which is exactly why The Retail Owners Institute website has been built!

Given our years of experience consulting with retailers, especially in turnaround situations, our speaking at conferences and publishing in trade publications, we wanted to "level the playing field" for retailers.

Try as we might, it seems that there will be no avoiding a recession in 2023. How deep it is, and how prolonged, still remains to be seen. 

For retailers, it's not a matter of whether your business will be impacted, just how much. Alas, retail does not lend itself to being recession proof.

However, there are ways to make your business more recession resistant.

The place to start? First, find out what your Debt-to-Worth ratio is right now. That is the #1 measure of the financial strength of your business. It's a key indicator of your ability to weather an economic downturn. 

Each year at this time, our thoughts turn to turkeys. 

No, not the ones that will adorn many dining tables on Thursday. But the "turkeys" lurking amidst your inventory. You know; non-selling, distressed, slow-moving, old, unappealing leftovers among your merchandise. 

But this year, frankly, our worries extend beyond the turkeys. 

Here are some of the reasons why.

• All the gloom and doom talk about the economy and recession continues, affecting consumer attitudes.


• With few pandemic or supply chain issues, many retailers have more-than-ample inventory this year, unlike the previous two years.


• Inflation is impossible to ignore, especially for those who drive cars or shop for groceries.

 

As a result, in this environment, consumers are scaling back their discretionary purchases, and/or choosing to spend on travel, dining out, or other experiences versus retail merchandise. 

Not an upbeat prospect for retailers, is it?