PERSPECTIVES

The Clock Is Ticking…

Christmas is two weeks away.

Time to focus on the “science” part, the numbers part, of “the art and science of inventory management.” The march has begun toward a vital, critical touchstone – your 12/31 targeted ending inventory level.

On that date, you must have appropriate inventory levels and mix for the months ahead – plus the cash to pay for it!

This is the moment an “ending inventory enforcer” must step up. 

The prospect of tariffs from 10% to 60% being imposed on goods from Canada, Mexico, China, and other countries by the incoming Trump Administration is certainly contributing to headlines and attention. Another flexibility test for retailers. 

Some retailers have seized on the uncertainty that has resulted. They are using the fear of tariff costs leading to higher retail prices to heighten the shoppers' sense of urgency.

Yes, to you.

Since 1999, you and people like you have supported the mission of The Retail Owners Institute® to “Eradicate retail bankruptcies,” one way or another. 

We give thanks to you. 

As you may know, the worldwide retail industry has the highest failure rate of any major industry.

Except for the lingering sugar high, Halloween is well behind us. Retailers know what that means: on to the Holiday Season!

Of course, for most retailers that brings a major focus on sales. But, savvy retailers are especially focused on the targeted ending inventory on December 31. 

Those retailers are carefully watching sales reports, and are poised for action. 

Each week, they identify "What's not selling yet?" And they do something about it! Move it around on the floor? Display it differently? Pair it with merchandise that IS selling? Lots of choices!

What About Markdowns? 

What are we waiting for? The customers are here now. Do we really want to wait for January clearance sales?

Periodically it’s more essential than normal for business owners to interrupt their routine and get a good look at their upcoming financial choices.

And this is one of those times!

Many very savvy people are quite concerned about the economy and consumer behavior right now.

• High debt maturing in both the real estate and the public sectors.

• The multiple international upheavals that continue to grow.

• And, certainly, the impending changes at the Presidential and Congressional level in the U.S

These issues are joined by others to make NOW a very important time for business owners to look ahead financially…maybe weekly for a while. 

 

"Christmas will be here before you know it."

Well, actually, Christmas will be here the same time it always is: December 25. 

However, what does change are the cues for the shoppers. 

That is, Thanksgiving falls as late as it can this year, on November 28. That means, for those keeping score at home and for the breathless business pundits, there are only 26 shopping days between Thanksgiving and Christmas. This is six days shorter than a year ago, and the shortest since 2019.

That's why some retailers, especially those that are publicly traded, are making mighty efforts to lengthen the shopping season. 

But, is there actual value in trying to prompt shoppers to start their Christmas shopping before they have even handed out Halloween candy? Yes, but...

Have you noticed? There sure seem to be lots of new businesses opening up. 

Well, turns out there are some stats that can substantiate this. 

According to an analysis of Census Bureau records by NerdWallet, new business applications through April 2024 have settled into a 12-month average of 455,000 per month. This is a significant 48% increase over the average of 293,000 applications per month in 2019 (pre-pandemic.)

• Indeed, as reported by Andy Medici in The Business Journals, “the United States has seen a small business boom that shows no signs of letting up. A record-breaking 5.5 million new business applications were filed in 2023 alone. That's the strongest year on record.” 

Who Are These New Owners?

Compared to before the pandemic, new business founders have changed substantially.

“There are a bazillion possible Starbucks orders – and it’s killing the company!”

That is the provocative title of an interesting New York Times Guest Essay* by Bill Saporito, editor-at-large at Inc.

• "Starbucks says there are more than 170,000 possible drink combinations available, but outside estimates have put the number at more than 300 billion. And,” he laments, “the person in front of you always seems to be ordering 100 million of them.”
• "Companies have always had to deal with choice and customization versus the complexity that comes with it. But we know that too much choice can be paralyzing," Saporito writes.

Saporito’s message is very relevant as the Holiday Season approach. To reduce the paralyzing effects of too much choice, now is the time to finalize your merchandising strategies.