PERSPECTIVES

“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.

As Amazon's second two-day Prime Day of the year approaches – this one is October 8 and 9 – retailers from all segments are wondering (or being asked): "So, how do you compete with Amazon?"

Our response? You don't, at least not directly. Not on their turf. 

Look, independent retailers do have many strategic advantages over Amazon. Your challenge – and opportunity – is to recognize them, and enhance them at every opportunity. Here are some ideas that you may want to consider to allow you to compete on your terms. 

Take Advantage of Market Segmentation 

No more attempts to be all things to all people. Instead, focus on the portion of your market – and the customers – that are most profitable for your operation. (Go here for more about that.)

Remember that life stages (presence and ages of children in the household) drive buying decisions. Shoppers from which lifestage are most profitable for your stores?

We once knew a lady who steadfastly championed the idea that Labor Day should be considered New Year's Eve, and the Tuesday after Labor Day as the start of the New Year. (Yes, she was ahead of her time in many other ways as well.)

Here's her reasoning about the "real" New Year's Eve: as summer fades away and vacations end, the new school year starts up; the baseball season pennant race is on; football games begin. 

As all this happens, she explained, most people take on a renewed sense of energy. 

The promise of a fresh start is everywhere. Optimism abounds!

Take A Minute. Check Out These Two Charts. What Do You See?

This shows the average annual pre-tax income (in 2022) and average expenditures, for US total, and by generation.

 

And this chart shows total US population by generation, by age in 2022.

You may be looking at the future of retailing

Granted, everyone in retailing who looks at these two charts from the Collage Group* will conclude something different. Didn’t you?!

Bold Way To Improve Productivity 

As we look around, we see a popular cost-saving and productivity-boosting tactic being instituted by many national retailers, shopping malls, and restaurants. They are open fewer hours. 

This offers an opportunity for you to revisit your store hours and employee scheduling practices. Maybe it's time to consider some changes, if you haven't already. 

Your customers have voted with their feet. Your goal is to see what patterns there are in their shopping visits. (This could be a fine project for a summer employee home from college.)

Start small; focus on , say, the last four weeks of data collected by your POS system. But this time, produce reports by the day of the week. Yep, seven columns of data. Wait till you see what it can reveal!

We've been wondering...

What's the #1 thing that the retail industry needs now more than anything else?

More towns. 

That's right, more towns and villages. Look, towns tend to be more residential, even slower and more relaxed. 

Even the word conjures up warmth. 

And towns, and the people who love towns, are a mecca for the vibrancy of retailing. Think about it: the retail industry needs more towns!

And it's already trending in that direction. Macys, Whole Foods, Nordstrom Rack, and Walmart have announced rolling out small formats, seeking locations closer to residential areas. They recognize that's where their customers are and will prefer to be. 

Conversely, there are way too many cities. 

Undoubtedly you'll agree with this. We read and hear a lot in the business press, but we treat 100% of it rather skeptically. 

And so it is with articles and commentary about this coming Holiday Season, specifically about retailers' inventory and margins.

Nevertheless, there is considerable good news being trumpeted. Most recently, this feature article in the Wall Street Journal: "Retailers Hone  Inventory for Holidays" *

"In-Person Shopping Keeps Getting Worse"

That was the headline in a recent business page editorial*. And the writer was able to cite chapter and verse of all-too-prevalent lousy shopping experiences for customers. 

• "More American stores are doing with fewer employees and many have locked items up to keep them from being pilfered."
   
• "The retail industry slashed head count in 2020 and has never returned to pre-pandemic staffing levels."
   
• Meanwhile, "store employees are spending more time fulfilling online orders, leaving them less time for helping [in-store] customers."
   
• Then this warning: "Head-count reductions will become even more tempting in the quarters ahead, as the economy dampens consumers' appetite for shopping."

As noted by a Wharton School professor, "retailers frequently reduce headcount because 'you immediately see the savings in payroll but you don't necessarily know what damage that does to the top line.'" Of course, the retailers that professor is referencing are the Big Guys who have to satisfy their investors every quarter.

As independent retailers, you have advantages that are unavailable to the Big Guys.