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Patricia M. Johnson & Richard F. Outcalt
Retail Strategists and Retail Turnaround Experts
Co-Founders, The Retail Owners Institute® • Business Strata:G®
Given all the angst that can come from paying attention to business news, we were intrigued by this explanation of the "buoyant spending" occurring currently:
"Don't bet against the American consumer."
That’s an upbeat thought, isn’t it? Especially for perpetually optimistic retailers. The writer goes on to explain
"It's a maxim investors ignore at their peril. There have of course been times that household spending slumped, but almost always later than when one would have guessed from reading the headlines. "
The journalist then went on to cite economic experts, Commerce Department statistics, and other sources to explain this consumer resiliance. Plus, of course, some caveats about when it all will come due….
We, however, have a more succinct explanation of “buoyant consumer spending,” particularly for resiliant retailers:
“ Worrying works! 90% of the things I worry about never happen!”
For those of you who quickly wonder which 10% DO warrant your attention? That's where you can count on The ROI.
It’s a practical “library” of owner-focused tools , benchmarks, webinars and strategic Resource Centers designed to help growth-minded owners think ahead, test ideas, compare alternatives and make better decisions before committing time, money or energy.
In other words: financial headlights for owners.
We invite you to stop by, explore the Resource Centers, and see what might help you the most right now.
Tips • Tactics • Strategic Insights • Commentary
FYI, each week's From The Co-Founders commentary is posted on The ROI site: Perspectives: The Co-Founders.
These short but pithy musings are all very quick reads. You know, retailer-friendly!
Available online, 24/7, free for all. ➡️
Which weighs more: a pound of bricks, or a pound of feathers?
You remember that trick question, right? The answer is they both weigh the same, one pound.
We might feel sheepish for jumping to the wrong conclusion - since bricks weigh more than feathers - in this riddle.
But it illustrates some of the daily challenges of managing inventory. That is, are you controlling the dollar costs? Or the item counts?
Let's say you've ordered $100 of bricks, and $100 of feathers. What impacts will each order have on your receiving department? Your backroom storage? Your display space?
Or, let's say you've ordered 100 bricks, and 100 feathers. How will each of those orders impact receiving, storage, and display?
What's the point? Operationally, the size, shape and weight of those items does matter, especially to the folks receiving the merchandise or selling on the floor.
But financially — a different metric — they have other implications.
Because of the capabilities of computers, many POS systems focus on items. Lots of details about each item of merchandise. Vendors focus on items as well, encouraging reorders when item counts dip to a certain level.
But -- does your banker or the vendor's credit department care about item counts? Nope, they're looking at the dollars, whether bricks or feathers. They are speaking a totally different language.
That language is what we call "banker-ese." And The ROI can help owners master the A-B-C's of "conversational banker-ese."
It's a series of three articles from the Strata:G® OWNERS Center. We're also making all three available - free - to readers of The ROI News.
Profitable lines of merchandise ? Important, sure.
Profitable stores ? Necessary.
Growing with your " best customers!" Everybody knows that, right?
But beware: no matter what the built-in reports of your POS system want you to believe, your biggest customers, the "top 100", are not necessarily the best ones.
👀 Instead, your "best" customers are the ones that are most profitable for your business.
For that, meet the STRATA:G® Business Wheel. (That's "strategy". Every retailer needs one!) It captures WHY and HOW effective target marketing means more profits and more financial strength. (Yep, everybody wins!)
It's the merger of strategic financial and strategic marketing for retailers. This proprietary concept, showing the cause-effect connection between marketing and financial management, was developed by and is exclusive to The ROI.
Sound too lofty? Don't worry.
Pat Johnson and Dick Outcalt, The ROI Co-Founders, present their innovative concept in this lively and timely Webinar of the Week.
They connect all the dots in a retailer-friendly way.
And they show how you can identify your most profitable customers... without spending a dime!
Ready to challenge business-as-usual thinking? Take advantage of this empowering how-to webinar, available only from The ROI.
RetailOwner.com
Avoid mistakes • Seize opportunities • Look ahead now
How’s that working out?
“Something feels off at Andon Market," reports the New York TImes. “The front windows are empty, and the facade lacks signs. Inside, there are two boxes of a knockoff Connect Four game, and four copies of a book about mushrooms. A small bowl holds decks of playing cards, and another holds incense. “And there are candles — so many candles — in all shapes, sizes and smells. “The peculiarity could be because of who put this all together. Or, more accurately, what put this all together: an artificial intelligence agent."
Lukas Petersson and Axel Backlund, who founded Andon Labs, have handed over the reins of their Andon Market convenience store to an AI model referred to as "Luna."
The founders signed a three-year lease for the store, put $100,000 in a bank account and handed a debit card to Luna, which is powered by Anthropic’s Claude Sonnet 4.6.
They gave it a mission: turn a profit.
Then they sat back and watched.
The founders said they wanted to see what happens when an A.I. agent manages humans in a controlled experiment. After they signed the lease and provided the seed money, they did not intervene with their AI model's work; they only observed.
Luna began by focusing on brand design and item selection, then found contractors and painters, posted jobs on Indeed for retail workers, interviewed candidates and hired staff. She sets the store hours, buys the inventory, does marketing outreach, decides what goes on the walls.
The founders said they were impressed with Luna’s employee handbook, but less so with its memory.
However, since opening on April 10, the store has been limping along.
Luna has fouled up the employee schedule enough that the store had to close for three days in a row.
Luna ordered 1,000 toilet seat covers for the employee bathroom, and then listed them as merchandise.
And Luna cannot stop ordering candles.
On top of a monthly lease that runs around $7,500 a month, the founders say Luna so far has spent around $15,000 on inventory. In addition to all of the candles, there are granola bars, jars of honey and a random collection of books. Yet the shop has only $2,000 in revenue to date.
While "Luna" serves as an interesting test case for AI store management, Petersson and Backlund say it is not necessarily a guide to financial success.
"She has the basics of, like, OK, you need to buy items, you need to set reasonable prices, you need to have people that can run the store," said Backlund.
" She can do all of those tasks individually. But maybe there's something more strategic ... a strategic element that's needed [in order to turn a profit]." 👀
Do you think??! The pros do make it look easy!
—-
We learned about the Andon Market from news reports*. You can find out more by reading the Andon Labs blog post .
* "What Happens When A.I. Runs a Store in San Francisco?" Heather Knight, New York Times
* "This San Francisco shop is run completely by an AI agent." Mason Leib, ABC News
There have been some delays in the release of figures from the U.S. Government, for a variety of reasons. We now have them through March of this year, so - finally - have been able to update The ROI's Monthly Retail Sales Trend charts.
As you look over all 12 sectors for which data is available, the recent trends of sales versus the same month last year look very encouraging. Take a look and see how your own trends compare.
The past year has brought a lot of volatility for retailers, between the effects of tariffs, inflation, and now the war in Iran.
But evidence of retailers’ flexibility and resiliance remains strong.
Meet The ROI's SPEEDY HEADLIGHTS. Online, FREE, 24/7, helping Owners plagued by worrisome questions.
All it takes is you and your good judgment!
You make just a few entries, and SPEEDY immediately shows you what the financial outcomes would be.
Sales & Profits : The "Bottom Line"
Monthly Ending Inventory – how does that look?
Resulting Cash Shortfall/Surplus each month (remember, cash is not the same as profits)
See? SPEEDY focuses on the important "Owner's info"...and the "controllables."
In moments, SPEEDY's "what if...?" power enables retailers to compare the outcomes of different assumptions, in advance. All on their own, privately.
And The ROI provides it FREE!
Why free?
Because The ROI knows that any retailer who can see ahead will make appropriate adjustments.
We want to empower EVERY retailer to "Turn on their financial headlights!" and take control of their own future.
See more about the SPEEDY Headlights in this lively webinar with Pat Johnson and Dick Outcalt, Co-Founders of The Retail Owners Institute.
The Strata:G® Resources have been empowering owners since 1999 to "Turn on their financial headlights!" Our tools and resources are trusted by thousands of independent owners to help grow financially stronger and resilient businesses.