PERSPECTIVES

From The Co-Founders

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Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts


ROI Co-Founders
ROI Co-Founders's Article

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 financiallymaybe 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.

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?

Need Perspective on Your Sales Numbers? Here's How to Look Behind the Top Line

Consider this retailer, whose sales over the last 4 weeks are down sharply compared to last year.

Some retailers in this situation essentially freak out. But the pros, like you, know to keep asking questions. Before they decide what to do next to fix lagging sales, they want to know "Why?"

So, rather than guess the answer, here is a way to get to the numbers behind the numbers; to begin to know the "why" of your sales trends, whether they’re falling or rising.

All it takes is tapping into the data that's already in your POS system, and putting together a little summary tally sheet. The point is to get some key data together in one place so you can easily, quickly, and for free, compare and analyze your results.

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!