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Brick and Mortar Retail is Alive and Kicking!

According to a report from EMarketer, retail sales last year were a whopping $4.53 Trillion. Yes, with a T!

E-commerce was $264 Billion of that. That’s 5.8%. Oh, and M-commerce – you know, those mobile apps that are the new hot thing you need to have that are going to eat the computer’s lunch? M-commerce was only 0.9% of the total.

E-commerce and M-commerce continue to grow. And $264 Billion is a lot of cabbage. But contrary to what you hear, brick and mortar retail is certainly not dead. Over 90% is still being spent on the ground.

What are you doing to capture your share of that market?

-Phil Wrzesinski
www.PhilsForum.com

PS I have heard from other sources that the e-commerce number is higher when you account for only goods and services that are bought in typical retail stores. I don’t know the methodology EMarketer uses to determine their numbers, whether home sales or gasoline is included in the overall sales total. Since they are a company that caters to the e-commerce crowd, however, I’m going with their number. Even so, if e-commerce is truly 10-12% of retail as some claim, that means 88% is still done on the ground.

The Two Distinctly Different Customers

This video is a great summation of many of the ideas and thoughts I have shared with you. I want you to watch it and think about the Transactional vs Relational Customer. I want you to watch it and think about the importance of knowing and showing your Values. I want you to watch it and think about your products and services and policies and to which planet they are aimed.

There are powerful lessons contained in these eleven minutes. Block out some time when you can watch this without distractions.

-Phil Wrzesinski
www.PhilsForum.com

PS What does Planet Neo look like for indie retailers? Much of what we already do, but need to do more. Think words like Innovative, Cutting Edge, Unique, and Authentic. Think not just in terms of your products, but of your services, too. What do innovative services look like? What services are cutting edge? How can your services be unique?

Are You Planning or Learning?

Five years ago, how many of you predicted that Amazon would be the retail power that it is today? How many of you accurately predicted the housing market collapse? How about the Great Recession? Did you nail that one, too?

None of us did.

Any Five-Year Plans that were made in the beginning of 2008 would not be producing fruit in today’s market. The market changed in ways no one was expecting.

Do you think the plans you’ve made this year have any chance of accurately predicting what will be happening in 2018?

“We cannot plan our way into the future. We must learn our way into the future.” -Jeff De Cagna

The one thing you can plan on with certainty is unforeseen events, seismic market shifts, new threats, new challenges, and a marketplace no one in today’s world would recognize.

The one thing you can do to prepare for that is to learn more. Read more blogs that challenge your views of the world. Take more classes that stimulate your mind. Attend more events that change your perspective.

The more you learn, the more likely you will be on the leading edge of those changes. The more you learn, the more likely you’ll be able to implement the strategies that will succeed in the new market. The more you learn, the more likely your current plans will be able to adjust to the new challenges.

I’m not saying that planning is bad. But strict five-year plans that do not take into account the fast-moving changes in today’s business climate have little chance of succeeding. Learning organizations will always have the leg up on planning organizations, because they will be nimble and smart enough to make the necessary changes to succeed.

-Phil Wrzesinski
www.PhilsForum.com

PS Plans change. Values do not. Know the difference. Regardless of the products and services, we’ll always be here to make you smile.

When it Rains…

Yesterday afternoon I watched my son run a cross country race in the rain.  Some of the hundreds of spectators had umbrellas, some had raincoats, some had no protection at all.  I read the weather reports.  I had an umbrella and a raincoat.

After the race that same son had to rush to the football stadium to march with the band.  The band wore full length rain jackets with hoods.  It rained so much the woodwinds didn’t even play.  I added rain pants, a warmer shirt and a hat to my umbrella and rain coat.  Some people in the stands had nothing more than a jacket without a hood.

This morning my other son had a soccer game.  He was the only kid on the soccer field wearing a rain coat.

Sometimes it rains.  Life still goes on.  The cross country team runs. The football players play.  The band marches.  The soccer game happens.

Some people are prepared for the rain.  They read the weather report and dress appropriately.

Some people don’t.  They hope the game or meet is canceled.  They pray the weather will change.  They make do the best they can and pretend it doesn’t bother them.

Are you reading the weather report for your business?  Are you prepared for the storms?  Or are you just praying and pretending?

-Phil Wrzesinski
www.PhilsForum.com

PS Storms can be economic crises in your hometown, vendor issues, competition coming to town, over-buying, or even under-buying, cash-flow problems, profit problems.  Every business has storms.  The best businesses have umbrellas and rain coats ready to handle those storms.  One way to stay prepared is to make a list of storms you might have to face and find the appropriate “umbrella” for each one.

Politics and a Plan

The political campaign is upon us.  Let the mudslinging begin!

Don’t you hate when one side criticizes the plan of the other without offering a plan of their own?  Me, too.  But I know why they do it.  It is easier to rip someone else apart, than it is to counter with a plan of your own.

The same is true in retail.  It is easier to blame the _____________ (economy? local government? weather? federal government? competition? customer base? suppliers?) than to develop your own plan to deal with each issue.

“To open a shop is easy. To keep it open, an art.” -Chinese Proverb

The best way to be successful is to have a plan.  Have a counter proposal to any obstacle life may throw your way.

Even if all you do is think it through in your head, you are light years ahead of the shops that don’t have a plan.

Tonight, before you go to bed, say to yourself, “If _________ happens, our plan will be to do ___________.”  Pick one issue every night and think it through.  The next morning spend a few minutes writing it down.  Then you’ll be ready for anything that comes your way.

In spite of a bad economy, some businesses thrive.
In spite of the government, some businesses thrive.
In spite of the weather, some businesses thrive.
In spite of the competition, some businesses thrive.
In spite of a shrinking customer base, some businesses thrive.
In spite of supplier issues, some businesses thrive.

Be one of those thriving businesses.  Have a plan.

-Phil Wrzesinski
www.PhilsForum.com

PS If you want to win my vote, don’t tell me what the other guy will do.  Tell me what you’re going to do (and how it will benefit me).  Wouldn’t that be a fun campaign if both sides took that approach?  Yeah, they tell us that will never happen and that is not how to win an election.  But what if…

PPS  Whatever you do, however, don’t you start mudslinging your competition.  While it may work to win an election, it never works to win a customer.

Growing in a Shrinking Market

Our market is shrinking.

The 2010 census showed that we have 3200 fewer children in the county than we did in 2000. For four straight years the number of births in the county has dropped from the previous year. Plus, people are spending less on toys than ever before thanks to the economy and the electronics market.

The toy-selling pie has shrunk considerably. (In fact, it is more of a tart than a pie right now.)

Yet, I still have all the same competition. More, if you include the explosion of ecommerce websites. My expenses like utilities, health care, and property taxes continue to go up. And my access to profitable lines of products gets smaller each year as vendors use discounting sites to move their products or choose to sell direct online.

Sounds like a recipe for disaster.

There are three ways to combat this disaster and stay profitable as a company.

Right Size Your Business

Rather than focus on growth, focus on being the right size for your market. Shrink your overhead by moving to a smaller location. Trim the fat out of your staff by letting the poorest performers go and training the remaining staff to do more. Bring some of the outside services like payroll and accounting back in house.

Rather than lament the losses, figure out exactly what the market will bear and what your take of that market should be. Then build your business around that size.

Grab Market Share

When the pie is shrinking, you need to get a bigger piece of it. You do that by hyper-focusing on your strengths. Carry exclusive brands that cannot be found everywhere. Ramp up your customer service beyond any level previously seen in your area. Make your marketing stand out so that it moves people to want to shop with you.

That last one is easier than you think. You can take greater risks with your marketing when your back is against the wall. Go ahead and be remarkable and memorable and moving. What have you got to lose?

Expand Into New Markets

You can do this two ways.

First, consider moving into a different geographical market. Go find a town that is growing or under-served in your category and move or expand your business there. Or add eCommerce to your website and see if you can grow sales all over.

Second, find new complimentary product markets into which you can expand. If you sell toys, can you sell books or hobbies or baby products? If you sell furniture can you sell decor, wallpaper, paints, appliances? If you sell jewelry can you sell scarves, hats, or purses?

Both expansions are tough and can be costly. You’ll have new competitors, new costs, new headaches. But when times are tough, you have to be tougher.

If your market is shrinking you can still grow. You just have to do it and measure it differently.

-Phil Wrzesinski

www.PhilsForum.com

PS For the last few years we have focused on grabbing a bigger piece of the pie through better customer service. Right now our market share is over 11% in both toys and baby products. This year we have been right-sizing, too. Next year? Expansion? Yeah, in some way, shape or form. Stay tuned…

What Should Your Sales Be?

Thinking about opening a new store? Wondering what your sales might be?

Here is the easiest method for estimating expected sales:

Market Potential
First find out how much business can potentially be done in your market. To do this you only need to find the national sales figures for your industry (note: for some industries this is easier said than done).

Take that national sales figure and divide it by the US population. That gives you sales per person.

$22.1 billion divided by 308 million people = $72
Then simply multiply that result times the number of people in your expected trade area.
$72 x 150,000 people = $10.8 million
Now you know what the Market Potential is. Your expected sales will most likely start in the 3-5% range, maybe higher if there is no indie competition, maybe lower if there is indie competition or you are saturated with highly effective big box stores.
What Size Store?
From this figure you can get a good estimate of how big a store to build. You just need two numbers… Lease Rates in your area and/or Sales per Square Foot for your industry.
Lease Rates: To be profitable you have to be working for yourself and not the landlord. If the rent for the year is more than 10% of your expected sales, you’re working for them, not you. You basically have three options:
  1. Look for a smaller space
  2. Look for a cheaper space
  3. Look for a different market
But be careful of those three options. The cheaper space is usually in a bad location and retail , like real estate, is all about location, location, location. The smaller space might work, if you have room to show enough product to justify the sales.
That is why knowing the sales per square foot for your industry is helpful. Let’s say your Expected Sales are $500,000. If your industry average for sales per square foot is $200, then a 2500 sq ft store should work fine. Only lease a bigger store if it is both affordable and in a great location.
Everyone thinks your store “would be great in our neighborhood.” Yes, great for them. Do the math and you’ll know if it will be great for you, too.
-Phil

What Difference Did You Make?

Sometimes we forget the impact we have. And this time I’m not talking about the social impact of the products we sell. I’m talking about money. Pure cold hard cash.

Do me a favor… Go read this article .
I’ll wait…

Think about the billions of dollars of economic impact that one company has had on the world.

Now think about your own.

There have been studies that say a dollar spent in a local independent retailer circulates seven times through the community. Some have put it as high as fourteen times. Others question if seven is too high. But none dispute the facts that the money spent in your store goes around the community more than once.

So let’s use lucky number 7. Take your gross sales for the year and multiply it times 7.

That is the impact you had on your local economy.

That money allowed families in your town to keep their homes, feed themselves, and buy clothes. That money sent kids to college so they could learn to solve future problems. That money plowed the snow on your streets, sent firemen to rescue old Mrs. Hodges, and helped the police make the biggest drug bust in a decade.

That money maintained the park where your kids play, helped your dentist buy a better, safer x-ray machine. That money kept two kids out of jail because they got an allowance from their employed parents.

Sometimes when you look at your business, good or bad, you wonder what it’s all worth. As you reflect on 2010 know this… it’s worth more than you originally thought!

Happy New Year !

-Phil

Don’t Panic

You’re at sea in the middle of a storm. Waves are pounding you from all sides. First from the right, then from the left, then two more from the right. You never know where the next wave will hit. You brace yourself for whatever impact will come and hold on tight.

The only way out of the storm is to keep a steady hand on the helm and keep the ship pointing in the same direction.

Okay, captain?

Economic Storm
We are in an economic storm right now. Ups and down without any predictable pattern. Customers spending more, customers cutting back. Positive and negative news from the media. Positive and negative signs at the register. Sales up big one moment, down big the next. promotions that work and promotions that fall flat.

Want an example from the weekend?

Black Friday I put out some doorbusters – really good sales on some of last year’s Step2 kitchens. Even had a $10 coupon from the company to sweeten the deal. Didn’t sell a single unit all day! Customer count was exactly the same as last year, but average ticket was down 8%.

Fast forward to Saturday – Small Business Saturday as promoted by American Express. 5% decrease in customers but 10% increase in average ticket. You might think the Amex promotion helped. Yet we had less American Express charges that day than a typical lazy Tuesday in August!

Stay the Course
Some businesses, after a weekend like that, will start twisting and turning every which way thinking that they need to chart a new course with every passing wave. But doing that will never get you out of the storm.

Keep a steady hand on the helm of your business. Adjust the sales as necessary, but always keep heading in the direction you have plotted for your success.

One thing we have learned in sixty years of retail. Smoother seas are always just beyond the storm. You just gotta stay on course.

-Phil

Christmas Sales Predictions

It’s time to make your predictions. What do you see in your crystal ball for Christmas sales?

Shopper-Trak is predicting a 2.9% increase.
National Retail Federation says it will go up 2.3%.

But what does that mean?

Not every retailer is going to hit that 2.3 to 2.9% mark. In fact, I predict that very few retailers will be up 2-3%.

Double-Digit Growth
Some retailers are going to have double-digit growth this holiday. Others are going to see double-digit declines. And a whole bunch of retailers are going to be within 1% either way of last year’s sales.

Those numbers NRF and Shopper-Trak are predicting are national totals. They take into account overall population growth, spending habits, surveys of customer moods, etc. – on a national basis!

None of that has any relevance in your local market. Your population might be growing faster than the national average. It might be declining. Your competition might be doing more in your market (or less). You might be doing more (or less) to grow your own business.

The Only Number That Counts
The best thing to do about those numbers is to forget them. Ignore them. Don’t give them the time of day. Focus only on your own number, the growth you want to make happen in your business. Pick a number that works for you. Then set about doing what you have to do to hit that number.

For me, I am predicting 15% growth in November. I have acted accordingly. I have planned my marketing and my inventory to meet this goal. I have indoctrinated my staff that this is what we are going to accomplish. I have trained them, scheduled them, and inspired them to make this happen.

Planning and Action Make it Happen
It isn’t a wish. It is a plan. We looked at what we did last year. We looked at what we are capable of doing historically. We looked at what was realistic based on this year’s trends. We looked at what the market would bear. We chose a goal that we knew we could make. Then we set up actions to put us in the right position to meet this goal.

It doesn’t matter what NRF or Shopper-Trak believes. It only matters what you believe. Do you believe you can reach double-digit growth this holiday? If you believe it, you can achieve it. You only have to act upon those beliefs.

If you’re just sitting back waiting for your 2.3% increase, I promise you, you won’t get it. Be proactive and go get the sales you want for your business.

-Phil