Home » Profit

Category: Profit

Cutting Expenses The Wrong Way

I was in Walmart yesterday. I had to pick up a few things. At the checkout, the cashier kept doubling bagging all of my items. I asked her why.

“These bags tear so easily that almost everyone has a ripped bag at the end. They used to be better but these new bags are too thin.”

Image result for walmart grocery bagsI hope for Walmart’s sake that the new bags are less than half the cost of the old bags. Otherwise their cost-cutting move is costing them more than it saves.

I get why they did it. I’ll bet their bags are a huge expense for them. I’ll bet someone pitched them the idea of a cheaper bag, or knowing Walmart, they probably went to their vendor and demanded a cheaper bag. The only way to make it cheaper was make it thinner. And now their employees are double bagging everything so that you can get your groceries home in one piece.

How’s that cheaper bag working out for you?

Bags, like so many other non-merchandise items, seem like a hassle expense. You know you need them but you hate paying for them. I know I did. But that didn’t stop me from buying better, thicker bags than I probably needed. Mostly because I also looked at bags as being a reflection of my brand. Cheap, flimsy bags send the signal that I care about my money more than I care about you. Sturdy, reusable handle bags say I care about you more than I care about money. (Remember that Values post I just wrote?)

The problem is that we too often look at our expenses as single, individual entities instead of how they fit into the whole. We make decisions on those expenses purely on a financial basis instead of thinking about how we want to present ourselves and how we want our customers to feel about us. You have to consider everything, otherwise your cuts may end up costing you more.

In the 68 years we ran Toy House, one of our most profitable years was 2009, smack dab in the middle of the great recession. I had to cut expenses that year to get that profit. Here is a post I wrote January 11, 2010 about how I cut those expenses … “Cutting Expenses the Smart Way”

Sometimes you need to cut expenses. How you cut them is often more important than how much you cut them.

-Phil Wrzesinski
www.PhilsForum.com

PS This trip down memory lane looking at old blogs has been fun for me. Maybe it will be fun for you. Here is a link to one page with all 897 blog posts to date.

“Everything Cheaper Somewhere Else”

I used to hate anonymous commenting on news articles and blog posts. It is so easy to hide behind a pseudonym and take unsubstantiated potshots at people and businesses, spread rumors, and even spread downright lies.

As a retailer, I took every negative comment and review of my business personally. Some of them hurt, especially when they weren’t true. The misunderstandings were one thing but the outright lies were the worst. They cut to the bone.

I remember one day in the infancy of online news when a fellow downtown business owner alerted me to comments posted on an online news story that attacked both my store and me personally. He warned me not to read them. I didn’t heed his warnings.

One person had taken it upon him or herself to just rip the business up one side and down the other, calling us, among other things, price-gougers who were just out to destroy the little people in town. This person claimed that he or she could find everything we sold in our store cheaper online.

I took offense to the first part. The person posting the comment had no idea what I paid myself or my staff or our profit margin or what we gave to charity or what causes we supported. I am a forgiving person, though. I will forgive them their ignorance.

The second part, however, was pretty much true. Not only could that person show you the items cheaper, I probably could, too. After all, I had Internet access. I could also show you sites and stores where just about everything we sold was more expensive than our prices. That exists, too.

In fact, if prices weren’t fluid across different channels, Retail would look a whole lot different and be a lot less fun. Everyone would pretty much do the same thing and charge the same for it. Yawn.

Image result for valueRetail is a game, and the game can be boiled down to this … Find the Value you can give the customer that will make it worthwhile for them to pay the price you wish to charge.

At the ballpark they charge you more for a single beer than you would pay for a twelve-pack at the store. You buy it because you want to drink a beer during the game. There is enough Value in enjoying that beer while watching the game that makes you pay the price. (Don’t want to pay their outrageous prices? You can eat before you go to the ballpark. Most people can handle 3-4 hours between eating. You can also drink water for free. They have to provide it to you.)

People call them price-gougers all the time. It doesn’t stop them from raising their prices and making money. They offer you the Value of being at the game and watching the action in person.

The real question you need to ask yourself as a retailer is … What Value are you adding to the equation and will that Value be enough to get people to pay your prices?

You can add Value in several ways. You can:

  • Offer services other stores don’t have (i.e. layaway, free gift-wrapping, assembly, delivery)
  • Curate the selection to help customers get only the best solutions
  • Align your business with a social cause
  • Offer follow-up services (such as the free 30-day riding tuneup that we used to offer with every bike we sold)
  • Build relationships to the point that the customer feels as much ownership in your store as you do.

Any one of those is a way to “play” the Retail Game. Play more than a few of them and you’ll never worry about how someone can find “everything cheaper somewhere else.”

Were we the lowest priced game in town? Nope. Never tried to win that race to the bottom. But in a 2007 survey of Jackson County residents about stores that sell toys in Jackson, we were rated as having the highest “Value” ahead of Walmart, Target, Toys R Us, Kmart, and Meijer (all whom love to advertise their “lowest prices”.)

What Value are you adding to the equation?

-Phil Wrzesinski
www.PhilsForum.com

PS I have a good friend also named Phil who also ran a toy and baby store in the other Jackson (MS) who never liked MAP (Minimum Advertised Pricing) because it made everyone price their goods at the same price. He said true merchants have no problem with the undercutting of prices on the Internet because they know how to offer Value and make sales at higher margins. As much as you hate to admit it, he’s right. MAP only protects you at the margin the vendor thinks you should make, not the margin you deserve for all the value you offer.

PPS As for anonymous negative comments online, if they are an attack on your character or the character of your business, ignore them completely. Your actions speak louder than your words. Use your actions to prove that person wrong. If the comments are simply something misunderstood, you can respond for clarification, but only if you can substantiate your claims without putting down the person who made the comment. More often than not, however, it is best to ignore anonymous comments, period. I’ll talk about how to respond to Reviews in a future post.

PPPS A few of those ways to play involve the skills and training you give to your front line staff. As I pointed out before, that is probably the easiest way to add the kind of Value your competitors are not adding to their equations.

You’re Looking at Credit Cards Wrong

I was having a recent discussion with a friend about credit card usage. She uses her credit and debit cards almost exclusively. I still prefer cash. Many people think exclusive credit card usage is a young person, Millennial thing. My friend was born on the cusp between Baby Boomers and Gen X.

She isn’t the only person I know who prefers cards over cash. In fact, many smart shoppers prefer to use their cards. They have rewards cards that earn them miles or cash back. Some of my fellow business owners use their cards almost exclusively for their business and go on vacations virtually free.

Image result for credit cardsCredit card usage is the way of the world. It is the way most customers wish to pay you. And with the expansion of Apple Pay and other mobile wallets, that usage is going to continue to increase and become the preferred method of payment not just for Millennials but for all generations. (My son wants me to change banks just because my bank doesn’t yet support Apple Pay.)

Yet many small retailers (and some larger ones) are still stuck in the dark ages when it comes to accepting credit cards.

Yes, you need to accept chip cards. Yes, you need to accept mobile wallet payments. Those are necessary changes in today’s retail climate.

More importantly, you need to check your attitude about accepting credit cards.

I still see retailers who have “minimum charges” for credit cards. If you have that, you’re penny-wise and pound-foolish. You’re telling your customers those few extra cents on that transaction are more important to you than taking care of the customer and serving her the way she wants to be served. You’re telling the customer your needs are greater than hers.

When my friend sees those signs it pisses her off, makes her want to spend less, and makes her not want to come back. Would you rather she comes in once a week to spend $5 or spends zero money and tells people what a horrible store you are?

Heck, even if you allow credit cards for any amount yet you cringe when a customer pulls out her card for a $2 purchase, you need to check your attitude at the door. Swipe fees and percentages are part of the cost of doing business. Period. Unless the majority of your transactions are under $5, those fees are actually quite minimal in the grand scheme of your business. (And if your business does have a lot of $5 and under transactions, you should be making enough margin on your sales to cover those fees quite easily.)

If you want to cringe at a $2 credit card transaction, don’t cringe at the extra pennies you might pay to Visa. Cringe, instead, at the inability of your sales staff to make a larger sale. Cringe, instead, at your lack of connection with the customer that might compel them to buy more. Cringe, instead, at your failure to price things enough to cover your expenses.

Better yet, don’t cringe at all. Celebrate that customer and her purchase. Make her feel as special as the customer who spent $200. Be happy she came in. Be happier that she spent money. Be happiest that you have the chance to build a long-term relationship with her. That is the winning attitude.

You are going to have credit card fees. That is an expected expense in today’s business climate. Your job as a merchant is to make enough money to cover your expenses. Whether you do it through better profit margins or cutting other expenses, your attitude towards those expenses shapes the attitude you have toward your customers.

When you limit how your customers can pay you or simply take an attitude when they pay you in a way that is least convenient for you, you’re taking a business-centric approach. When you have no limits and no worries, you’re taking a customer-centric approach. One leads to smaller average transactions and fewer transactions. One doesn’t. You know the difference.

-Phil Wrzesinski
www.PhilsForum.com

PS The same can be said about whether or not to accept American Express. Yes, you need to accept it … with a smile on your face. You need to be happy when a customer pulls out her Amex instead of her debit card. You need to celebrate the customer, not worry about the fees. You do that by adjusting your margins and expenses to cover it. (As for Bitcoin and other cybercurrencies, because of their volatile nature, you can draw the line there without angering customers. Those of you who do accept cybercurrencies, however, are going to find that you attract a whole new level of clientele that could possibly be quite good for your business.)

PPS Here is the best thing you will read about how to increase your margins enough to cover those credit card expenses.

Words of Wisdom From 1969

Here is another gem I found buried in a file, long forgotten. My grandfather and founder of Toy House, Mayor Philip H. Conley, penned these words in June 1969, two months before hiring my dad as his new manager.

I don’t know if this was penned to put his thoughts on paper for my dad, or if it was just something that struck him one day. I do not know if it was ever read again after that day (the file I found it in was pretty darned old). I don’t even know what one of the terms means (neither did my mom or dad). He refers to “marking capacity” and “markers”. I believe those were people who put price tags on boxes like my sister and I did as young children. He also refers to “jobbers”. I know that term. Those were the wholesalers or distributors of that day. I do know there are some nuggets in there that ring so true I’m calling them universal.

Here is his June 1969 manifesto in its entirety…

Business is a matter of balance.

Good business – successful business can be achieved as good government can be achieved using a system of checks and balances.

Balance as it applies to our business, there must be a balance between the number of customers, parking, inventory, shopping carts, sales people, stock people, marking capacity, office capacity, square feet selling space, square feet of stock space, store hours, checkout capacity, and giftwrap capacity. An excess of any of these factors creates too much expense for an efficient operation. A deficiency of a factor immediately creates an excess of all other factors – this is very bad for a profitable operation. Management’s responsibility is to maintain balance.

Enough free off street parking is an obvious example. Enough shopping carts is not so obvious. If people have to wait for a cart, then their parking space becomes non-productive , floor space, sales persons, inventory, etc. all become non-productive. Very wasteful, very expensive. We must realize that the customer may be on a time limit, therefore his waiting time must be subtracted from his shopping time. And, too, waiting is most aggravating and will result in a bad attitude for the customer.

Without customers, there is no business. If a customer is not satisfied after he is in the store, there is no sense in advertising to get him in the store.

Any time a customer is not satisfied with merchandise purchased in our store, he may return it for a credit, refund, or exchange. This matter should be handled more quickly than the original purchase.

Inventory balance is most difficult for us to achieve.

Excessive inventory is wasteful as it requires too many markers, too many receivers, too much work capital, too many sales people, too much stock space, and too many markdowns. If not balanced, this is the greatest cause of business failure.

An accounts receivable policy should be set up and adhered to with all being treated alike.

Inventory turns is the number of times your total inventory is sold per year. If you subscribe to the theory that you need only a 90-day inventory, then you should turn your inventory four times a year. Food stores may turn their inventory 40 or 50 times a year. Specialty stores turn theirs considerably less. This is the nature of the business. “If you can’t find it somewhere else, go to the specialty store and pay their higher price.”

Buying direct, although at a better discount, tends to create overstock conditions. In just buying dollars alone, your better price reflects at the most an 18% savings. However, your first markdown is usually 50%. I have not referred back to the other excessive expense factors. Buying direct, except under strict control, is dangerous.

In business the obvious is not always true!!! Example: “You’re nuts to buy from a jobber when you can get from us for less.”

Jobbers have been hurting for the past several years because so many operated on buying at the best price and selling at the lowest price hoping to move mountains (and doing so) of goods. (At a profit????)

So jobbers have been financially weak which is reflected in many ways.

  1. They do not carry a complete selection.
  2. The services of a competent salesman are not available.
  3. Their plant facilities do not allow for an efficient handling of vast quantities of goods.

Historically, three or four jobbers could not supply our needs. Their selections were never broad enough. We many times were forced to go direct to satisfy our needs for a “spread” of goods as well as supplying the needs of our customers, i.e. Monopoly money, Carrom refills.

Direct suppliers and jobbers giver preferential treatment usually to the largest customers. But not necessarily sometimes to the most regular – frequent – steady – GOOD PAY buyer. Over the years loyalty is pretty much a thing of the past.

No one seems to assess the market today. In years gone by, it was wise to spend time assessing how much could be sold profitably in the market and then budgeting the business accordingly. No one ever realized how large this nation’s ability to consume really was.

Business is a matter of keeping all relevant factors (and there are untold, unseen ones) in balance.

-Philip H. Conley

-Phil Wrzesinski
www.PhilsForum.com

PS The more things change, the more they stay the same. This June I’m going to be speaking to the toy industry about how to keep things like inventory and cash flow in balance. If you would like me to speak to your industry, I have some insights that go way back.

You Don’t Make it Up in Volume

(Warning: this post contains math. Proceed with caution.)

“We lose a dollar on each one we sell, but we make it up in volume.”

Yeah, we all know that isn’t right, but there is a mistaken belief that if you lower your prices, you can easily make up the lower margins through higher volume.

Warehouse Melissa and Doug 2

Let me show you why that doesn’t necessarily work.

First, we have to make an assumption together. Your business has fixed costs that do not change as your sales change (utilities, rent, etc), and your business has variable costs that go up as you do more volume (credit card fees, payroll, freight, advertising, etc).

Agreed? Good.

DOING THE MATH

Here is some simple math…

You have an item you purchase for $10 and sell for $20. Let’s say you sold 24 of this item last year. That gives you a gross profit of $240 (24 units x $10 in profit per unit = $240 gross profit).

But you have the grand idea to lower the price 10% to $18, figuring you’ll make it up in volume.

 

To get the same $240 in gross profit, you now need to sell 30 units (30 x $8 = $240). That’s a 25% increase in units sold. With more units sold, however, your variable costs will go up. Maybe it is advertising because you had to spend more to get the word out about your lower price. Maybe it is extra sales people needed to help boost sales. Maybe it is more credit card transaction fees.

Realistically, just selling 25% more units won’t even break even because of the rise in variable costs. You’ll probably need closer to 30% more in units sold to cover your 10% discount.

Do you think 10% Off is enough to sell that many more units?

GOING LOWER

Okay, maybe 10% isn’t enough to move the needle. Let’s go 20% Off and sell them for $16!

Here’s the math…

40 units x $6 = $240.  Yes, you now need to sell 67% more units just to get the same gross profit! More than likely, as your variable costs go up, you’ll probably need to sell about 70-75% more units to truly break even.

How about 30% Off?

60 units x $4 = $240. If you go to 30% Off, you better be able to sell 250-300% more units to make it up in volume.

That is a lot of extra traffic you’re going to need to draw, and a lot of staff you’re going to need to handle those sales.

GOING HIGHER

When you do the math, making it up in volume isn’t the answer. But ask yourself this question…

If I raise my prices a little, how many sales might I lose?

A 10% price increase could handle a 17% drop in units sold and make you the same amount of gross profit.

See? Those math classes in high school can pay off!

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you can raise your prices. With the way insurance premiums, taxes, utilities and other expenses keep rising, you have to find ways to make more money just to stay in business. But just a straight increase across the board isn’t the strategy. Download my FREE eBook Pricing for Profit in the Free Resources section to see smart ways to raise your prices (that won’t cost you a single unit sold).

 

The Need to Keep Raising the Bar

Bed Bath and Beyond just announced that their coupon strategy is backfiring and that their profits are hurting because everyone is waiting for the coupon to do their shopping.

Umm… yeah. When you send the coupon out every week and never enforce the exclusions or expiration date, you pretty much send out the message that everything in the store is always 20% off. Anyone paying full price in that store is either lazy or an idiot.

What used to be special is now considered the norm.

BBB faces a dilemma. They either have to drop the coupon program and wean customers off the 20% discount (a daunting and dangerous task), or raise the bar on the coupon program to make it special again.

They said in the article, “Bed Bath and Beyond says it plans to draw in more customers through marketing.”

Okay, but how? A bigger, deeper coupon every so often? (further eroding profits) or something else?

THE LESSON

If you are doing something special for your customers, eventually it goes from special to expected and the marketing pull from it will taper off. If it is a discount, that discount will have to grow over time to remain equally effective.

If you consistently go above and beyond your customers’ expectations, eventually they will come to expect it, meaning you’ll have to raise the bar even farther.

As you choose your marketing strategy, remember that the special things you do today will become the norm tomorrow. Make sure you have room to raise the bar when the effects start tapering off.

-Phil Wrzesinski
www.PhilsForum.com

PS Surprise and Delight are the best tools for attracting new customers because you’ll never run out of new and fun and inexpensive ways to surprise and delight your customers. Check out these two Free Resources to get some ideas of things you can do to raise the bar and attract more customers – Generating Word of Mouth and Customer Service: From Weak to WOW!. I doubt either of these will be strategies employed by BBB (although they should).

Free or Gift With Purchase?

You just got some free merchandise from one of your favorite vendors. It was a low cost item that you didn’t sell anyway. You want to give them away to your customers.

Do you give them away free, no strings attached, or do you only give them away free with a qualifying purchase?

FREE, NO STRINGS ATTACHED

The upside to simply giving them away is that you will surprise and delight your customers in an unexpected way. They will be talking about your generosity to their friends.

The downside is that you likely won’t garner any extra sales and you may end up giving them to people who don’t need them.

FREE GIFT WITH PURCHASE

The upside for GWP is that you are using the freebie to help close the sale of a related product. Plus, you are getting the freebie into the hands of someone most likely to use it.

The downside is that the only word of mouth it generates is them talking about the good deal they got (that others might not be so lucky to get).

Here are some questions to ask…

  • Do you want them to talk about your generosity or the deal they got?
  • Do you want to put them only into the hands of people who will use them?
  • Do you want to surprise & delight or close the sale?

Ask the right questions and you’ll get the right answer.

-Phil Wrzesinski
www.PhilsForum.com

PS Door #3 is that we just sell them at a discounted price, take the profit and run. The only question is whether you can get more profit using the freebies as a marketing tool than you would by simply selling a low-cost item you didn’t want in the first place. My guess is marketing tool pays more dividends in the long run.

How to Get Customers to Fall in Love With Your Products

Dr. Ross Honeywill says there are two types of customers – NEO’s and Traditionals. Traditionals are all about the Price. NEO’s, however, care more about Design, Authenticity, and Provenance than Price. Get the NEO to fall in love with the product and you’ll make the sale.

Roy H. Williams says there are two types of customers – Relational and Transactional. Transactional customers are all about the Price. Relational Customers, however, are looking for someone they can Trust who will lead them to the right products they can fall in love with.

The Diffusion of Innovation says there is a big chasm between the Early Adopters and the Early Majority. The Early Majority want the tried and true commodities that have a proven track record. They will go wherever they can find the best deal. The Early Adopters love the new and unique and have to have the latest, greatest, regardless of price.

You can discuss the nuance between the three theories until the end of the earth and never fully reconcile them into one theory.

Or you can pull out the one thing all three agree on and run with it all the way to the bank.

The money is in getting your customers to fall in love with your products and your store.



FALLING IN LOVE

Remember falling in love? You don’t analyze it. You don’t weigh out pros and cons. You don’t look at the features and benefits.

You draw smiley faces. You doodle his name on the worksheet you were supposed to turn in. You imagine what it will be like to be together. You visualize walking hand in hand. You picture the two of you on a date, at the park, in the movie theater. You see the future of you with this other person.

Bob Phibbs says that customers who are shopping are in a different mode than customers who are buying. Customers who are shopping are in analytical mode. They are gathering info, measuring and weighing options. Customers who are buying, however, have to get out of that mode and into wonder and love. They have to see themselves already owning and using the product.

In other words, they have to fall in love with the idea of owning the product.

You have been wrongly taught for years that your job is to give your customers information. Features and benefits, features and benefits, features and benefits. In today’s online world, they already have most of the information they need before they set foot in the store. Your real job is to get them out of analyzing the product and into visualizing already owning the product.

You can do that two ways…

Ask Visualization Questions:

  • How do you see yourself using this product? 
  • What are your plans for this product? 
  • How will this look in your home? 
  • Where do you see yourself using this? 
  • What is your ultimate goal for this item?

Use Assumptive Statements and Questions:

  • Most everyone who buys one of these gets a second as a backup. Do you want to get two today or just the one?
  • Would you like me to giftwrap these items while you finish shopping for the rest of the list?
  • You’re going to be really happy with your choice of that product.
  • When you get this home, to make sure you get the full use out of it, be sure to…

Before you start thinking those sound snarky or sneaky or gimmicky, remember that your customer came into your store looking to solve a problem or fill a need. Your job, therefore, is to help her solve a problem or fill a need. If you leave her in analytical mode, you won’t solve her problem or fill her need. She’ll leave in search of more information and most likely have someone else solve her problem or fill her need.

If you make her fall in love with the product, you’ll make the sale, whether she is a NEO, a Relational Customer, an Early Adopter, or any other label you want to give her.

-Phil Wrzesinski
www.PhilsForum.com

PS You still need to know all the information. In part, so that if she has faulty information, you can correct it. In part, because she may need one or two more pieces of information to help her visualize the product properly. In part, so that she will trust you as the expert.

Is it a Business or Just a Job?

I work with a lot of smaller retailers – start-ups and indies who are just getting going in this crazy industry we’ve all chosen. Many of them get this one question wrong.

Did you start a business or just create a job?

Most people think they are starting a business, but in reality all they have done is create a job for themselves, often a low-paying job at that. Then when they go to sell the business, they can’t find any buyers.

Here are three questions you need to ask yourself to see whether your retail shop is truly a business or just a job.

Could the business run without you? More specifically, could you hire someone to do your job, or is the whole reason the business exists because you exist?

Do people come to your business because of what you offer or what your business offers? If the vast majority come because of you, you might have a job, not a business.

Do you pay yourself a salary? If you don’t then it isn’t even a job, it’s a hobby. If you do pay yourself a salary, is it a good one? Is it enough to hire someone else to do that job? If you said no, then you might have a job, not a business.

Do you show a profit? If you’re paying yourself a salary, that is a good thing. It means that you could potentially hire someone else to do that job, while you reap the profits – assuming there are some profits. Some owners will make the correct move of paying themselves a salary, but do so at the expense of showing a profit. Some will keep profits low on purpose to avoid taxes. There might be a number of reasons for not showing a profit. Amazon doesn’t seem to need to show a profit. As long as the cash keeps flowing they (and you) can usually keep doing your job. But an indie retailer without profits probably won’t be able to sustain that cash flow for too long. You and I don’t have the deep pocket investors Amazon has. If you’re paying yourself a salary in lieu of showing a profit, you might have a job, not a business.

Not that there is anything wrong with having a job, not a business. You can make a healthy living for many years that way. You might like the job of being boss (and you might be really good at it). You might like the salary you pay yourself for being boss in lieu of having your business show a profit. Those are good and valid points for you to keep doing what you do.

The only downside will be the exit strategy. Once you decide you no longer want your job, if you didn’t first turn it into a business, you’re going to have a hard time finding anyone who wants to buy it. No one “buys” jobs. They buy businesses. Without a business, all you have left to sell are your assets.

Neither concept is wrong, but not knowing the difference can be costly down the road.

-Phil Wrzesinski
www.PhilsForum.com

PS If you want to turn your job into a business, you need to think about three things.

  1. Could I hire and train someone to do my job?
  2. Do I pay well enough to hire someone competent to do my job?
  3. Is there enough profit and/or growth potential to keep the business making money?
When you can answer yes to all three, you have a business, not a job. You have something you could sell down the road. You are truly an entrepreneur. Heck, you could should hire someone to do your job right now and go start another business or two.

Bye-Bye Buying (A Grandfather’s Wisdom)

In 1951 my grandfather and founder of Toy House, Phil Conley, wrote his “Twenty-Two Important Retail Fundamentals”. I just uncovered them going through some old files.

Wow!

It was amazing how many of them are still true today. Take, for example, number 18 which is appropriate as many of us start buying for the fourth quarter…

18. That weak departments dissipate their merchandising strength…

  1. By buying from too many manufacturers
  2. By buying from too many price lines
  3. By buying too many colors
  4. By buying too many sizes
  5. By buying too many materials
  6. By buying too many styles

All this adds up to bye-bye-volume and profit.

Powerful stuff. Stay true to who you are. Limit your customer’s choices. Give them the best options. Remove the clutter. Don’t over-buy.

In today’s retail climate we feel compelled to offer more and more because the Internet offers more. Yet, we will never be able to match the offerings of the Internet. Instead, the more we should be offering is more thoughtful choices, more carefully chosen products, more practical solutions, more intelligent offerings. We need to help our customers cut through the clutter by knowing everything that is out there and why we chose to sell these particular items.

There are already too many options causing analysis paralysis in our customers. Remove the options that don’t make sense and don’t fit your customer’s needs and your inventory will sparkle and shine just a little better than before. The only bye-bye’s will be when you help a customer carry her purchases to the car, usually followed by a Thank You!

-Phil Wrzesinski
www.PhilsForum.com

PS Choices are good. Don’t get me wrong. Having options for different needs is also good. But the biggest way to eat up a chunk of your cash is to buy too many choices and too many options. Keep it down to a Good, Better, Best (or better yet a Best, Bester, Bestest) selection and your cash flow and profits will improve.

PPS Yeah, I’ll talk about a few others down the road. There are some really good nuggets in there, like this one…  7. That good basic stocks plus strong reorder numbers, plus realistic timing, plus selling – not order-taking – will increase volume and profit anytime.