November 9, 2017
Are You Equipped to Achieve Retailing Success?
You need more than a passion for your business if you want to see real profits.
Are you prepared and equipped to achieve retailing success? How do you know? Grit, hard work and intent are not good enough.
If you are a typical firearms, shooting and hunting retailer, your motivations for being in business are principally driven by two factors: You love selling the category and you hope to make a decent living in the process. If nothing else, you want a generous return on your risk, time and efforts.
But while you may aspire to become a retailing rock star making generous profits, you have to ask yourself, “Am I prepared to do so? Do I in fact possess the skill sets necessary to reach my profitability aspirations?”
What skill sets are we talking about? If you have been in business for 10 or 15 years, you may say, “I’ve got experience and I make some profit.” Okay, but are you getting rich in the process?
Retailing is a gratifying but tough business. To succeed, as expressed in copious profits, you need specific skill sets as they relate to strategic planning, budgeting, reporting, buying, merchandise mix, inventory management, merchandising, operations and digital marketing, just to mention a few. If you want to hit it big as a retailer, you must be willing to evaluate your knowledge quotient and then set about defining the measure of excellence, grade yourself and then embark upon a program of self-improvement.
The wise man says, “You can’t do a great job unless you have the proper tools!” Great advice, but where do you start? Begin with the list of business segments listed above. Then set out to identify those competitors, persons or businesses that excel in each category. Emulate the winners and try to bring yourself and your business to that level.
If you feel that you are not qualified to evaluate your skill sets or even to identify your level of retail education, then read on and let me define what I think you need. Additionally, you may want to speak with a professional who can assist in evaluating your ability gaps.
Based upon my years as a retailer, educator and consultant to many successful retail chains, here is a short-form list of what every retailer should master:
- Strategic Planning — Every successful business endeavor begins with a good plan of implementation. The business plan should define the desired end result, the steps necessary to achieve the result and the order of each action. Such a plan is much like a good recipe for making a banana cream pie.
- Budgeting — If you want to avoid bankruptcy, make a budget! List your anticipated sales less cost of goods sold, minus fixed expenses, minus variable expenses. If the resultant number is positive, you will make a profit. If it’s negative, you must increase your anticipated sales, increase your margins or reduce your variable expenses.
- Reporting — Reporting simply means producing a monthly report card showing how your actual sales and expenses are relative to your budgeted numbers. The key here is to take decisive action if you are not hitting your numbers.
- Buying — It’s simple, the heart of every retail operation is the inventory. You must have schooled buyers who understand all aspects and ramifications of merchandise mix, inventory management, merchandising and promotion. Loving to hunt and shoot does not qualify someone to be a buyer. Good buying requires perceptive interpretation of the market and consumer preferences.
- Merchandise Mix — Merchandise mix is the balance between consumer demand items along with a complement of promotional, impulse, high-margin and accessory inventory. A mix will influence sales, margins, profits and turn rates.
- Inventory Management — Inventory is the largest asset of the retailer. It has the capacity to make or break you. Without good turn rates, margins, return on investment and cash flow, profits and liquidity will suffer greatly. Inventory management is the heart of all retail operations.
- Merchandising — The term “merchandising” collectively means presenting inventory to the consumer such that sales are maximized through impulse purchases. Placement, signage and creative displays are integral components of merchandising.
- Operations — Operations refers to all aspects of store activities such as staffing and payroll, expenses, security and inventory logistics. The store must be run efficiently and profitably.
- Digital Marketing — Retailer success is directly linked to your ability to promote via your website, social media and email lists, along with more traditional forms of advertising. Good marketing and promotions beget good sales and profits.
The above list can be expanded greatly, but these are the core issues. Big successes require big efforts and acquired expertise. In truth, if your retailing skills are just average, it is likely your profits will be the same.