August 21, 2017
Want to Enhance the Bottom Line? Time for a Sacred Cow BBQ
Why do businesses continue to do things the way they have always done them? A few reasons are because those ways actually work most of the time, the retailer believes his action or inaction is best, or simply because the retailer is comfortable with familiar ways, as right or wrong as those may be. Of course, some retailers continue to perform poorly because they won’t give up their retail “sacred cows.”
What is a “Sacred Cow?”
A “sacred cow” is any practice, procedure, concept or activity considered to be untouchable, unchangeable and believed to be vital to the company. In the eyes of the practitioner, such practices are considered essential and will supersede all other strategies.
Most companies have their own versions of the sacred cow. For better or worse, it’s something that management won’t address or change because it’s viewed as an unassailable fact, an idea that must be upheld at all costs — and therein lies the problem.
In my work with retailers I commonly see a somewhat blind, resolute acceptance of things, a view that conditions are what they are. Those conditions become de facto sacred cows. But today’s sporting and shooting retailers live in a highly dynamic world replete with competition, rapidly changing technology and product-knowledgeable, price-sensitive consumers — and that means whatever you did as a retailer last year, it is unlikely those same ways will be as effective this year.
Retail Sacred Cows
The following is a list of common retail sacred cows. How many apply to your business?
- You must carry a broad merchandise selection, even if it doesn’t sell well.
- It is impossible to get more than three inventory turns
- Maintained margins of more than 40 percent cannot be achieved
- Markdowns are always bad
- Expenses simply cannot be reduced any further
- Sales are strictly a function of demand and little else
- Service level rates (a measure of the percentage of time you are in stock of A-level, in-demand merchandise) cannot be higher than 70 percent
- If you stock it they will come
- Merchandising does not impact sales that much
- Salesmanship and customer service are outdated retail concepts
- There is no practical way to reduce labor costs
- It’s impossible to buy it cheaper
- The best ideas always come from management
- Your banker, accountant, insurance agent, lawyer and provider of supplies and services are competitive; in other words, have you shopped for these services?
Okay, since most if not all companies have some sort of sacred cow, what is the sequence for making effective and positive changes?
The fact is, if you want more profits it’s time to hold a sacred cow barbeque. Begin by challenging virtually everything you do and the way you do it. Question your assumptions and enlist the participation of your staff, along with a few outsiders. Reward staff for productive ideas or valid suggestions and let no stone remain unturned.
Don’t be too structured in this process. Engage in some goofy free-form thinking. Get out and see your competitors, along with some of the big boy retailers, regardless of what they sell. This will awaken your creative juices. Don’t be afraid of what appear to be strange ideas, for they may lead to really good ideas.
From this intensive introspection, identify changes that need to be made and prioritize the list such that the low-hanging fruit can be harvested quickly, i.e., what are the easiest and least costly items on your list to change? Making even those changes will create an immediate sales and profit infusion.
The next step is more complicated for it involves the creation of a detailed implementation plan for making targeted changes. These plans should include each change action required, its needed completion date, the persons responsible for making the changes and the expected end result.
Implementation is where most businesses fail in making constructive changes. It is easy to specify your goals and plans, but it is much harder to effectively put the work into making those things happen. A good implementation plan involves validating the uniformity of thinking among all managers and departments, defining all obstacles, searching for solutions to those obstacles, constructing standards to measure implementation progress, defining accountability and, for each action required, defining the measurement of completion. All participants must uniformly agree on what constitutes “completion.”
In summary, regardless of how slick your business is, there are always ways to improve it and enhance the bottom line. The sequence for making such changes is to:
- Challenge the status quo
- Identify the needed changes and their expected economic gains
- Develop the game plan specifying all goals and objectives
- And, most important, construct a detailed implementation plan.
Put another way? Find those sacred cows, hold a BBQ and grow your profits!
You might also like: Spirit of Shared Benefits Yields Greater Profits for Retailers, Vendors
About the Author
Robbie Brown has an extensive background in retailing, wholesaling, distribution service industries and consulting. He has been CEO of numerous companies in the shooting sports industry, including several retail chains and distribution companies. Brown consults for businesses of all sizes in both the merchandise and service industries, as well as for a variety of corporations, industry groups and trade associations. He is a frequent round-table moderator and speaker before industry trade shows, conventions and other corporate groups, and he has published more than 300 business-related articles in various trade magazines, delivered hundreds of speeches and served as a business advisor to many CEOs both inside and outside of the firearms industry.