Beyond Wishing and Hoping: Proactive Strategies for Retail Success

Wishin’ and Hopin’ (12/14)

If you are of the age that you can claim one-time ownership of a transistor radio then you might just remember the song Wishin’ And Hopin’. I recently heard this tune while listening to the “oldies” station on my car radio. Ironically I had just finished speaking with a retailer who had used the exact same words as we discussed his merchandising strategy and year-end outlook. The coincidence really struck me.

Background

Dusty Springfield’s catchy tune reached #6 on the pop charts in 1964. Though Wishin’ And Hopin’ (W&H going forward) is much better suited for a song title than a business strategy I still encounter many retailers who either fail to plan or who don’t effectively implement or execute their plan. These retailers end up with W&H results. Sometimes it works out but most of the time it doesn’t.

W&H Strategy Explained

Let me lay out what I mean by the W&H strategy. The W&H retailer typically buys merchandise with no clear thought of how it might fit into the existing assortment. New arrivals are distributed among stores in a predetermined order and are seldom if ever transferred to balance the assortment. This ultimately leads to missed sales opportunities in some stores while potentially creating unnecessary margin problems in others.

• In-season markdowns are not addressed in a timely fashion and fill-in orders are hit and miss.
• Promotional merchandise is not sought out regularly which would help the store build volume and margin.
• The W&H retailer probably doesn’t have a solid marketing strategy either.
• Other typical traits might include not paying attention to freight costs current market rates on leases employee selling expenses and inventory shrinkage.

At RMSA we see this scenario all too often.

The W&H merchant enters each new season full of optimism yet is often left disappointed at season end. The retailer is unprepared to deal with day-to-day reality due to inadequate tools poor training lack of time or insufficient manpower. You can recognize this merchant by his “Ready Fire Aim” approach to most problems. This is management by crisis because the day is dominated by the urgent never leaving time for the important.

In other words valuable time is spent putting out small fires while the big blaze continues to burn out of control. Because of these and other problems the W&H store is left wishin’ for a different outcome than it experienced in the past. Wishin’ customers will like the selections he or she has made and hopin’ that the store will be profitable at year end. This really isn’t much different than playing the lottery. Most of the time you end up with the same results.

W&H is a reactive strategy not a proactive one.

A goal without a plan to achieve it is nothing more than a wish and “hope” is not a strategy at all. Many times this retailer ends up with little or no profit season after season and year after year barely staying afloat and not growing or improving. The vendors and the landlords are the ones making the most money in this case unfortunately… not you. In some cases you are simply buying yourself a job!

For better results make changes now.

Strategies for Better Year-End Results

If the W&H strategy sounds all too familiar there are things you can do now for better results at year end. You have the entire new year ahead of you.

Plan for Old Merchandise

• Plan now for all old merchandise to be gone by the end of the season.
• Ensure that seasonal classifications (i.e. winter boots slippers etc.) have manageable stock levels going into season end.
• Review current selections and take markdowns NOW on styles sizes and colors not performing.

Opportunistic Buys

If you have OTB to spend for opportunistic buys (i.e. Off-price) contact key vendors to see what might be available to freshen the presentation during the transition period between seasons.

Spring On-Order Review

Review spring on-order once again to make sure all bases are covered and that you are not overextended.

Financial Health

• If business was good last year and cash is plentiful make sure that the accounts payable is in good shape.
• Also pay off credit cards and reduce or pay off any balance on the lines of credit.

Operating Expenses

Review last year’s operating expenses and make adjustments if out of line with industry benchmarks.

Marketing Strategies

Review marketing strategies including email blasts and social media for effectiveness.

Inventory Variance

Finally don’t overlook inventory variance (the difference between book and physical inventory). Some retailers take huge losses by not paying attention to this.

A little effort on the items mentioned above will improve your chances for success instead of simply Wishin’ and Hopin’ for higher profits this year.

Ritchie Sayner

Ritchie Sayner

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