Finding Balance: Prioritizing Efficiency Over Endless Growth in Retail

How Much is Enough?

According to author and speaker Joshua Becker “The very nature of “more” and our desire for it makes it unattainable.” When more becomes the goal you’ll never get there because the finish line is constantly moving. When was the last time you asked yourself how much you needed to be happy? How much money how big of a house how many cars how big of a store how many stores?

Becker contends that it is our desire for more that leaves us wanting. The constant pursuit of “more” cultivates a sense of lacking and a feeling of insufficiency. My feeling is that always chasing the proverbial “more” is not unlike any other addiction if the underlying reason is not clearly understood.

Business Needs and Sales Goals

Stores often claim that they need to sell more to cover increased operating expenses such as rent payroll and various administrative costs. Sometimes the need for sales increases is to cover indebtedness stemming from business loans for new store openings remodeling projects or covering vendor invoices. Other times an increase in sales is wanted simply to surpass last year or keep up with inflation.

Understanding Your Business Goals

What is the number one goal of your business? I often ask this question when speaking with independent retailers. More often than not the answer is to sell more. When asked if there is a specific number in mind the answer is generally more than last year or 10% more than the previous year.

The follow-up question always garners an interesting reaction. The question is simply why? Why do you want to sell more?

Retailers and the Sales Mindset

Retailers are conditioned to think that they always need more sales to be viewed as successful. Some believe if sales are not continually growing something must be wrong with the business. This usually results in a review of vendors carried styles purchased price points sales training marketing buyer’s ability etc.

Balancing Sales and Efficiency

Increasing sales volume certainly isn’t a bad thing assuming everything else in the business is in balance. What would be the point of settling for less if not striving to maximize one’s true potential? In other instances the focus should be redirected toward better efficiency of what we already have. Consider for a moment that sales volume may not be the problem at all. The real issue might be better control of what you are buying or spending.

Managing Expenses

Let’s deal with the expenses first. Make sure your operating expenses are in line with other sporting goods stores of your size and type.

• Rent and payroll make up the lion’s share of expenses so tackle those first.
• Be cognizant of interest paid on bank loans used to pay for inventory. This would be a huge red flag if excessive.

Operating expenses that are constantly spiraling out of control will always require more sales.

The Next Area to Review: Merchandising

The next area to review would be the merchandising of the store. By that I mean the merchandise planning and buying. If you are buying simply to fill a store or continually driving sales with markdowns you will always need to generate more sales volume to pay vendor invoices. Effective merchandise management begins with a sound merchandise plan. A merchandise plan that is developed by store and classification considering current trends planned markdowns turnover and margin requirements. The ultimate goal of the merchandise plan is maximizing the profitability of your inventory investment. Said another way when properly constructed a solid plan should be able to exploit any upside opportunities while minimizing areas of downside risk. Reviewing and modifying regularly during the season as needed is a must-do.

To quote Joshua Becker once again “Enough is a reachable destination. More is a journey with no end.” Focus on doing better and you WILL have more… more happiness more job satisfaction and yes even more sales.

Ritchie Sayner

Ritchie Sayner

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