Retail’s Seven Deadly Sins: Navigating the Path to Virtuous Success

22 NOV-DEC 10

The Seven Deadly Sins first identified by St. John Cassian and later refined by Pope St. Gregory the Great have been with us for more than 1500 years. As Cassian put it “They provide us keys to understanding our faults and the actions that result and a framework for self-knowledge.”

The original Seven Deadly Sins were Pride Greed Envy Lust Sloth Anger and Gluttony. While I would relish the challenge of drawing parallels between the original list and shortcomings evident with some modern-day retailers I will resist the temptation to do so. What I will offer instead is:

My list of Seven Deadly Sins along with their corresponding virtues.

You may find yourself guilty of one or two – or perhaps several. That being the case one can rest easy in the knowledge that along with repentance comes total redemption. Hopefully this list will prompt you to come up with your own personal list of retail maladies which is the ultimate goal.

My Seven Deadly Sins are:

• Overbuying
• Underbuying
• Not Attending Markets
• No Markdown Strategy
• Not Controlling Operating Expenses
• Under-Utilization of Technology
• Poor Planning

Let’s consider these individually.

Overbuying

This one should be obvious. The consequences of this “sin” include reduced margins due to high markdowns cluttered stores confusing assortments stocks that are out of balance slow turnover poor cash flow and increased expenses.

Virtue: Following your open-to-buy plan.

Underbuying

Perhaps not as obvious but a “sin” nonetheless. When underbuying occurs sales opportunities are missed. This problem is generally caused by lack of proper merchandise planning at the classification level. Examples of underbuying range from not responding to needed reorders to not buying narrow and deep enough to positively impact sales volume.

Virtue: A bottom-up sales and inventory forecast at the class and store level.

Not Attending Markets

Not attending markets or trade shows on a regular basis is a retail “sin.” This is the perfect opportunity to keep your store

Fresh and One Step Ahead of the Competition

New lines can be discovered orders already written but not yet shipped can be reviewed educational seminars can be attended vendor relations can be nurtured and major retailers in the area can be shopped.

Virtue: Attend trade shows and markets two to four times a year depending on industry segment.

No Markdown Strategy

Markdowns in and of themselves are not a problem. Markdowns taken at the wrong time in the wrong amount and for the wrong reasons are a big problem. Excessive markdowns taken at season end can be very costly if the classification was overbought to begin with. Proper monitoring of sales and inventory during the season can help prevent costly markdowns at season end. Remember “The first markdown is the cheapest”—so make it count.

Virtue: Have a well-developed markdown strategy for your store.

Not Controlling Operating Expenses

If you pay too much for rent chances are the only ones making money will be the landlord and the vendors! Review your lease(s) annually to make sure you are paying market or preferably below. Most retailers only look at their lease when it comes up for renewal. This can be a costly mistake especially in today’s business climate. I strongly recommend hiring the services of a good lease negotiator to act on your behalf unless you are personally very skilled in this area. They can usually save their fees several times over and you will know you are not leaving money on the table. Review payroll and other expenses annually and compare to industry benchmarks.

Virtue: Develop an operating expense budget and review at least annually.

Under-Utilization of Technology

There was a time not so long ago when only a handful of cutting-edge merchants embraced the latest technology of the day. Today not understanding…

Using Technology

Using technology puts a retailer in jeopardy of being left behind. Point-of-sale (POS) systems not only track sales and inventory but can also help manage work schedules and analyze buying habits. Social media outlets help today’s merchants get their message out quickly and cost-effectively. Store websites provide store information and can serve as a vehicle for additional sales especially when linked to a vendor’s site. Good POS systems are a major investment. All too often the investment in them is under-utilized resulting only in bar-coded tickets and electronic cash drawers.

Virtue: Take the time to understand and maximize all forms of technology available to you.

Poor Planning

Poor planning is almost as dangerous as no planning at all. From a forecasting perspective poor planning can be to blame for many of the “sins” described above. From an accounting perspective poor planning can lead to poor cash management – and cash management is the lifeblood of most retail operations.

Virtue: Spend time developing implementing and revising all planning aspects in your company.

Just as no human is perfect no retailer is without occasional “sin.” Confession of these and other infractions as well as implementation of the virtues described above will certainly help put you on the pathway to eternal salvation and secure your place in retail heaven. Go forth my retail brothers and sisters and “sin” no more!

I
Ritchie Sayner
Retail Reverend
(To schedule your private confession and receive absolution penance and suggestions for retail salvation contact the author at rsayner@rmsa.com. No tithing required.)

nsra.org

Got Email?

NSRA requests your email address! The association is updating its membership database and would like to include your correct email address. Please put your name and current email address in the “Subject” line of a blank email then email your updated information to info@nsra.org. Current and correct information helps NSRA better serve your needs.

Ritchie Sayner

See Full Bio