Chip Averwater - Retail Truths: The Unconventional Wisdom of Retailing

Retail Truths

The Unconventional Wisdom

of Retailing

by

Chip Averwater

* * * * *

Published by

Chip Averwater

Kindle Edition

Copyright 2012 by Chip Averwater

Cover and type design by Erica Jennings, Jennings Design

Unattributed quotations are by Chip Averwater.

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When I was growing up I thought everyone tended shop. It was what every adult I knew did every day. It was what I did every day I wasnt in school.

Although we called it going to work, it never seemed like work. There were some unpleasant tasks, to be sureloading and unloading trucks, counting inventory, housekeeping. But these were more than offset by visiting with favorite customers, showing an exciting new product, creating a beautiful display, or participating in a successful promotion. I dont remember dreading a single day.

Forty years later Im still in love with retailing. A smoothly operating store with a steady flow of customers and healthy profits is a work of art. I still get a thrill from a big sale or a system improvement, and even enjoy poring over the numbers at month-end.

I suppose part of my infatuation is that retail has too many facets and intricacies to ever be mastered. There are thousands of lessons to learnsome critical to a stores survival, many valuable for improving customer service or increasing the stores profits, and others that simply make operations run smoother. Perhaps because Ive enjoyed learning them, but also to avoid repeating my countless mistakes, I wrote many of my lessons down.

Some years ago I began gathering and polishing them. My original intention was to pass them on to my son as my father had to me and his father had to him. Perhaps it was these lessons (combined with ninety years of long hours and dogged persistence) that allowed our family musical instrument business to survive. My son would surely need them to beat the notoriously long odds facing the fourth generation.

Over the twelve years that I wrote, my co-workers unwittingly donated more lessons and examples. It seemed unfair to them (and costly to our business) not to share with them the assembled observations to which they had so generously contributed.

Then, businessmen have an irresistible urge to share their solutionsmotivated, of course, more by ego than altruism. My business friends wouldnt contain their amusement if I denied my own inclinations to this. So Ill just admit that sharing with them a little collected common sense, much of which I took from them anyway, provided some of the inspiration for this effort.

Ultimately the thought crossed my mind that all of us retailers suffer the same afflictions, differing only in the widgets we peddle. Being not immune to the temptations of opportunity, I further expanded my purposeto sell enough copies to pay for those I give away. Projects of unreasonable time and effort require delusions of unrealistic outcomes.

Failing in this lofty goal, I still have the immensely human and irresistible pleasure of dispensing advicein this case with the added benefit of not requiring anyone to actually listen.

Please feel free to lie about enjoying itor even having read it. I promise to enthusiastically acknowledge your compliment and not test your comprehension.

I was standing at the front of our musical instrument store not long ago when a boy rode up on his bike and came in. The salespeople were busy so I asked him how I could help. He asked me several questions and then said, You mus be da owner here. I smiled and said, Youre a pretty smart little guy. Howd you know that? He said, Cuz you dont know nothin.

It was an astute observation. I often feel that way, especially on the sales floor.

Yet I believe there are many things every surviving retailer learns.

Some are the complex concepts taught in business schoolsdouble-entry accounting, contract law, creating financial statements, etc.

But far more are the practical insights and techniques gathered only on the frontlinenegotiating with suppliers, choosing among job applicants, setting profitable prices, resolving employee disputes, sending messages to competitors, designing motivational incentive plans, firing employees, attracting bankers . We learn these one-at-a-time, in the trenches, under-fire, and with considerable costs and consequences.

Many of my lessons were drilled into me by my father and grandfather, who hoped, for their sake and mine, I wouldnt need to repeat them. Others were shared or offered by example by my retailer friends (and a few enemies); vicariously is cost-effective learning if we just pay attention. Most, unfortunately, I paid full price for; lessons, it seems, are more memorable and convincing when we fully appreciate their consequences.

I pass these lessons on to you now, not in the expectation that you wont test each of them for yourself. Rather I hope only that youll recognize them more readily and affordably than I have.

We are generally better persuaded by the reasons we discover ourselves than by those given to us by others.

Blaise Pascal

It looks so easy

to be so hard.

Rent a space, order some merchandise, run an ad, and operate the cash register. Anybody can do that!

Apparently not. Estimates of the retailing failure rate range as high as 95 percent. And for those who fail, not only are their hard work and long hours unrewarded but, in most cases, their precious betsusually their life savingsare lost.

Easy work and guaranteed returns are not in the description of retail.

Its not whether we can do it;

its whether we can do it best.

The challenge isnt in merely offering products the public wants to buy; weve got to do it better than all of our competitors.

Each shopper chooses only one store for his purchase, the one he feels offers the best valuenot just quality and price but convenience, selection, security, atmosphere, etc.

The winner takes all. Second place gets nothing, no matter how great the effort or how close the race.

Retailing isnt one skill.

Try to define the skills of a successful retailer. We can create a list but regardless of its length its inevitably incomplete.

A retailer needs abilities in sales, marketing, management, accounting, advertising, purchasing, hiring, training, finance, negotiating, collection, dispute resolution, public relations, real estate, insurance, law, and much more.

Specialists such as accountants and lawyers can provide some valuable expertise. But its still the retailer who has to determine what advice to seek, how much he can afford, whose advice to accept, how much of it to apply, and how to balance it with other aspects of the business with which it inevitably conflicts.