By Bill Scott, President, StoreReport LLC
ONE OF THE members of Convenience Store Supply Chain Management forum on LinkedIn, recently asked me a question. “Why do you spend so much of your time giving away the knowledge in retail you have acquired over the past 38 years?” The answer is simple. “All of that information came from customers and readers just like you.”
It’s one thing to go to school, study stacks of books and become and ‘expert’ in one subject or another, but quite another to venture out into the field and experience failure and success while dealing in real world situations. It’s difficult to be a pathfinder. They’re the guys with arrows in their backs. Living on the bleeding-edge of technology is definitely not for sissies. But, experience always trumps knowledge, and experience of new things shared with others validates and gives value to that knowledge.
Many years ago, back before small business computers and predating pocket calculators, an old friend gave me this sage advice. “Forget about yourself. Make your friends successful and you will have everything you need for the rest of your life.” Several years ago, a lady named Tara Hunt wrote an interesting book, in which she described ‘the power of social marketing.’ It was an extension of my friend’s advice, and fit perfectly within my mission of reinventing retail.
Many Retailers Have Over-learned From Their Experiences
Mark Twain said, “If a cat sits on a hot stove, that cat won’t sit on a hot stove again. That cat won’t sit on a cold stove either. That cat just don’t like stoves.” Some retailers have simply over-learned by their experiences. Even success can become a major handicap if you dwell on it forever. A good experience causes you to do the same thing over and over again. A bad experience turns you off to anything related to it. I could eat greasy, fried chicken every day. I could eat so much greasy, fried chicken that I would get sick to death of it. But, if I were convinced it was keeping me alive, I’d keep consuming greasy, fried chicken until I died of a heart attack.
Since I wrote “Retail is Detail” in 2011, I’ve sold hundreds of copies on a plethora of Internet sites for the price of $49.95. When I started giving it away, some thought I had lost my mind. My intention never was to make money selling books. My mission was to awaken retailers from the nightmare they have struggled with for decades, and lead them to ‘the light’.
“Successful people maintain a positive focus in life no matter what is going on around them. They stay focused on their past successes rather than their past failures, and on the next action steps they need to take to get them closer to the fulfillment of their goals, rather than all the other distractions that life presents to them.” ~ Jack Canfield
But, you can’t fuel your actions on past experiences forever. After all, there is no success in being the last one to fail. Retailers, especially convenience and other smaller retailers have been operating in a dying environment for over a decade. Not that the overall environment is dying, it’s the way they choose to operate within the environment that’s dying.
A perfect storm is on the horizon, and instead of changing their positions, they hunker down and reflect on how they were mildly successful in the past. To them, anything is better that failure. What’s worked back then, they assume will work forever. Maybe they’ll get lucky again. Who knows? But, this time, the storm is a hurricane of unimaginable power, and there is no safe place left to hide. Success requires your doing something different. The killer is costs associated with running a company. It’s becoming uncontrollable, and you don’t have a lot of time left to get off the siding and find a new track.
It’s Time We Sang a New Song
In the early 60s, after doing my bit for Uncle Sam, I decided to embark on a lifetime of ‘sales’. One of the first things I was told was that people hate to be sold, but they love to buy. This was sound advice in the 1960s. But, with the introduction of the World Wide Web, the process of buying and selling has changed dramatically, into something totally foreign to the majority of us. My wife hates shopping, but she delights in sending me Amazon links for things for me to buy her. I never have to ask her what she wants for her birthday, or for Christmas, or for our anniversary. I can rest assured it will show up in my email at the appropriate time. It’s not so much that buying and selling has changed. It’s the methodology of HOW we buy and sell that’s been modified.
In 1985, when I first began using the Internet, I had a vision that one day the entire business community would be able to join a vast, worldwide community of participating web surfers who would share knowledge and information about everything from conquering mental illness to making multi-million-dollar business deals without ever venturing from their offices. But, the resistance to change that affects businesses has been both constant and impressive. Not so much for the non-business community. Facebook, Twitter, Instagram, texting and email have completely captured the fascination of buyers, most sellers continue to use the Internet for advertising. Most businesses refuse to learn: advertising is poisonous to social media.
In the 1990s my idea began to formulate into a crusade that not only became profitable, it utilized the combined knowledge of millions of experts working together for the mutual benefit of solving problems and validating new ideas. Today we use the Internet to learn how to do everything from how to drill an oil well, to fixing a broken zipper, but money and greed are always looming in the background.
However, the current state of affairs has never been more positive for smaller retailers who are looking for ways to compete against larger competitors. Yes, you may have far less resources in both money and knowledge, but in your willingness to change, you’re more inclined to operate with an open mind. And if you spend your days trying to relaunch Success 1.01, you are wasting a horrible amount of time and energy.
Automate and Die! The Way Retailers Have Chosen to Cut Cost Is Killing Them
We have a small grocer in our community. Yesterday, I made my usual trek to buy groceries and found that 10% of the items I usually buy have been dropped from the shelves. For example, all Pepsi products had been pulled and there was nothing left but Coke and a few private brand products.
Turns out, Coca Cola has refused to quote the grocer decent prices unless he removed all Pepsi products from his shelves. Sound familiar?
Now, my wife loves Coca Cola products, but she also likes Sunkist Orange drinks, and since Sunkist is a Pepsi product, and no longer sold in that store, this forces us to go elsewhere to do our shopping. I wonder if we are not the only ones who will be forced to change grocery stores so we can acquire the products we are accustomed to. But, it’s more dramatic than the loss of a single line of products. The entire store has been redesigned and other popular products are also missing.
In the process of schooling the store manager, I asked him if his contract with Coca Cola was worth the loss of me as a customer. He was speechless. I told him, that if he would take the time to know what he is selling, instead of hiring some “expert” to redesign his store, he would be far better off.
What an opportunity for the small convenience store across the street, unless he of course has the same contract with Coca Cola as well. The local grocery store has failed, and he will lose customers for taking bad advice. One single incident may sound innocuous to a larger retailer, but when you add up all the customers lost because of the thousands of small mistakes being made by small retailers daily, it adds up to gobs of money being thrown away in order to save pennies.
Disconnect In the Supply Chain
Many years ago, I began using the term, “Non-Competitive Cooperation”. There are ways that small retailers can band together to outperform larger retailers through the sharing of information, and the Internet has made it a reality. The Internet provides us with the means to connect the supply chain into a continuous thread of trading that was never before possible.
Information that can be shared is endless. Some examples are, what’s selling in your area today? What products are become more popular? When is an overstocked supplier ready to get rid of his overstock on certain items? Suppliers might even bid for a retailer’s business. What is your market looking for? What are the traffic counts in an area you are thinking about building in? Things that you have spent thousands of dollars researching in the past, can be delivered to your desktop for free. Rumors are only slightly accurate. Real data doesn’t lie.
There is currently a serious disconnect in the supply chain between manufacturers, suppliers, retailers and customers that has created huge gaps in trade activity. The chain is there to be sure. The manufacturer makes the products and sells them to the supplier. The supplier delivers them to the retailer. Hopefully the retailer puts them on the shelf and the customer takes them away; but the connections I am talking about have never existed, due to the successes of obsolete technology, or more simply put, the ‘if it ain’t broke don’t fix it’ mentality. The program, ‘If it ain’t broke don’t fix it,’ has caused the demise of many a successful organization. Blockbuster is a prime example of the results of that frame of mind.
The knowledge small retailers receive is filtered down from larger retailers operating with the same obsolete technology that makes it difficult for them to consider a change. Their technology experts advise them from a position of insuring their continued employment, and the result is that ‘change’ gets pushed further into the background. “Don’t be ridiculous. If it ain’t broke, don’t fix it.”
Trying to implement a successful just-in-time inventory (JIT) system in an organization the size of Walmart would result in a madhouse. Not because it’s bad technology, but Walmart would attempt to implement the program internationally and it would take years, and meet resistance like they have never seen before. Something a small retailer would be able to do easily would turn Walmart’s technology department into a sideshow. A single store owner could do what Walmart is incapable of doing in less than one week. However, the key is to do something large retailers cannot do, and tracking inventory by items is what it takes to install a JIT system in your store(s).
Traditionally, technology has come from the top down, and most retailers continue to lag at the end of the herd, picking up scraps the big retailers left behind. A larger retailer implements a technology, works out the bugs, the price becomes more reasonable, and as the word gets around, smaller retailers are either forced to adopt it, or at least willing to give it a try. It’s like standing on the platform as the train goes by, then running your heart out in a futile attempt to catch up.
It’s Sad, Because It Doesn’t Have To Be This Way
I talk about disruptive technologies all the time. Disruptive technologies force you to change, even when you don’t want to. When smaller retailers turn away from the herd and adopt a new technology, there is a window of time in which they can steal business from other less savvy retailers, and it creates a silent breach within the larger retailers’ environments. It’s silent because the big retailer doesn’t notice an insignificant spec such as you or I. They let their guard down and you quietly slip in, and when they finally catch on, you have already improved your advantage and do something else. That’s the only way to get ahead. You have to be willing to do something new. Doing so will put new life in your business and make you the leader for long enough to gain an advantage.
Let’s reinvent retail. Let’s talk about item-level management, adapt a JIT relationship with our suppliers, and change the way we manage our inventories. Let’s complete the links in the supply chain and give Big Box a run for its money.