Three Rules of Retail

Three Non Negotiable Rules of Retail

Selling the Most Amount of Product at the Best Margin Possible with the Lowest Expense Possible.  Period.

Sell the Most Product You Can:  First rule of retail is that sales cover a multitude of sins.  How true.  If we do not have sales, all else is lost.  Too many merchants worry about other issues a retailer may face such as shrink.  While these do need to be addressed, sales are the first line on a financial and all else follows those metrics.

Sell at the Best Margin You Can Get:  Here is the great balancing act in sales.  Sales volume vs. gross margin.  What is the magic point where we do not hurt either part of the equation and maximize our gross profit income?  Too many retailers have done the see saw marketing program where we need sales so we lower the price and now we need margin so we increase the price.  The customer sits and wonders who the heck is running the show and do we want to be a part of this?  Competition, fixed and variable costs and cash requirements all play a part in our pricing strategy.  No matter what, value is what you are trying to provide for the customer so focus on that.

Sell at the Lowest Expense Possible:  I have always said the job of retail operations is get the money to the bank.  When we look at our retail business, it does us no good to have large sales increases and then lose it because of dishonest employees, poor controls or losing our focus.  When money disappears, it is because we have lost our focus.  The minute we look the other way, something will happen and you will pay dearly for it.  How many times has an incident occurred and you looked at the individual responsible and were shocked.  A trusted friend?  A relative?  Your best employee?  The little old lady that looked like your grandmother?  You never know but retail will teach you very quickly that focus is essential.  And this is only the shrink!!  We haven’t on labor costs, utilities, lease costs and all the other expenses that drain your margins and penny profit.

A financial can be overwhelming with detail.  New management theories can cause us to chase our tails and lose focus on what retail is really about.  Sell as much product as we can at the best margin we can get for the lowest expense possible.   That’s what retail is really about…