(Are you Wishin’ and Hopin’ for a profitable year?…If this is you, read on then call me, I can help) 

If you are of the age that you can claim one-time ownership of a transistor radio, then you might just remember the song Wishin’ And Hopin’.  I recently heard this tune while listening to the “oldies” station on my car radio. Ironically, I had just finished speaking with a retailer who had used the exact same words as we discussed his merchandising strategy and year-end outlook.  The coincidence really struck me.

Dusty Springfield’s catchy tune reached #6 on the pop charts in 1964. Though Wishin’ And Hopin’ (W&H going forward), is much better suited for a song title than a business strategy, I still encounter many retailers who either fail to plan or who don’t effectively implement or execute their plan.  These retailers end up with W&H results, sometimes it works out, most of the time it doesn’t.

Let me lay out what I mean by the W&H strategy. The W&H retailer typically buys merchandise with no clear thought of how it might fit into the existing assortment. New arrivals are distributed among stores in a predetermined order and are seldom if ever transferred to balance the assortment. This ultimately leads to missed sales opportunities in some stores, while potentially creating unnecessary margin problems in others. In-season markdowns are not addressed in a timely fashion and fill-in orders are hit and miss. Promotional merchandise is not sought out regularly which would help the store build volume and margin. The W&H retailer probably doesn’t have solid marketing strategy either. Other typical traits might include not paying attention to freight costs, current market rates on leases, employee selling expenses and inventory shrinkage.

“Ready, Fire, Aim”

At RMSA, we see this scenario all too often. The W&H merchant enters each new season full of optimism, yet is often left disappointed at season end.  The retailer is unprepared to deal with day-to-day reality due to inadequate tools, poor training, lack of time, or insufficient man-power.  You can recognize this merchant by his “Ready, Fire, Aim” approach to most problems. This is management by crisis because the day is dominated by the urgent, never leaving time for the important.  In other words, valuable time is spent putting out small fires while the big blaze continues to burn out of control. Because of these and other problems, the W&H store is left wishin’ for a different outcome than it experienced in the past. Wishin’ customers will like the selections he or she has made and hopin’ that the store will be profitable at year end. This really isn’t much different than playing the lottery. Most of the time, you end up with the same results.

W&H is a reactive strategy, not a proactive one. A goal without a plan to achieve it is nothing more than a wish, and “hope” is not a strategy at all. Many times this retailer ends up with little or no profit season after season and year after year, barely staying afloat, and not growing or improving. The vendors and the landlords are the ones making the most money in this case, unfortunately…. not you.  In some cases, you are simply buying yourself a job!

There is still time left this year

If the W&H strategy sounds all too familiar, there are still things you can do now to prepare for next year. Make plans now to make sure that all old merchandise is discounted so that it will be gone by the end of December. See that seasonal classifications (i.e. winter footwear, gloves, hats, etc.) have manageable stock levels going into season end. If you haven’t already, take markdowns NOW on styles, sizes and colors not performing as they should. If you have OTB to spend for opportunistic buys (i.e. Off-price), contact key vendors to see what might be available to freshen the presentation during the transition period between now and the arrival of spring goods. Review your spring on-order once again to make sure all bases are covered and that you are not over extended. If business is good, pay off credit cards and attempt to reduce lines of credit. Review operating expenses and make adjustments if out of line with industry benchmarks. Review marketing strategies, including email blasts and social media, for effectiveness.

Make an effort on the items mentioned above and you won’t have to go through next year Wishin’ and Hopin’ for higher profits.

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