Retail Management Are You Thinking Like A Customer Or Merchant?
By Bob Phibbs
Whenever I look at a business that is not making money I find it usually is from owners or managers thinking like a customer or employee rather than a merchant.
It starts with not pricing correctly. "Oh, I wouldn't pay that much for this item." Knowing how much something costs somehow devalues its worth in their eyes. Since most owners or managers have never taken a course on pricing or examined their financials, they may mark it up less than keystone. (One guy at a recent speech sheepishly admitted he purchased an item at $10 and priced it at $15.) But merch should be marked up keystone (that's double) + a few bucks so the business is profitable.
That's what merchants do.
You may not be able to do it on every item but you have to consciously choose items you must be priced-competitively on and others you can make up lost margins. Otherwise you probably are dumping money into the business rather than taking it out.
This fuzzy thinking continues with employee flexibility. Instead of a set schedule a manager can knock out in an hour or so, the manger lets employees give them their availability week by week and then try to plug that into a schedule. This results in hours and hours of wasted time with store coverage compromised.
Merchants come up with a set schedule based on demand, then fill it based on ability to sell the merch. That allows the managers much more time to train, monitor and sell on the floor. That tight ship also helps them let go of bad new hires quicker.
Thinking like a customer shows up in marketing and promotions with endless freebies, 2-4-1s or discounts. One local gift store offered free gift wrapping on Feb. 14. The busiest day of the year for them when people would have paid anything to have someone wrap their gift, they gave it away.
How did they come to that decision? They thought how great it would feel for a customer.
As a customer, imagine a florist giving away free same-day delivery on Mother's Day or a wine store offering 30% off champagne December 31. Wouldn't that be great?
But that intent to get like a customer instead of lose like a merchant damages profits.
Thinking like an employee cripples managers from doing their job as a merchant when they don't write people up for being late, rudeness or their inability to perform the job. Those managers judgement is fuzzy because they want to be nice, liked, popular.
I had a boss one time say, "You're only as good as your last sale." Brutal. He was a merchant.
Understanding the clear mindset of a merchant versus the fuzzy one of a customer or employee should help you when a tough decision needs to be made, ask: Am I thinking like a merchant looking to profitability, or like a customer or employee looking to be nice?
Be profitable, be a merchant.
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