There are INVISIBLE ELEMENTS in retail that we tend to forget.
When people buy a product or a service, they do not only pay with money, they pay with many 'invisible dollars':
- They invest their very precious time
- They risk their reputation
- The opportunity cost of not pursuing a different product/outcome
Forgetting these 'invisible payments' can cost us dearly.
TIP: When you are talking to your customer on the floor, incorporate these INVISIBLE factors into the benefits they may get from buying a particular product (from your agency.)
Similarly, the retailer pays with those same invisible dollars (i.e. indirect costs) for the products. We don't factor in costs like:
- The opportunity cost of the working capital
- The risk of obsolescence
- The risk of damage
Forgetting to factor in these 'invisible costs' into our cost of sales is an expensive mistake.
TIP: When you are considering whether you should markdown some slow-moving stock, think about the INVISIBLE costs associated with hanging on to it longer than necessary - not merely what you paid for it.