7 reasons why independent retailers fail: filtered for you

Opinions are dime-a-dozen, and the internet has no real filter except for your common sense. A post on a reasonably reputable website covered the seven common reasons why independent retailers end up going broke, and when I read it, my b&llsh*t antennae quivered.

My main issue (pet hate probably) is how people confuse symptoms for problems, and the author made the same mistake we encourage clients to avoid.

What they said

What I observe

  1. Poor location

Geographic locations may become more or less suitable over time. But rarely does this happen in a radical and completely unforeseeable way in the typical 5-year lease period.

 

This is usually just poor decision-making; laziness or ‘momentum’ managers/leaders who just keep on truckin’… and they don’t’ (want to) see the signs of change.

  1. Poor choice of merchandise

No one I know in retail deliberately choose products poorly. They always buy what they think will sell. The real problem is that they are just ill-equipped to make the right decisions. Range/ variety/ assortment decisions on even a modest few thousand sku’s can rarely be done by gut feel in a hyper-competitive market place.

 

The real problem is usually that they don’t have a system in place.

  1. Over buying merchandise

See above.

  1. Relying on word-of-mouth marketing

This is code for do nothing, hope for the best. That is probably more likely a result of ultimately not knowing what to do or not appreciating the importance of marketing in any economic condition.

  1. Poor mark-up

No one I know in retail deliberately mark up below what they think they can get.

 

The real problem is usually that they rely on the wrong people (the rep, the partner. the staff) for information or they don’t have the right information accessible in their system or their system is not capable of providing timely, accurate feedback.

 

And we have found quite a few who do not know the difference between a mark-up and a margin, but that is another story.

  1. Lack of cash flow

Poor cash flow is simply a symptom of doing any one of hundred’s of things wrong.

  1. Enamored with being the owner

What can I say? Where does that come from? How do you determine that? What does enamoured mean and how do you measure it? Really…

 

This post is not about ‘failure’ and the reasons why. I would like to challenge readers to think about their perceived ‘problems’ and clarify whether these are the real problems or whether they are simply symptomatic of the real problem.

Root cause analysis can be as simple as asking yourself ‘WHY’ a few times as you drill down on a perceived problem.

When you finally arrive at an answer ‘just because, then you have probably found the root cause.

For example:

Perceived Problem: Declining sales

  • WHY (is it declining)?

Internet buying is keeping customers away?

  • WHY (are customers embracing the internet and staying away)?

They just seem to enjoy that – maybe because it’s a novelty?

  • WHY (are customers prepared to abandon me for a novelty?)

Maybe my retail offer is boring.

  • WHY (is your retail offer boring)?

Because I just don’t know how…

It is not hard to do. All it takes is a bit of common sense and – very importantly – the willingness to face the answer and the courage to do something about.

If you are not addressing the real issue, you are wasting your time and money and ultimately also the opportunity to succeed.

PS: In case you missed it, we published our infrequent (and therefore packed) Winners’ Circle last week. If you subscribe, I will email you the link J

Have fun… 
Dennis 
Ganador is a learning and development agency with track record of using smart ideas, structured execution and cutting-edge learning technology to enable people to deliver the ideal customer brand experience on the consumer frontline. Email Dennis with questions.