This is the second in a series of posts that explore how the ‘lean’ methodologies of the technology industry can be applied in the world of retail. This week, The Retail Community.
I often talk to people who are thinking about opening a new store for the first time. My most common piece of advice is that they should try to find and/or build out their local retail community. I normally get a blank stare in return.
If I tell a young tech entrepreneur the same thing, they will go out and network with venture capitalists and angel investors, with experienced entrepreneurs and other young aspiring startup builders, with tech journalists and business school professors. There is an inherent understanding that there is a whole eco-system out there to rely on and from which to draw knowledge and inspiration.
The ‘Retail Community’ is, for many, an altogether more elusive concept. Who should you be turning to for advice and support? What’s the value in having coffee with a supplier? The answer is that there is a huge amount of insight and information out there that’s ready for the taking – and most people are willing to share it with you for no more than the price of a coffee.
The simple truth is this – if you are able to learn from the mistakes and successes of those that have gone before you, you will give yourself a huge advantage and save yourself a lot of time, pain and money. So where should you start?
1. The Mentor
Running a retail business is not always easy. Things will falter and you won’t be entirely sure why. You will want to ‘fix’ things and you won’t know exactly what to change. The good news is that no matter how innovative your new retail concept, chances are you are NOT the first person to walk this path.
The Karate Kid had Mr Miyagi, James Bond had Judi Dench, Luke had Yoda, heck, even Indiana Jones had his dad. The first and most important person in your retail network is the experienced mentor – someone who has been there before and can provide informed advice and guidance based on actual experience. Plus you might get a cool nickname, like Grasshopper or Padawan Learner.
Note: Whilst this person will usually be an experienced retailer in your field, make sure to choose someone who doesn’t have any reason to feel threatened by your success. If you’re opening a wine store, the local wine store merchant probably isn’t your best bet!
2. The Business Partner
A lot of people get into independent retail because they like the idea of ‘working for themselves’. They like the idea of having complete control over decisions and want the sense of accomplishment that comes with having built something on their own. This is completely valid and I am a firm believer that only one person should have the deciding say in a business.
However, it is incredibly rare that one person will come with the complete skill-set of a successful retailer: the financial whizz may not have the eye for marketing, the person with real attention to detail may lack the interpersonal skills to manage staff. More often than not two heads really are better that one. Especially if you’re new to retail it may be beneficial to partner with someone more experienced.
There is no hard and fast rule about whether you need a partner to be successful and there are plenty of examples of success in both camps. The key here is that if you go it alone, you make sure to build a great team around you and if you choose to partner, make it clear where the decision making buck stops.
3. The Supplier
Retail merchants have traditionally enjoyed an adversarial relationship with their primary suppliers. It’s really easy to get bogged down in aggressive negotiations about pricing and disputes about the quality and number of goods supplied. That’s why it is vital to get to know different suppliers as soon as possible and get a feel for their personalities and potential operating methods.
A great supplier can also be a huge source of industry insight. They are not new to the game. They can help you choose your initial product line and streamline your inventory management over time. Early effort at building a positive relationship can help ensure that supply is on time, your shelves are always stocked, and discrepancies in the delivery manifesto are quickly and easily dealt with.
If you develop a long-term relationship with a supplier, they may even agree to accept delayed payments for inventory, something which can be hugely beneficial for those seeking financing to open a second location.
4. The Accountant
Quickbooks is a fantastic tool. I love it and I use it myself. However, like so many great tools, it is not a substitute for a knowledgeable and experienced individual who knows how to wield it. I can’t recommend the following highly enough: as early as possible – ideally before you’ve even had the idea for your store – go forth and find an accountant, preferably one with lots of experience managing the books of independent retailers.
An accountant like this can help you properly set up your finances, separating your personal money from your business accounts – this will save you a huge headache down the line. They can help you identify trends, understand your margins and this is crucial – manage your cashflow so you know you can pay all your obligations in any given month.
5. The Technologist
The modern retailer has to deal with a wide range of technologies to effectively manage their business: these include, loyalty programs, point of sale systems, credit card processors, in-store wi-fi, email and social media marketing, accounting software and e-commerce integrations to name just a few.
This complex and rapidly expanding roster of retail technologies can be incredibly intimidating even to experienced retailers. That’s why a retailer’s newest best friend is the technologist. Historically this role is filled by a professional Value Added Reseller (VAR) who can help you choose and install relevant hardware, set up systems, and even manage aspects of these systems for you.
Increasingly however, the best person to turn to in this regard is the switched on, tech-savvy retailer who happens to understand these systems and how to get the best value out of them. When it comes to choosing technology, there is absolutely no substitute for consulting widely amongst local retailers and finding someone whose insight and advice you trust.
This is by no means an exhaustive list of the people who should form part of your retail community but these people will be the core of your support network. You should always have experienced, knowledgeable and helpful people to turn to when you need insight.