March 8, 2010

"Snow What?" They Say. "February Best Month Since 2007"

Retail sales results for February have come out, and two major tracking services - Retail Forward and the International Council of Shopping Centers - report that comp store retail sales rose at least 3.7% in February: "their best monthly gains since the economy began its meltdown in November 2007." (In fact, we believe that is the sixth straight month of sales increases!)

"Snow what?" indeed!  What do reports such as these mean to independent retailers? Especially since they are reporting results of major national chains.

Well, we believe they do matter in several ways. First, they provide a benchmark against which to measure your own stores' performance.  How were your February sales? You now have some context for assessing your own progress. (And maybe feel a bit better about what you did accomplish!)

Second, it provides insights into how consumers are feeling. Maybe "Frugal Fatigue" is in fact becoming more prevalent. For the 90% of the population that still have their job, they may be gaining some confidence that it is okay to spend.

No question, the spending that does occur will be much more purposeful and restrained than 2007. There is no going back to that! But those retailers who have edited  their assortments to better match what their very best customers want will be well positioned going forward.

Third - and perhaps most important - the financial community is reading these reports as well.  Bankers and the credit departments of your vendors should be encouraged by these positive signs. In your discussions with them, be sure to have armed yourself with the most recent perspective on consumer confidence.

Remember, unemployment is a lagging indicator of the economy; consumer confidence is the leading indicator, particularly for retailers.

Retail Owners: Where's Your Job Description?

What is the most over-looked and under-performed job in retailing today? Being an Owner!  Owners have responsibilities that are separate and distinct from any other job in retailing.

The ROI has identified that every retail business has Three Levels of Responsibilities:

• the Management level: the day-in, day-out stuff that we are all too familiar with;
• the President level: overall leadership and management, plus analysis and planning;
• the Owner level: the unrelenting survival issues of the business, both the vision ("Why survive, and for what?") and the financial viability

Being the Owner is in fact a full-time job of its own.  As Owner, you have three major responsibilities: (1) Defining "What constitutes success?" for the business; (2) Maintaining your competitive edge; (3) Managing the Balance Sheet.

For a start, go to The ROI site and take the Owner's Test. Then take advantage of all the resources at The ROI that are specifically for Owners. Lots of places offer resources for store managers, store operations, etc, etc.  Only at The Retail Owners Institute® will you find resources and help specifically for Owners.

Going forward in this decade, as we emerge from the financial meltdown, which retailers will survive?  Those who have the best Owners, who are focused on performing the long-overlooked Owners responsibilities!

Looming Over the Horizon

A heads up for you: there are some lease accounting rules changes that could have significant Balance Sheet impacts on retailers. Leases - for real estate, equipment, etc - would have to be capitalized as assets on the Balance Sheet, and the lease payments treated as a debt, as we understand it. This could impact your Balance Sheet ratios, and therefore could mean that you need some adjustments in your loan covenants. 

All of this is still in the "pending" stage, but if it proceeds, would begin to go into effect in 2011.   

Retail Business Insight from The ROI

The ROI is determined to "level the playing field" for independent retailers.  Bigger isn't necessarily better; better is better!

The ROI's goal: Enable ALL retailers to "Turn on your financial headlights!" 

Have You Seen the Retail Startup Site? There's much information out there for "small businesses" and "small business startups", but there's very little specifically about retail. 

The ROI has launched a companion site. It's called Retail Startup (see www.RetailStartup.com). A one-stop shop for online and/or storefront retailers, it is dedicated to all who have the vision of owning retail stores.  

The goal of Retail Startup is to help aspiring retailers to realize their dream. Faster. Better. Smarter.

Please go check it out, and then let us know what you think. What else should it have? Would you refer would-be retailers there? We would appreciate your reactions.

The ROI's Blog Re-Inventing Retail

Even More Ways to Join the Dialog

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