How Independent is Independent ?

by: Evan Wise

We often talk of independent retailers to differentiate them from chains. The term independent carries a lot of significance, especially for consultants working with them to improve the bottom line. Many of these businesses are owned and operated by the same individual which gives that person the authority to make decisions quickly. They are truly independent from answering to anyone else in the organization. This independence can be both a blessing and a curse.

The blessing is the ability to adapt to changes in the market quickly and easily. The challenge is identifying those changes quickly and deciding what to do. That is not always as easy. Chains and larger businesses have a host of executives and checks and balances to question every move. That forces the company to move more carefully and deliberately. Small businesses would be well advised to develop a system to question and analyze decisions. That system can come in the form of a consultant, a board of directors, a critical association off peers or a mentor that is familiar with the business.

The second blessing is that an independent retailer is able to make a decision without getting paralysis by analysis. POS systems and back office systems generate reams of data that can provide as much worthless information as valuable information. Many independent retailers don’t enjoy analyzing data and turning it into useful information upon which good decisions can be made. They get a “feel” for the situation and then shoot from the hip. Larger organizations can afford planners, marketing directors, cash flow managers and budgeting systems. These people focus on individual parts of the business and are trained to use the data and information to make decisions. Independent retailers need to find a way to get information into the decision-making process. There are only three methods of using the data to make decisions:

1. Ignore it and shoot from the hip
2. Take the time to pour over the data to do trend analysis, sales forecasts, turn ratios, cash flow plans, project maintained markups, and develop open-to-buy budgets.
3. Hire someone to analyze the data and give you the information. This can be an internal person (expensive) or a specialty retail consultant.

In order to compete effectively, even the independent retailer must have similar information. Often he uses only a fraction of the information that his POS system provides. In other cases, he is unaware of how the POS system generates information and lacks the skills to analyze the performance of the business when decisions are based on those numbers. In other words, there is a difference between good information and bad information! The problem is that many independent retailers don’t have the ability, time, or knowledge to get the most value from these software systems, even if he could afford to buy them for his business. Many retailers are great at the art of relating to customers and finding the right styles for them. They are not as proficient at the science of retail that involves forecasts, budgets and retail financial analysis.

We use the Winning@Retail™ process to bring the business functions and IT functions together. Data is collected from the retailer, analyzed by proprietary software, reviewed by professionals and then analyzed by a consultant. The action plan and information is returned to the retailer. This allows the retailer to develop a relationship with a consultant that can’t be duplicated by a software package. The consultant is able to serve as a sounding board for decisions and gives the independent retailer a check and balance on his own independence.

The goal is to make the IT application transparent yet keep the information customized and aligned with the business. The consultant provides the direction and relationship that will show a return and greater profits over the long term. IT evolved from a complicated system based on programming knowledge to a user-friendly process that can be very powerful in the hands of a person trained and skilled in using the information. The next step in the evolution is the Winning@Retail™ approach. The retailer buys the results and hires a professional that understands both the software and the business to provide meaningful direction. The concept may put Tech Support out of business but, if you are a retailer, that isn’t such a bad thing after all.

About The Author:

Evan Wise is a Managing Director of Management One, Ltd. , a consulting company based in Tucson, Arizona with clients and affiliated consultants throughout the United States and Europe.