Saturday, June 11, 2011

The Case Against Category Management – Wrap Up

This brings us to the conclusion of our notes for our yet untitled book to be released in a few months. I want to thank the members that took the time to read some of the articles and sent me so many encouraging emails and comments.

The long and the short of it us: The world is changing, faster than we have seen it change in our lifetimes. Notwithstanding the unstable economy, experts believe buying habits are changing, not temporarily mind you, but permanently. The days of mass marketing may have come to an end, as we move from an environment of mass markets to precision markets, and those that attempt to continue to be all things to all people will fail.

I believe large retailers like Walmart know this, and in their quests to develop smaller footprints like Neighborhood Market (which fell far below Walmart’s expectations), the new Walmart Express, and their radical idea of delivering groceries to peoples’ homes; these events are synonymous with a company struggling for a makeover. I’m not suggesting Walmart is going out of business anytime soon, but their actions do lead one to come to the conclusion that Walmart is endeavoring to become something else entirely.

7-Eleven is exploding in size, buying up every convenience store they think they can salvage. This is reminiscent of The Pantry’s actions in the southeast a decade ago. But there’s a difference. 7-Eleven has an inventory control system somewhat similar to the one I have described; something akin to the one we have developed for our customers.

The regimen of ‘reducing expenses’ has been beaten to death. If there’s somewhere else to cut back overhead, I don’t know where it is. The answer appears to be lower stocks, greater sales, increased overall profits, and managing your inventories more efficiently. You can accomplish these things by taking some, if not all of the actions I mentioned in these notes. 

Yes, this is absolutely the best time ever to be in the convenience store business. I don’t care who you are; each and every one of you has the chance to become a leader in your industry. I believe Sam Walton started out as a clerk in a five and dime store. It doesn’t take a lot of money or size, but it does take a great deal of keeping up with technological changes that will impact your business. Even if you think some of these ideas are crazy, insane gibberish, maybe, at least I’ve got you thinking about them, and someday it may all make sense to you.

Suppliers may step up to the plate to help you, but you’ll have to ask them. If you see merit in ‘vendor managed inventory’, I urge you to urge your suppliers to get in touch with me. I will do all I can to help them implement a similar program whether our services are involved or not. The important thing is, you have been informed as to the existence of services such as the ones I’ve mentioned and at the least, you should use that knowledge to plan your future. The advancements in POS technology and the Internet may have lead you to believe you operate in a high-tech environment, yet despite all of the technological changes that have occurred over the past three decades, most retailers are still stuck in the eighties.

In 1977, I gave a seminar to a gathering of business people at Colorado State University in Ft. Collins, Colorado. In the opening speech, I made the statement, “Over the next few years, computers will make everything you think you know about business obsolete.”  I could make that same speech today and it is even more appropriate than it was thirty-four years ago.  We cannot afford to ignore the changes in technology that affect us, else we will all awaken one day and wonder, “What happened?”

Thank you again for your kindness, patience and well wishes, and good luck to you all. You will find more useful information at
Bill Scott - StoreReport

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