Tuesday, June 12, 2012

Automated Store Replenishment – Volume XXII

Suppliers take heed! Things are about to change. If small to medium-sized retailers go under, suppliers will be competing for business from smart, well financed, ‘take-no-hostages’ monsters like Walmart, 7-Eleven, Target, Alimentation Couche-Tard, and Costco. What happens when it becomes too expensive for smaller companies, the ones that make up the backbone of America find it too difficult to remain in business? Yes, I know about the latest SBA reports and all the new jobs that were created during the past three years. If you believe that, then I suppose you are buying into the current US inflation rate of 2.3 percent.

In today’s business environment, companies must grow in order to survive. This puts business acquisitions high on a company’s plans for expansion. For those businesses who feel they are approaching the end of their rope, selling out seems to be their only option. Every day, we are seeing smaller companies gobbled up by larger ones, larger ones selling out to even larger ones still, and so on, and so forth. Be honest! Have you not entertained the idea of selling out to the next The Pantry or 7-Eleven that comes along? We don’t really need an MBA to see what is happening, do we? The gradual decline in the number of independent retailers, the ones the trade magazines do not care or even know about—these are ‘the canaries in the coal mines.’

Where are all the clothing tailors of the fifties? What has happened to the small independent banks, restaurants, even the baby-bells, independent Internet service providers, the small software providers, the shoemaker, the local drug stores? The only thing that is saving small retailers that have not sold out, is the fact that Big-Box has not yet figured out how to service their smaller markets and make a profit.

For years, Walmart has been trying to wipe out the independent retailer, and in many ways they have succeeded. Should it make any difference to consumers who provides them with services if someone larger can do it better, cheaper and faster? It should, but it appears it does not.

Customer Relationship Management is a good thing, but it is not enough to stop the average consumer from jumping ship. Remember the hundreds of small TV stores that were literally, wiped out during the seventies by Sears and other similar big-box boys? Circuit City liquidated their last retail store in 2009. Montgomery Ward is history. Walmart is doing to Sears and Best Buy what Sears did to local TV and appliance stores nearly four decades ago.

You may think you provide better choice, higher quality, better service, with a killer CRM program in place; but you know what? It doesn’t matter. To quote an old cliché, “You might be in the process of rearranging the deck chairs on the Titanic”.

Long-term survival has nothing to do with the temporary fixes you have invested your hard-earned capital into, or plan to initiate in the near future. Don’t misunderstand, all of the things I just mentioned have the potential to increase your business for now, but until you have plugged up the gaping hole in your own Titanic, you may be merely ‘whistling past the graveyard’.

Is it too late? Absolutely not! There is a solution to this problem, but only one. The remedy lies in greater cash flows and that means better inventory control. Talk to you suppliers, call me, or speak to your current software provider. The small retail business is not dead yet, but you must act now to insure your future.  

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