Transforming the Laws of Jungle for today’s retailing
This week’s courses enabled IMS Retail University to reach a significant milestone of over 13,000 graduates. While many of the “Laws” of the Retail Jungle have remained consistent the past two decades, the new “sound bites” reflect the current trends and challenges. Retail is not rocket science; it’s harder … at least in terms of making a profit.
Retail University founded on the Fundamentals
IMS developed Retail University as a means of providing manufacturers with insights and strategies to more profitably sell consumer products through retail channels. The courses are designed to highlight the best practices regarding retail requirements and execution. By focusing on the core metrics, processes and dynamics of retailing, manufacturers can align their strategies to optimize sales and reduce costs.
Due to the short product life cycles, consumer electronics retailing has always been challenging. Increasing commoditization of products has eroded margins to razor thin levels, where there is little room for error in execution. In many ways, the fundamental “Laws of the Retail Jungle” are not only relevant, but more important than ever!
Laws of the Retail Jungle – Traditional Fundamentals
Top “Laws of Retail” indentified by this week’s Retail U grads include:
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If you are not 100+ days early, you’re late!
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If you are not on cycle [seasonality], you pay at least twice [2X]
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You don’t have to be perfectly right, but you have to be on shelf
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Launch with a bang, or rot on the shelf
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Everything in retail is based on when the cash register rings
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If you don’t turn [inventory], you burn [through lots of cash]
Retail is not a complex business to understand, but the complexity of the many “moving parts” requires “science” to increase the precision of execution.
So what’s Changing and Transforming Retail?
So, while the fundamentals are still incredibly important, recent market dynamics have made the core principles just “ante” required to enter the high stakes game of selling through retail today:
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There are fewer retailers, and more 800 lb. godzillas
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75% of consumers research online before purchase
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Internet transparency drives down price & erodes margins
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Technology enables mountains of data available hourly
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Retail operating margins are razor thin – no margin for error
Sound bites for survival in retail today
Is retail profitability an oxymoron? That’s a very interesting question! It could be asked of retailers who are severely challenged in the current economy. On the manufacture side, many have increased consumer unit sales, but are severely challenged to grow profits, as products become even more commoditized.
At the end of all Retail U classes, I always ask graduates for their big “take aways” from all the case studies, data and discussions. Here are this week’s major “sound bites” for both retailers and manufacturers:
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Differentiate, or die!
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Online or in-store, it’s all about converting traffic
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Profit requires more than selling a SKU, it’s all about basket
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Profitability = Excellent, Execution … Everyday
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It’s no longer about all products on all shelves … it’s about the right products on the right shelf in the right stores
Is retail profitability possible given current trends? Yes, but it now requires more than just the fundamentals. These new sound bites coming out of Retail U are reflective of the new standards of execution required in times of increasing competition, with less margin for error.
Retail is not rocket science … it’s harder than that! Today’s retail is definitely not for the faint of heart, or those who are not committed to transforming how they both measure and manage their business.
Results count now more than ever before!
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