Retail Truths

427 lessons retailers learn the hard way.  

“A compendium of street-smart retailing insights and acumen.”
No academic theory–just hard-nosed realities shrewd retailers discover through experience and use to build profitable stores. Retail truths like:
*Wholesale is the cost of the merchandise, not the cost of the sale.
*There is no magic close.
*Profit is not immoral.
*Expecting to get the sale is half of getting it.
*They hear what you say, but they do what you pay.
*A manager is not a referee.
*A return policy is a tool, not a rule.
*Be-backs don’t come back.
*Good management is an attitude, not a technique.
*He who underestimates his costs gets the sale.
*A sales presentation is not the place to give a business education.
*You’re not in business if you’re not in show business.
*The last few percentage points are the profit.
*Merchandise is for sale, not for storage.
*People like to do business where business is being done.
*Inventory expands to fill all space.
*A good salesman makes a bad buyer.
*Building a brand doesn’t make you its owner.
*A weak competitor is a useful nuisance.
*Good isn’t good enough; only best gets the sale.
*The measure of a competitor is the price he can get.
*A company is known by the people it keeps.
*A retailer’s effectiveness can be measured by the animosity of his competitors.
*The applicant pool is not a cross section of the population.
*Tell the job, don’t sell it.
*Low wages aren’t a bargain, good people are.
*All applicants are smart until they speak.
*If it’s important to know, certify that it’s known.
*Employees treat customers as managers treat employees.
*The only appropriate discipline is de-hiring.
*Growth doesn’t produce cash, it consumes it.
*Bankers want you most when you need them least.
*A banking crisis is always just a personnel change away.
*Two stores don’t make twice as much.
*All business is gambling, but double-or-nothing is soon nothing.
*A little success creates a lot of overhead.
*If at first you do succeed, try not to believe you’re infallible.
Chip Averwater is a third-generation, 38-year veteran of retailing. In Retail Truths he shares the lessons of a career, gathered in over twelve years of writing.
“If you could own only one book on retailing, this should be the one.”

Review: “The Ultimate Guide to Successful Retail.  In Retail Truths, Chip Averwater distills 40 years of hard-won experience into 380 highly readable pages. …instead of banal generalities, he offers specific and detailed suggestions that will resonate with anyone who has spent time in the industry.
Averwater provides an exhaustive list of the critical details that separate stellar performers from the casualties, and his insights are invariably on the mark.  On the need for fiscal prudence, he writes, “A store needs profits, not so the owners or investors can winter in the Caribbean but to grow inventories, expand locations, add personnel, or upgrade systems.”  Are bigger stores better?  He observes, “An abundance of space indulges our tendencies to disorganization.  What we usually need isn’t more space, but purchase planning and inventory management.  Efficiency is seldom fun but always rewarding.”
Based on long personal experience, Averwater concludes that a good salesperson can easily be five times as productive as a laggard, and says high-priced salespeople “are an expense we want.”  In a lengthy segment devoted to personnel, he offers a blueprint for hiring and retaining those top performers–from how to screen out undesirables in the hiring process (“Less than one in 20 job applicants is a suitable candidate”) to maintaining high morale (“A manager’s words resonate for a while then fade. Incentives speak with every paycheck.”)
We suspect that Retail Truths will ring true to any thoughtful practitioner of store management.”
–Music Trades, April 2012

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2 comments for “Retail Truths

  1. Charles F. Myers
    November 16, 2013 at 6:48 PM

    Excellent. A few suggestion … I agree with other reviewers that this book should be required reading for a BBA or MBA candidate. The book has a ton of information, and it’s certainly worth every penny of its modest price.My gut feeling, however, is that the book doesn’t point out enough of the **dangers** of starting a new retail business. For example:1. The new business should probably be a corporation (Inc. or LLC) from the very beginning. Otherwise, the owner’s personal assets may be at risk. In the start-up costs, be sure to allow $2,000 or so for legal fees.2. Have your lawyer review any lease you are thinking of signing. I have seen landlords double the rent on successful businesses the first time the lease expires. Remember that the landlord probably has a lot of problem tenants who aren’t as successful as you. Also, be sure to know if you can be assessed extra for certain improvements, such as a new roof or repaving the parking lot.3. Be sure to budget some salary expenses from the very beginning. Yes, you’ll be doing all of the work at first. However, if you aren’t careful, you’ll be totally married to the business and never be able to take a vacation. If you assume your labor expenses are zero, your planning process is flawed, and you are underestimating your expenses.4. Be sure to budget some accounting expenses from the very beginning. If you have formed a corporation, you’ll end up with a 50-page federal return, plus all the state and local returns. If you have employees, you’ll have even more forms. Saying you will do all of this by yourself (or using QuickBooks) is not realistic, and you are understating your true cost of doing business.5. There is an old saying: do the very best planning you can before you start the business. Realistically estimate all of your income and expenses. After you’ve done that, cut your income in half and double your expenses. Can you survive on that for, say, a year?6. There are some businesses where it’s extremely hard to get started. Funeral homes are one. No matter how nice you are and how nice your facilities are, in times of crisis, families will go to the funeral home that “buried grandma.” A friend of mine said that, if you are starting a funeral home, make sure you can survive with zero income for six months.7. As counterintuitive as it may seem, local municipalities may not want your new business in town. Talk to relatively new businesses to see what kind of cooperation they got (or didn’t get) from the city, county, etc. Don’t be surprised if the municipalities want detailed site plans, extra parking spaces, landscaping, signs, etc. You could be forced to hire an architect or engineer to meet all the requirements.8. The minute you open your door, you will be inundated with people who want your money: newspapers want you to advertise, ditto radio stations, the local baseball team wants a contribution, the security company wants to install an alarm, the phone company wants money, the insurance man wants your money, etc., etc.9. If you are selling food or drinks, expect to spend a lot of time and money dealing with the health department, alcohol bureau, beer board, etc.10. Remember that you are now the tax collector. You’ll have to handle sales tax, income tax, withholding tax, unemployment tax, ad valorem tax, business licenses, etc., etc.There are a number of topics that were never really addressed by the author. Some of these include franchising, planogram software, advertising, websites, health care, and private branding. There also really isn’t a lot of advice/tips for people who are currently working as clerks and managers in chain stores. (Totally different rules apply if one is dealing with “corporate.”)Overall, however, Chip has done a phenomenal job with his book, and I thank him for his wisdom and experience.

  2. flutist0847
    November 16, 2013 at 7:06 PM

    THE TRUTH ,THE WHOLE TRUTH AND NOTHING BUT THE TRUTH! As a small business owner, I devoured Retail Truths in one night, and am carrying it around in my handbag for a moment of ‘truth’ when I need one! Chip Averwater compiled his insights into running a successful business into one book, chock full of wisdom, insight and, well, honest truths that has made his business succeed into the 4th generation. I love books written by people that have been on the firing line themselves, that have actually worked their business, and can speak from true experience as Mr. Averwater can. He isn’t just writing it, he has lived every one of these ‘truths’ learning many of the lessons like we all do, the hard way.His practical approach is perfect as a springboard for company meetings or staff training. Truth #2: “It’s not whether we can do it: it’s whether we can do it best.The challenge isn’t merely offering products the public wants to buy; we’ve got to do it better than all of our competitors. Each shopper chooses only one store for his purchase, the one he feels offers the best value-not just quality and price but convenience, selection, security, atmosphere, etc. The winner takes all. Second place gets nothing, no matter how great the effort or how close the race.” Wow. Powerful. And so very true. We had a great discussion with our staff about that truth!The organization of the book is such that I simply open it up and choose a category : Selling, pricing, systems, design and display, leadership, cash flow, training, firing, people problems, pay, competitors to name just a few.It is all here. The truth about running your business successfully and the solutions to your questions and problems. I would recommend that key staff members and managers have a copy of Retail Truths to highlight, turn back the pages, underline and absorb! A true gem for anyone running a business, managing people, or thinking of starting a business.

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