Author: Mark Fletcher

This year’s Sydney Gift Fair has been a good opportunity for newsagents to expand their inventory portfolio. On the trade show floor have been new suppliers and some existing suppliers with more diverse range. It has been a good opportunity to go beyond what the shop is known for.

This matters because inventory range can be a calling card if we use it in social media and other out of store promotion and activity.

Pitching products people do not expect from us can help re-cast how we are seen and this is key to traffic growth.

The challenge is that too often indie retailers stock what they like. In my experience it is more important that we stock on the basis that we are not our customer.

The inventory range decision is simple in my view. Stock what you have been stocking or similar to what you have been stocking and you will fulfil the current trajectory of the business. Expand the focus of the business with a broader sock range and you open the opportunity of finding new traffic. New traffic is key to achieving growth.

My suggestion to every newsagent is to have a portion of the inventory spend allocated to new products, to ensure consistent pursuit of expansion of the appeal of the business.

The New York Toy Fair is a terrific trade show to visit to gauge what will be hot or not in the next year as we can see the plans suppliers have for existing and new products. It is also a terrific place to catch up with Australian wholesalers, to talk about what you are interested in, to inform their own buying decisions.

Toy Fair in New York this year has been that and more. With the (broad) toy category playing a growing role in our businesses, tapping into market intelligence before it hits Australia and before it is filtered by suppliers is valuable. That is my experience at least, having been to the New York fair for a few years.

It i alas valuable for discovering products and suggesting them to existing Australian wholesalers and providing retailer context as to the local opportunity.

I’d say the outlook for the category is strong. There are some cool trends for 2019 and extensions for popular brands and segments this year.

We will see some of this at the Toy Fair in Melbourne in a few weeks and at events later in the year.

One broader trend that is appealing is the speed to Australia of launches we see in the US. Whereas in the past there could be a delay of a year. Now, thanks to better planning and jumping on the back of US production runs, we see trend opportunities much faster.

I am speaking at the newsXpress national conference in Sydney later this week. That is where I will share specific product and brand insights from the New York Toy Fair.

With social media accessible 24/7 it is important that your employees understand your expectations. My advice is you share this with them in-store as well as on social media:

While we may post information on social media and ask questions through messenger apps  outside your usual work hours, we do not mean to intrude on personal time. Nor do we expect or ask you to engage whatsoever on business issues outside the time we pay you for.

By doing this and repeating it every so often you could be establishing a  line of defence should a relationship turn sour and you find yourself on the other side of a Fair Work claim relating to pay for time worked outside usual hours.

The message also establishes your expectations, so both sides are fully aware. This is better than assumptions based on unwritten positions.

This issue has been on my mind over the weekend following hearing about a retailer who is being pursued by a former employee for a claim of overtime payment relating to regular Facebook Messenger questions outside of work hours. The owner of the business worked elsewhere and the only time they had questions was after the shop closed. They did not expect them to be answered outside of regular hours. However, they did not make that clear.

In my work with newsxpress I prepared and shared this cashflow management advice. I share it here to offer an example one type of business advice (of many) provided by newsXpress and for the advice itself.

CASHFLOW ADVICE FOR YOUR CONSIDERATION. 

In it’s simplest form, cashflow management is about ensuring a business has the cash necessary to meet its obligations and, hopefully, build reserves for the owners.

Good cashflow management starts with the understanding that this is your business. You sign the lease. You sign up for any loans. You hire, train, motivate, manage and, maybe, fire the staff. You choose what you sell. You set your prices for most of what you sell. You control how the shop looks. You manage the promotion of the business outside the business. Yes, this is your business.

The cashflow of the business is a product of your choices.

It is critical for every business owner to own their business cashflow performance. Blaming others or external factors is a cop out. harsh as it is, that’s the truth.

MANAGING CASHFLOW.

This list is ordered by priority.

1. Budget. Have one. Until you do, do nothing. This is priority #1. The budget should include an inventory spend allowance, so you know what you can spend. Plan the budget for the business to be profitable / viable without the need for agency to support it. Business budgeting should involve provision to grow savings / emergency funds without having to borrow / lifestyle choices / exit strategy if you cannot sell the business.
2. Funding. Before you borrow from any source, get advice as to the appropriateness of this funding. Too often we see expensive, unsecured, loans taken out at ridiculous interest, to the significant cost and harm to the business.
3. Shop lease. Only sign a lease you are happy with. Be prepared to walk away at the end of the current lease if the new one offered is not good. Run your business through the life of the lease as if you will not take up a new lease in the same location.
4. Labour costs. Run a lean roster. $25.00 a day saved in labour costs is like $50 to $75 in retail sales. That is, $15,600 to $23,400 in revenue for a six day week over a year.
   1. Ensure every team member has a role description.
   2. Set business performance targets:daily revenue / revenue per labour hour or similar. It is critical everyone working in the business understands the goals and that they support them.
5. Price for margin. Understand retail price psychology. For example, $13.50 is seen to be the same as $14.99. So, price at $14.99. By pricing to a higher price point you can discount back or fund a loyalty program that discounts for loyalty. Also, choose .99 over .90 or .95.
6. Loyalty. Run a loyalty program that focusses on people shopping more often with you. Be consistent in your pitch. Do not waver over the offer. It rewards loyalty, not laziness. The focus on loyalty needs to be whole of business, whole of team in pitch and management.
7. LayBy. Stop it. Instead, offer Oxipay, ZipPay or AfterPay.
8. Basket depth. Maximise every touchpoint.
   1. Counter. Always have multiple offers at your counter, offers that are easily purchased on impulse, offers that deepen the basket and make a shopper visit more efficient for you.
   2. Top selling items. Look at what is on either side. Make sure the products are relevant and easily purchased with the popular item.
   3. Exit pitch. Make sure you have a compelling and regularly changed pitch to shoppers as they leave the business.
9. Inventory.
   1. You control your buying. Not a rep of a supplier ordering on your behalf.
   2. A full shop is not necessarily a good shop. A smart shop is better. This is, one that people love to browse, love to shop. Often in retail less is more.
   3. Consider establishing a buying approval process where more than one person participates in buying decision. The goal is to slow impulse purchases. This could be someone outside the business.
   4. If you doubt your ability ton pay, don’t buy.
   5. Move, move and move. Every day there should be movement of products in the sore to keep it feeling fresh.
   6. If products don’t work, quit them as they are worthless if you put them in storage for later.
   7. Work with suppliers, exploring delayed terms or consignment opportunities.

DEALING WITH A CASHFLOW CRISIS.

A cashflow crisis is when you can’t pay your bills on time or a sustained period of dissatisfaction with the cash reserves in the business.Too often, small business retailers ignore a cashflow crisis, leaving action until it is too late.

Here is our advice on how to deal with a cashflow crisis.

1. Own the problem. Fixing this is on you.
2. Bring in outside help. This could be a friend, a financial counsellor. The best person will be someone who understands your type of business who can help you see what you don’t see and support you in tough decisions to be made.
3. Understand the problem. Know if it is short term or long term. Be certain about the role you have played.
4. If you run customer accounts, collect with urgency.
5. Ask the landlord for immediate rent relief. The more transparent you are with them the better. Document your case. Be prepared to show your P&L in support of your request.
6. Cut your roster to bare bones.
7. If you have stock on sale or return and it is not selling, return for credit.
8. Immediately start a sale.
   1. Give it a cool, non scary, name.
   2. Price items to sell, especially items for which you have already paid. Even selling below cost frees cash to the business.
   3. Get everything on the shop floor.
   4. Display to clear. i.e. not pretty displays for sale items.
9. For inventory that you cannot sell, consider eBay.
10. Consider selling assets. If you have equipment in the business that you no longer use, sell it.
11. Talk to all your creditors, apologise, outline your plan, ask for help.
12. When making progress payments on creditors, respect all with payments. NOTE: small regular payments could be key to you not facing debt collection action.
13. Act.Every decision, every action you take must work to addressing the cashflow challenge. If you have created a plan act on it immediately. This is not a time to overthink things.
14. Invest.If your cashflow challenge is because of a decline in traffic, not spending money chasing traffic will only make the problem worse. Spend carefully.
15. Plan for the end point. This will be either coming out on top or closing the business.

The cashflow achieved by a business is a product of your decisions. Be thoughtful in each decision and single-minded in your focus on a better cashflow outcome.

Thanks for reading. We hope 2019 is awesome for you.

Mark Fletcher
Managing Director
Tower Systems International (Aust.) Pty Ltd
E | mark@newsxpress.com.au.