Retail is a world apart

retaildombulletRetailers are unusual businesses, you know – they’re really a world apart…

If you come from other industries (energy, financial services, manufacturing, whatever), moving to retail and settling-in can be a slow and quite painful process – you don’t just need to learn the ropes, you are actually in for a completely change of (professional) mindset: you’ll be presented with radically different rules and, in general, with a singular approach to doing business.

That takes time of course, and – more often than not – is very, very hard.

Why is retail so different? What are its most significant distinguishing marks?

I’ll try to answer…

First distinguishing mark

Retail is the only industry  where competitors thoroughly know how you manage your business.

Think about: they know what you sell and at what price, how you promote your products, how you interact with your customers, etc. They even know – with a good approximation – your sales.

How so…?

…it is as easy as entering one of your stores and looking around…

Could you say the same about banks? about car manufacturers? about the TV station you watch after dinner?

I’m sure you can’t.

Second distinguishing mark

Retail is the only* industry that is “Cash-flow positive”

[*:there are some exceptions, but not very significant]

To be “Cash-flow positive” means that the cash inflows during a period are higher than the cash outflows during the same period.

In other (simpler) words, retailers buy on credit and sell for cash – they buy products paying after 180 days (…or even later…), while selling “immediately” for hard cash to shoppers.

Accordingly:

1) since they do not have to actively borrow (technically, it’s called “seller financing”), retailers do not need banks

2) with all that available cash, retailers can be financially “creative” and earn additional money

Hopefully…

If your career is retail-bound, knowing these two distinguishing marks probably will make your new professional life a little bit easier.

Andy Cavallini

PS: Just my usual two cents… …any thoughts?

 

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