{"id":9617,"date":"2019-02-22T10:26:48","date_gmt":"2019-02-22T15:26:48","guid":{"rendered":"https:\/\/www.retailsystem.com\/za\/?p=9617"},"modified":"2019-07-03T14:52:22","modified_gmt":"2019-07-03T19:52:22","slug":"are-you-focused-on-the-right-numbers","status":"publish","type":"post","link":"https:\/\/www.retailsystem.com\/za\/blog\/are-you-focused-on-the-right-numbers\/","title":{"rendered":"Are you focused on the right numbers?"},"content":{"rendered":"

While there are many great business books, one that still stands strong is Good to Great<\/em> by Jim Collins. If you haven\u2019t \u2013 worth a couple reads. While the examples are somewhat dated \u2013 the principals are fundamentally spot on. Which leads me today\u2019s topic. I received a question last week. The Retailer wrote \u2013 \u201cI am losing my shirt on most products. I can\u2019t be competitive with all the web competition. What\u2019s do you suggest?\u201d<\/p>\n

OK, that is a loaded question with a whole bunch of answers. But let\u2019s quickly focus on the products sold. Back to the book. In Good to Great<\/em> \u2013 Jim talks about knowing what drives your economic engine. Straight from the book:<\/p>\n

\"\"\u201cWhat drives your economic engine? All the good-to-great companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. They discovered the single denominator-profit per x-that had the greatest impact on their economics.\u201d<\/em><\/p>\n

Ask any retailer \u201cWhat\u2019s important to your business financially?\u201d Most retailers are extremely quick to say sales. Need to drive sales. Need to grow. Need to sell more. Need to sell more than last year. Sales are flat. Sales are down. Had a good sales weekend. The sale Monday was great. Last week\u2019s sales were off. Big sale the weekend. Last weekend. This week’s sale….\u00a0 I could go on. Heard these? Said a few yourself? Doesn\u2019t really answer the question – does it? However, it quickly reflects the top-of-mind focus. That is concerning. Because that quagmire of responses are all top line specific. Which screams sales at what cost? Now obviously, revenue is a huge piece \u2013 seriously! How profound. But again, at what cost. What if you had a $10,000 day but your net (including all COGS including shipping, commissions, and marketing costs) was $1,500. The next day you had a $5,000 day but the all-in net was $2,100. See the angle here. But I cringe when I hear things like \u201cI\u2019m just going to roll in my shipping costs into to the sale price\u201d. Or \u201cI can offer a no tax sale \u2013 I just increase the price to offset the tax\u201d. Mind \u2013 blown. That\u2019s genius. I bet no one has thought of that. Oh, wait. Have you ever looked at your pricing in comparison to say, Wayfair? Other sellers on Amazon? So again, if you are really gearing to compete on top line revenue only \u2013 and feel you are losing your shirt \u2013 you probably are. Time to define how you should view your \u201ceconomic engine\u201d. Because selling simple goods and hoping to remain competitive and viable is probably not the single-solution you have been looking for.<\/p>\n

A couple things to really understand:<\/p>\n