where will the profits be?

Copyright 2011 Dennis S. Vogel All rights reserved.
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I desperately need to do what you and Clayton M. Christensen advise - get to where profits will be.

I have a clothing store and I don't know how I could apply this concept to retailing in small stores.


Subject: Retail Innovators' Solution Part 1
In reply to: "where will the profits be?"

Desperately needing a better situation & knowing you need to change can work in your favor. Some people need to be pushed out of their comfort zones, so they'll search for a better situation they've never been in before.

Some people in their comfort zones want/expect different results, yet they don't do anything different enough to get a satisfactory difference.

Let's start with this hypothetical premise - You have limited money to buy inventory. You have a small sales floor & little display space. You can't afford to pay for more storage space, so you can't afford to make big purchases to get volume discounts. For financial efficiency, you can buy products from only 1 of 2 suppliers because your store can't accommodate a big variety of product lines.

Some suppliers require minimum quantity orders or they charge more for shipping smaller quantities.

Based on styles, prices & shipping schedules, you narrow your list of potential suppliers to 2. After you check each of them, you discover fabrics used by one of them seem unusual.

Add Your Trade Skill & Consumer Input
Based on what you know & what you learn from research, suppliers & customers, discover what consumers will be dissatisfied with in the near future.
What will be less than they expect? - OR -
Which product features may be more than they want/expect?
Unwanted features will probably just add more expense &/or complexity without significantly increasing benefits some users get.

Here are a few common issues in product design & manufacturing, I've applied them to clothing -
Superior quality & durability of materials & stitching can be good in theory. What happens after clothing is stained, somewhat worn out &/or out of style? Where will that unwanted clothing go?

Durable materials may last for a long time in landfills.

That clothing could be donated or handed down to somebody else. Eventually, clothing will be disposed of & probably end up in landfills/dumps. Piles of that material that didn't get worn down may occupy a lot of space. When clothing isn't used, it probably won't be degraded much with wear & tear (friction).

Let's figure a fabric won't break down unless friction reduces it down to lint. Another issue is ability to recycle the fabric when the clothes are discarded so the materials aren't wasted & land isn't overfilled.

A lack of landfill acreage is getting worse.

Cheap materials may be trashed even sooner & occupy landfill space. (Example - what big box stores offer. Always Low Quality. Always.)

I don't know how relevant my example is/will be to consumers who might buy from you. It depends who they are, what their priorities are & what they can afford.

Manufacturing products often causes pollution (It's a reason manufacturers & big box stores have things produced in 3rd world countries that are more lax with environmental laws. Lower labor cost is only one issue.).

Does the mining or harvesting of raw materials (for products you stock) endanger people or animals? Note: People tend to like cotton. Planting & harvesting, then hauling cotton to a factory requires using fuel (usually gasoline or diesel). Fuel combustion produces exhaust (pollution).

Recycling products requires some source of energy to reshape the materials. That source of energy is apt to have a carbon footprint (total set of greenhouse gas emissions).

Some byproducts are probably produced when things are recycled. Where are the byproducts put? Are byproducts used to make other things?

After I give this issue more thought, I can help you more.

So, you can start with Part 1 & check back for part 2.

Thank you for using my blog. Please let me know if I should clarify anything.

Copyright 2011 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/

Subject: where will the profits be?

I think I have most of what I need. I feel like I'm drowning in some resources, but I'm parched regarding others.

If I knew how to apply this skate to where profits will be idea, I'd know what to keep or liquidate and what else to obtain. I can't afford to load up on irrelevant (to where future profits will be) resources.

I think I know enough about retailing & marketing to succeed, except how and wbere to apply.

Thank you for your help.

Subject: Retail Innovators' Solution Part 2 - Side Effects & "Adverse Reactions"

Thank you for responding to my other message. Without knowing more about what the products are, I can't know where the profits will be, except in a very general way.

What do you want help with - current inventory or future products? Who is in the market niche? What do they have now? What (which benefits) do they want/expect? What are the alternatives (substitutes) they can choose?

At times, I may go off on tangents (or it seems I do). I feel it's important to consider a variety of factors, do some testing & continue what's optimal.

I'm continuing on with my reply to your 1st message in this thread -
> I desperately need to do ...

How critical is your situation?

2 definitions of desperate from TheFreeDictionary are (I added the glass analogy) -
Nearly hopeless; critical (Glass Not Empty & Not Full)
Having lost all hope; despairing. (Glass Empty)

Here's another related analogy -
Just Get More Water (or Something) While You Can

A glass isn't half empty or half full, it's just holding less than its capacity, which indicates something is missing. Knowing what to replace it with - & how to do it - is important. In a desperate situation, it's important to determine what will help most & hurt least.

I'm glad you realize this - "I'd know what to keep or liquidate and what else to obtain."

If your store has thrived while holding less than its capacity, maybe you have more glass than you need. Pouring more into it could make it harder go where profits.

If you're feeling ill & your symptoms are orthostatic hypotension, lethargy, nausea, paresthesia, tachycardia & hypoalbuminemia, you're probably dehydrated. If one symptom is delirium, it may seem like a doctor is speaking a foreign language or maybe the doctor is delirious.

(Side Note - Some people may be impressed by jargon, others may be offended. Other than the medical terms above, I've explained things in basic ways so I hope every reader can understand. I hope my message doesn't seem condescending.)

Some symptoms, diagnoses & cures are quite obvious to those who know how to recognize them. When diseases have similar symptoms, accurate diagnoses are harder. Treatments vary depending on patients & severity of symptoms. Overcoming the symptoms may feel comforting, but it probably won't cure the problem.

The wrong treatment may reduce symptoms, but hurt a patient more than the disease. I don't want to give you a marketing "pill" without sufficient details. I'm warning you (all readers) of possible side effects & adverse reactions.

Knowing retail & marketing is great, but testing methods, products & services is still necessary because situations change quickly, even if we don't notice. I hope you do conservative tests so you don't use too many resources on something that's not optimal.

In my medical analogy, whatever you may or may not understand, you should understand the importance of drinking enough water & getting everything else you need. (Water for your store would be anything it needs on a daily basis.)

If the diagnosis is moderate dehydration, would you want a doctor to wonder if you're half full or half empty? I'd think you'd want a doctor to give you an IV (insert an intravenous catheter/line) solution containing what you need most (not just water), after that s/he can determine if you're sufficiently hydrated. A little IV solution to start probably won't harm you & it could help.

This corresponds to conservative testing.

Medical doctors are taught "1st do no harm". Yet, too much delay can be harmful. Without more details, it's hard for me to help you apply the skating concept directly to your store.

One of the 1st things nurses & paramedics do is start an IV. There are various reasons like the ability to administer medications & as a patient becomes more dehydrated, veins constrict & inserting a needle becomes harder.

If you don't get what you need soon, it may be harder to give you what you need later.

Without a description of your situation, I don't know what the symptoms are. I hope what I'll write in Part 3 will give you what you need until you fill in some blanks. Like our need for water, I could advise drinking more water, after all, the excess will just (maybe) be excreted. Yet, too much water can cause problems too.

Thank you for using my blog. Please let me know if I should clarify anything.

Copyright 2011 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/

Subject: Retail Innovators' Solution Part 3 Get The (Hockey) PUCK Out Of There

I've added extra insights to what Clayton M. Christensen, Michael E. Raynor, Matthew Verlinden, et al have written, so some of this may seem unfamiliar.

I've developed a hypothetical situation (below) to explain a very general way to apply the "skating to where the puck is" advice.

Windermere Associates discovered a basic buying criteria hierarchy - functionality, reliability, convenience & price. Depending which products people consider buying, they may have other important criteria. A buying hierarchy could include safety, comfort, style, fit, environmentally friendly, then price.

When this buying criteria hierarchy - functionality, reliability, convenience & price - is used (consciously or subconsciously), a product has been commoditized by the time the majority of buyers has set price as the top priority/main criterion.

Innovation can put a product (that was a commodity) above price in a buying hierarchy by producing what a market niche deems to be special.

Whatever a market niche values (especially what they choose as a top priority) becomes the basis of competition. It's possible to persuade people to change their buying criteria & shift the basis of competition to hopefully delay commoditization. (It's another subject we can write about if there's enough interest.)

Any business/person, trying to promote anything based on any other values or priorities, is either a pioneer or fool.

Pioneers innovate or work with innovators to create, further develop & market what people don't want YET. They risk being too early. Example - When primitive people effectively used fire & wheels, they made significant progress. Then making progress meant inventing something very basic (by modern standards) or innovating to improve an invention.

Fire (combustion) & wheels (tires) are necessary to operate cars. Even the most advanced cave dwellers weren't ready for cars. They hadn't even driven wagons yet. So, Henry Ford would've been bankrupt if he were alive 100,000 years ago & tried to make cars.

Is this just a ridiculous idea of mine? No, so don't call it horse hockey. It's a bizarre example to help you realize & remember how Wayne Gretzky's wisdom applies to business.

Eventually, people used rolling logs, but when wheels were invented rolling logs were no longer good enough for many tasks.

Wheels were improved through experience & innovation. Making wooden wheels durable was where the rubber met the road. Making wheels tough enough for gravel paved the way for more travel.

After tires were developed, wooden wheels seemed a little flat. Wheels weren't good enough for rapid, long distance travel.

A Hypothetical Scenario -
Eventually, processes for using recycled materials to make fabrics may be more efficient & profitable. More demand for recyclable materials should reduce accumulations of waste products like plastic bottles.

As it becomes more profitable, more suppliers will offer more of these products. Then at some point, products in this category will be commoditized. After that, prices are apt to come down because of economies of scale & competitive pressures.

That kind of fabric could be a viable alternative as long as those recycling & manufacturing processes aren't significantly more expensive than producing what's currently available.

If it requires less mining & drilling (ecological threats) &/or fewer byproducts (less pollution & landfill use), people may prefer it if it's at least as comfortable & durable as what's available now.

It's best if the product's materials don't harm people, animals or the environment (Unlike products made in Communist China & sold in big box stores - Save Money. Live Better as long as you don't use big box store products made with cadmium, lead or other toxins.).

In part 1, I figured 'Based on styles, prices & shipping schedules, you narrowed your list of potential suppliers to 2.'

Now let's figure 1 of those manufacturers gets good, though preliminary, results by making fabrics from recycled trash. Consumers may be enthusiastic about this fabric & clothes made of it because the fabrics are perceived as better than others. To them, standard fabrics seem to be less than good enough.

The other hypothetical manufacturer isn't innovative at all. What it produces used to seem good enough, but more people prefer environmentally friendly products.

Now it's time for you to buy some clothing inventory. Let's figure you can afford to buy from either supplier, but not both.

Your past profits may have come from sales of standard products. Now standard products are less popular, so to sell those you have to markdown the prices.

(Hypothetically) Environmentally friendly products are more popular (fashionable) & many consumers are buying more of these. These consumers are also willing & able to pay full retail prices for these products.

In this hypothetical scenario, if you buy those environmentally friendly products & market them well, then you're on your way to where the profits are or will be.

As long as ecology is a high priority for your market niche, they may keep expecting ecological products to improve. Until most clothes are ecologically sound, people will want what they perceive to be the best. When all/most products in a category are perceived to be equal in an attribute (like ecology), consumers will put a higher priority on another attribute. They'll still expect a certain level of environmental responsibility when they evaluate products.

As long as they're satisfied with the product attributes they expect, they'll pick products according to their next priority.

Warning 1
There will always be some who disprove of innovations. Example - Athletic Clothing Made from Recycled Plastic Bottles (technorati.com).

Warning 2
Very few things work optimally at the beginning. There are many variables in experimenting (research & development) & production. Some variables are beneficial & others aren't. When good variables are improved & bad variables are excluded, products improve.

Too often, critics seem to demand immediate perfection. Some criticism is good, but many critics put down any inventors & innovators, plus their products.

Note - Criticizing potentially unsafe products is justified, even if the prices are always low.

If everybody refused to buy safe, but imperfect products, manufacturers couldn't afford to keep innovating & improving products. To succeed, manufacturers need to find somebody who wants imperfect products.

Imperfect products can still have benefits for somebody. If the benefits (in quality or quantity) outweigh a lack of those benefits, & potential product users can afford to buy those benefits, there's a market niche.

Example- Clothing prices would probably spike if 1) drought or pestilence wiped out an annual cotton crop; & 2) makers of commonly used fabrics were already using their full production capacities.

In a situation like that, if clothing made of recycled products were inexpensive; some people would either buy those kinds of clothes or not buy any new clothes (they'd be stuck with old clothes).

Critics enjoy finding what's wrong because then they feel superior. But what have those negative critics ever contributed to the world?

As plastic gets used for fabrics more often, it'll probably become better ecologically, financially & physically.

You should monitor trends carefully, so you'll know where to go get profits. When you find them, you need to take the right actions.

If Wayne Gretzky went to get a puck but did nothing with it, he wouldn't have been a star. Something people seem to forget or disregard this fact - After Wayne Gretzky got a puck; he got the PUCK out of there.

Before you go to where your puck will be, you should have a plan so you'll know what to do with the puck.

Thank you for using my blog. Please let me know if I should clarify anything.

Copyright 2011 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/