A re-enforcing positive arc.

The store has really been humming along this month.

Last weekend was great and I wonder if the Winterfest didn't help. I've never said that events can't be positive -- what I try to maintain is that closing the streets is a boneheaded move, most of the time.

Events yes. Closing streets no.

So Winterfest is great, lots of people, who if they want to get away for a few hours can bop downtown.

This will be the eighth month in a row that we have beat last year, and like December it will be a significant increase. (January was hammered by weather, but we still squeaked out an increase..)

So why are sales so solid right now?

Don't laugh at the obviousness of my answer:

We are fully stocked and adequately priced.

Seems like a simple equation, except that I've spent most of my career trying to find that balance between inventory and price.

***For many years, I was so under capitalized, that I could only carry the basics.

***For many years, I had to subvert the pricing in order to get enough cash flow to pay off the debts.

***For many years, having more inventory didn't help because I didn't have enough foot traffic; I carried what my regulars wanted.

***For many years, the inventory I'm carrying either didn't exist or wasn't available to me.

***For many years, I stayed away from some inventory because I didn't think it would work for me -- new books, especially, but also board games.

***For many years, I sank money into inventory that by the time I established the line, stopped selling. (Either stopped selling altogether, or was taken away by the mass market.)

So it sounds simple to have great inventory and steady pricing, but it isn't all the easy to accomplish. Probably have to learn what to carry by experience. There is no magic formula about what to carry and in what quantities. (Except, a lot and a lot.)

The pricing is something that you have to gut out. It takes a bit a chutzpah to keep to your pricing when everyone else is being a discounter. Sometimes, you can't stick strictly the pricing or you lose all your marketshare. Still -- I think I've finally learned that marketshare or even gross sales aren't as important as profits and cashflow margins.

So -- if you are small specialty store, and you have the inventory that carries you through the ups and downs and you can ask a "retail" price, you have accomplished something.

You establish yourself as a store that is always full and interesting, and the pricing will follow. People may grumble and walk away, and you have to be willing to let them. If you are the guy who has what they want, and it's right there, a good percentage will buy. Your store becomes interesting enough to warrant the regular pricing.

Which gives you enough margin to buy more of the inventory.

If you can get there, it becomes a re-enforcing positive arc. I think they call it a virtuous cycle.


I have a great example of the virtuous cycle in the latest round of Magic. It's not a perfect example in that I do discount a little from retail -- but I don't discount anywhere near as much as most of my competitors, either locally or online.

So I got a batch of Magic in, and even though my competitors were selling boxes for just above cost (online) or very small margins (locally), I stuck to my prices. A week after they came out, I got a call from my wholesaler who said, "We can let you have three more boxes", as if they were doing me a great favor.

"I have (xx) number of boxes left," I said.

Silence on the other end. "Wow. Everyone else is sold out."

And here it is another couple of weeks later, and I'm still pretty well stocked. I've avoided the cashflow strain of having to sink more money into inventory. The inventory I have is selling slowly, maybe, but it's making money as it goes along. Extend that to the rest of the store, and you should always have enough material selling without cashflow problems.

So here I still have the inventory, I'm getting my pricing, and sales are more than adequate.

Sure, I could've have sold it out the way everyone else did, but to what purpose? Just a 10% drop in price represents 25% of profits, a 20% drop represents 50% of your profits.

You chase your tail in pursuit of sales.

It's hard to resist, especially if you're inexperienced. The customer will blackmail you, to some extent. "I can get this for (xx) online, but I'm willing to pay you (xx) extra."
Or course, the (xx) extra is still too little to make money. These might be friends and regulars telling you this.

But once that happens -- once an industry become dysfunctional, to the point where the only way you can keep your customers is to lose money, then you are better off letting those customers go. It takes guts.

If the virtuous cycle kicks in, though, you'll be rewarded in the end. A larger group of customer buying less, is safer than a smaller group buying more, no matter what the price.