Retail Inventory Management

Hey, if you don't have a notebook for this week's podcast, you are definitely going to want to grab one because joining me today is. I don't even know what his official title is anymore. I'm just going to call him the Godfather of Retail. Joining me is Paul erickson with management 1.

Many of you have heard him speak.

At the summit or in our membership.

Group at the Boutique Hub, but he.

Literally is an industry icon when it comes to understanding and managing your inventory. He's a great storyteller. You will not be bored with numbers, I promise, but you, you will learn a ton. Not only is Paul a great guy, super smart, but incredibly funny. One thing I appreciate in all of my conversations with Paul is the actual real time data that I learn about what's happening in retail right now.

Because one of the coolest features about.

Management One and I'm so thankful for our partnership with them so that we can learn this, is they gather real time data from the point of sales of all the retailers they work with around the world. And so they have instant access to what's working right now, what's selling right now, whether it's brand size, price point, trend, you name it. They have such a great bird's eye view at actual sales in retail. So Paul brings all of that and then some to the table today. And also talking about post pandemic life and what's happening to retail in our world today. And newsflash, what an opportunity we have in front of us today. Get ready to meet my friend Paul Erickson. I know you're going to love this and it's just the beginning, you guys, because he'll also be joining us this year at the Boutique Summit. I can't wait for you to meet him. Get ready for a page and notebook full of notes.

You're gonna love it.

Enjoy. Guys. Let's talk about your business strategy and the juicy details of what actually works. From mainstream fashion to fashion on Main street and the entire ecosystem behind it. How do we scale your company and do it with the balance and the happiness that we all seek? Let's hear from those insiders, experts and strategists that actually make it happen. I'm your host, Ashley Alderson from the Boutique Hub and I can't wait to chat.

Hey guys, welcome back to the podcast. I think you guys are in for a real treat today because this is going to be a squirrel session that is probably going to result in a notebook full of notes. So I'm just warning you guys now, I Don't even know how to introduce our next guest. Gosh. Paul erickson of management 1. I think we should just call you the Godfather. Like the Godfather, the grandfather, the guru, something with a G around.

I am totally in favor of that. You can call me Godfather or Godfather 2. Equally good movies, I might add. Just don't call me Godfather 3, which was the worst movie of all time.

Noted. Oh, man. Well, it is always so good to see you and for anyone who has not had the opportunity to meet you or to see you yet. You've done a number of collaborations with us inside of the Hub and you've spoken at the Boutique Summit. You'll be back at the Boutique Summit this year, but you're really just a beacon in our industry of retail knowledge, as is Management One. And we're so thankful for our collaborations with you because while we talk a lot about the art side of retail and we love marketing and fashion and community and all those things, none of it works unless your numbers are right. You just have a really expensive hobby, unfortunately. So this is a much needed conversation. Ongoing.

Yes, I would agree. I would just say this to get started. I just discovered everyone, that Ashley is living in my hometown. I did not know that until about 30 or 20 minutes ago that she lives in La Crosse, Wisconsin, which is the birthplace. And I don't know if Ashley, you know this, but if you go down to Riverside park and down to the end of Riverside park, there actually is a shrine devoted to me. I don't know if that's. If you're aware of that at all, but it's. I'm kidding. I'm kidding, totally kidding. So I am really, really excited about coming out. I'm just excited about getting outside. Let's start there after. We're all been, you know, stuck in our homes for the last 12 months. But I have to tell you, I'm really excited about the. About the summit coming up in August. I'm very excited and I want to thank you for allowing me to give a little presentation. I think it's going to be a fun presentation. I want to tie it in a little bit to what's been happening in retail and how I think the pandemic has changed retail going forward from there's. I think there's pre pandemic retail and post pandemic retail. And so we're going to look at that and actually look at how. I think in some ways the pandemic has taught us to look at a different suite of metrics on how we should be determining how profitable our business is.

Yeah, I can't wait to get into that conversation and just really like down and dirty to the numbers and what people need to know about in order to remain profitable going forward. I've got to like give you a bit of a jab though, because I think about pre pandemic retail and post pandemic retail. And I remember a couple of years ago I kind of felt like an odd man out standing on your stage one time talking about E commerce and social selling and all these things that I saw trending in retail. And I think I was met with deer in the headlights a few times. No, that is not where retail is going.

Well, I think the pandemic has sped up all trends that had started pre pandemic. Everything has been accelerated right now and that includes E commerce and just, you know, it's such an opportunity. This is what I believe in my heart. The retail community, particularly the retail community within Boutique hub, is staring at an unprecedented opportunity to grow their business as we leave the pandemic. We've talked about this, Ashley, as you know, many times about all the signs are there that the recovery is going to be very, very fast and quick. I was watching actually the news this morning on TV and they're now estimating that we're going to have 8% growth in GDP in the United States this year. That's an unprecedented amount of growth. I think the only time we've had that kind of growth was just after World War II. We have 20,000 less stores. Retailers have closed or closed doors through chapter seven or chapter 11 and reorganization. So there's going to be less places for the retailer to go and buy from. And that's going to have a positive impact, not just for E commerce, but also I think for brick and mortar. Because the one thing that I think we all crave right now is human connection. After being home for so long and not being able to get out, the ability for us to go out into stores and buy and reconnect with our customers I think is going to be everything going forward. So, you know, one of the presentations I want to do in August is I want to talk about what we need to look at going forward. What are some of those really important metrics? We did a. I know I talk all the time. I'm just like this. But we actually at management one, we started looking at the failures during the pandemic. And I think a lot of people think that retail failure is centered around department stores. Retail failure is centered around chains. That were in shopping centers, the traditional closed, you know, four anchored apartments, shopping centers, malls. And that's all true. But when we looked at it, we found that there was one general rule of stores that failed. And that's where stores that had too much debt and those stores that were overly levered, that could be national chains or independent retailers, and that generally was around the fact that they had poor inventory controls or in the case of a lot of larger operations, that they had been bought out by private equity firms years earlier and they had literally taken all the assets out of the stores and let them dry with too much debt. And any kind of downturn in sales just crushed them. So I think the lesson is going forward for everybody that's listening to this interview is cash flow is king. It's everything going forward. All your metrics you look at in your business need to revolve around cash flow. And that may seem like something really, really obvious, but in retail, it's not that obvious because many times a retailer, a boutique owner, can actually show a profit at the end of the year, but have no cash in their checking account. And they actually have to borrow money to pay taxes on the profit, which is actually sitting in inventory that they haven't sold. And that has to come to an end.

Man, I appreciate you sharing that message so much. I feel like one of the things, as you mentioned, that kind of started to unfold during the pandemic because of the supply chain issues early on as this unfolded was all of a sudden we couldn't get our hands on inventory the way that we were used to doing so. And it kind of exposed, I would call it like this hamster wheel, compulsive shopping addiction that I think a lot of retailers fall trap to. And they're sitting on all of this unsold inventory but don't know how to move it. It's just they're used to just carrying this huge load. And so now I feel like businesses are coming out in such a much leaner fashion and they can do more with less. Are you guys seeing that same trend?

Absolutely. It even surprised us, to be honest with you. And we have been the preachers of more with less. Exactly what you said, Ashley. But it actually even surprised us at how well our client base did with so much less inventory. They were actually in many cases doing as much business during the pandemic as pre pandemic with a fraction of the inventory. And it comes down to this. I think for fashion stores, it's really not how much inventory you have it's how much fresh inventory you have. And I think that one of the, one of the things that we, that we've preached pre pandemic that is even more important now that we're leaving COVID 19 and getting back to more of a normalcy is that we every, every boutique hub member that we talked to today, we talk about one thing and one thing only. How much do you think you can grow your business in 20, 21 and over the next 12 months? Because this is an unparalleled, as I said, an unprecedented time for growth. But more importantly than that, we're going to grow the business by doing something that's very, very important. We have to understand that the inventory that they carry is hyper perishable. You've only got about eight to nine to 10 weeks at most to sell their inventory. You have to plan your inventories based on a very short time frame that get it in and get it out quickly. And if it's not selling, you mark it down right away. You don't worry about again post pandemic retail, don't worry about profits, worry about cash. So too many retailers I think in the past when they make a mistake on inventory, they think well okay, I'll mark it down a little bit and you know, because I still want to make money and I don't want to lose money right away and my accountant told me that if I mark things down I'm losing money so I don't want to do that. And that is the attitude that has to change going forward because everything is about getting new product in every eight, nine, ten weeks. And if it's not selling, mark it down but always flow in new. So the secret sauce I think going forward don't carry so much but make sure you have new coming in all the time in but it's maybe smaller quantities. Never get caught with sort of your pants down because if you're only caring about an 8, 9, 10 week supply, you're never really going to ever get hurt. You're not going to get hurt by a business downturn, you're not going to get hurt by mistakes. In fact, mistakes are important for, for any retailer to do. I think if you're not making mistakes, you're not really pushing your customer and you strong enough to really grow your business. But when you do make a mistake, I think the key is learn from it. I've often called Markdown's tuition that you pay on the education of your customer. So pay the tuition and learn. We have a client in New York. It's never an interview with me. It's just me pontificating. We have a client in New York that literally will not allow his buyers. They have 40 stores, and he will not allow his buyers to take a markdown until they do a written report and to tell him why they need to take the markdown. What's the markdown? What. What kind of markdown do we need to take to get our cash back quickly? He's not worried about margin. He's worried about cash flow. I want my money back quickly. And then what did we learn and how and so that we will not make that mistake again. I think that's a really healthy way to look at markdowns and mistake in a fashion business, because the markdowns aren't the problem. It's how you handle the markdowns that's the problem.

Yeah, how? Like, if you have kind of a rule of thumb, if someone's listening, and go, okay, what sort of parameter should I be looking for when it comes to taking those markdowns?

What.

What would you say is the most common?

Okay, let's see. I could go on, on this for. For a little bit. So I'll try to keep it brief. There's two things that I really want to. That I think are important relative to that. Anytime you can present a markdown by telling the consumer or your customer how much they're saving as opposed to how much they're spending, that is a positive psychological way to mark down. So in other words, instead of saying it's, you know, $50, instead of saying it's 50% off or 25% off, say save $25 or save $50. So that's a positive. Number two, don't try to move away from percentage off. Don't. Don't mark things down. If you look at the packaged goods industry like, you know, pressed toothpaste and Diet Coke, in the package goods industry, when they run a promotion, they never do percentage off because they know the pitfalls, which our industry still hasn't really accepted yet. The pitfalls of going percentage off. And there's two. Number one, when you do a percentage off markdown on your merchandise, you're forcing your customer to make a mathematical calculation. And we all stink at math to begin with. And number two is you are. You're actually doing something very dangerous to your business with percentage off. And I talk about this in my. In my seminars over the years in that I consider percentage off a. An addiction similar to alcoholism or crack cocaine or heroin. And people look at me. They go, really? It's that. I go, yeah. When you think about it, it is In December of 2019, there was a study done, and they polled women in shopping centers Pre pandemic in 2019 and December, and they asked them what would the percentage off need to be to entice you to go into a store that you normally did not shop. Their answer was 40%. So consequently, 20, 25% doesn't mean anything. And it is the same as an addiction because. And I've only been told this, Ashley, so I don't know, but I've been told that the first hit of whatever that is, you know, heroin, whatever it is, the first hit, is the best. And that addictive people are always chasing that first hit. And so they had more, they need more, and they need more, and they need more. That's why 20% off doesn't work anymore, because they need more than that. Now it's 30 or 40. So try to stay away from percentage off as best you can. I am a big, big proponent of coupons. I think sending out a coupon in the mail, if you really want to get people to come in, and is a great way. And it's been actually studied in neuroeconomics. You know, my old job in neuroeconomics was that that actually when you. When. When. When someone receives a coupon from a store that they shop in, that actually increases the dopamine and oxytocin chemical in their brain, which means they feel good. They actually. This makes. This is. This is something really special for me. And the rule with coupons is simply no restrictions and never make the sa. The coupon. If you send out a coupon of $50, make sure you never have the minimum purchase more than double the. Now, the most effective you could do is make it as good as cash. A lot of retailers are afraid of that because they're afraid that if you send out a $50 coupon and it's just like cash, customer will come in and buy a $50 item. They walk out, you don't get anything. Right. That rarely happens. The reason why that really happens is people are embarrassed to do that now. Not everybody. There are some people that will take advantage of you. And. And here's a flash. There's actually people that come in your store that will actually steal stuff. But, you know, but that's only about 1%, and it's about the same 1% that would actually have the chutzpah to come in with a $50 coupon and walk out with $50 worth of merchandise and not pay anything. Most people wouldn't do that. It's the same thing in returns too, by the way. People don't like to return things. That's the other misconception in retail is that, you know, if you have a liberal return policy, people take advantage of you. Some people will, but very few will. Most people look at returns as kind of a sign of failure. And quite frankly, the longer, if one of your customers buys something and if you make that return policy that they have to, if they're going to bring it back, bring it back in a week, guess what? If they're going to bring it back, guess what they're going to do? They're going to bring it back in a week because you've just set a deadline for them to bring that item back. But if you leave that deadline more open ended, well than it sits there for maybe two weeks or three weeks or four weeks. And in psychology it says that the longer you hold onto something that's in your closet, the less likely it is you'll ever return it. And so actually liberal return policies has been shown to actually reduce the returns, not increase returns.

Yeah, you're preaching my language. Zappos actually did a study on that and it tied right in with all of the customer service policies and proved the same thing. So I completely agree. All you're risking is an upset customer.

Right.

And a bad experience for someone.

That's exactly right. Zappos is a great example, by the way. I think Zappos built their reputation. I never thought you could sell shoes online. Let's start there. You know, I'm such a smart guy. I was going, well, I can see you could buy a book, right? But I mean, you know, a shoe, I mean, I got to try them on how who would buy shoes online? It's insane, right? Well, Zappos came out and I think Zappos success had a lot to do with the fact that they made it impossible for you to make a mistake. And that's the other thing. People want to shop. This all gets back to human psychology again. People want to shop where they, they feel like they won't be able to make a mistake. They want, they want, they want guarantees and they want liberal return policies. So Zappos, when you bought shoes or boots from Zappos, they put the box right with it that you can easily return it if it doesn't work out. So it's super, super easy. And they built their brand on the fact that you can't Make a mistake shopping with them. And I think we all should learn from that. By the way, you know, it's a little bit of sometimes, you know, Mark Twain said, here we go. Mark Twain said, when you find yourself on the majority, you need to pause and rethink. And so sometimes you really need to be successful. Now, going forward is, let's rethink everything. Are we doing everything really the right way, or are we just doing it the way the common narrative says? Because the common narrative sometimes is, this is a hard business. Common narrative isn't always right. And that's. And that's the one thing that I'm so proud of of our team at management. One, just as a blatant plug right now, is that, you know, our group of consultants, we try to make all our clients think outside the box. It's about controlling their inventory. It's about putting them, you know, on a plan around budgeting their purchases, when to mark down how much to bring in, how are we going to grow them, how are we going to grow the sales? And how are we going to grow the sales around better inventory management? Because we have found that to really grow your business, you can hire someone to help you with social media and you can hire some ad company to help you with advertising and all that. But sometimes it reminds me of. And I'm an old guy, so I remember when, when GM came out with this ad call this no longer they had Oldsmobiles, and they said, you know, we're not selling Oldsmobiles. And so they came out of that and they said, it's no longer your father's Oldsmobile. So people went to the. Went to the showroom and it still was their father's Oldsmobile. Actually, it didn't really help him sell it at all. So actually how. The real key for your membership, I believe to really grow their business to make payable something of the past, to really build financial security, to really make something that they can feel proud of, that they've. That. That they can really grow into something that's special. I think it has to be about how they handle their inventory because it's again, that we want them to come in the store and they don't want to see the same old stuff over and over again. I know I'm talking too much. I apologize. So this is my.

No, I. You're feeding right into my hand because I knew we were going to squirrel and I want to go down this path because I think there's a lot of things that are often overlooked. But I want to just really quick jump back to something you said a couple minutes ago about coupons because I think that we need to learn from the past. And I love what you said about Mark Twain. And if you're in the majority, what was it?

You need to stop, pause and rethink.

Right, Pause and rethink. So I think about this in terms of marketing as I'm hearing you speak and about inventory management and that idea of coupons. Social media is not the be all, end all anymore. I mean, everyone is getting throttled these days in the algorithm. So go back to standard mail. Send a postcard like when I. Paul, I'm sure you get these in the mail all the time. You know those Victoria's Secret coupons that come in the mail?

Yes, yes, I know about those. Ashley, I don't know where you're going with this, but yes.

Well, every woman rips those out. She puts it in her purse and she's not gonna let go of it. And it's a coupon for a free pair of underwear or free whatever it is. And I just think that's such a tried and true strategy that absolutely works. It's going to bring you in, you're going to buy more, they're going to upsell you, you're going to have an experience and it doesn't matter if you're a brick and mortar store or online, equally as effective. So I just want to tie that into marketing as well. Don't just stick on the basic three social media channels, but expand it to what has worked in the past as well. And I think you're going to find success. But mentioning that, I want to jump into kind of where you were headed. And I think so many business owners get, you know, they build the plane as they fly it, so to speak. You get in and you find your way to grow, you find your niche, you start to go down a path but then all of a sudden you realize you don't have control of your inventory. So if you could say there's some just basics that you feel like are so often overlooked no matter what the size of the business is. I'm not even talking about brand new businesses, but even established growing businesses, where should they start to get a better handle on?

Great question. This is actually going to be part of the topic that I want to talk about in August in Atlanta at the summit. But I think we look at in the fashion business margin too much and there are accountants out there right now that are fainting as I'm saying this But I think that, you know, if you think about this and everybody that's listening to this interview, when you go to a trade show, we're not. When we talk to other retailers, we're not talking margin to other retailers. We're talking sell through. In other words, sell through is the ultimate metric in our business because quite frankly, margin doesn't mean anything without sell through. And so, you know, so when you talk, you say, well, what are you selling? Oh, I just got in Vendor X. I'll tell you. I think I sold 80% of it the first week. No one is saying, I just got Inventor X and I sold three pieces at 66% maintain markup. Nobody says that. It's all about sell through. And so the one thing that everybody needs to understand is the metric that they need to look at when they look at their vendors, when they look at their categories, when they look at their store in general, they look at what did you sell last week and how much inventory did you have to produce those sales? You look at the investment that you made in inventory and is that the right amount to be producing this amount of sales? Is it too little, is it too much or is it just right? It's like Goldilocks in the porridge. Is that porridge too hot or too cold or just right? And that's what you look at. My favorite story is, was years ago we got a lead in Australia and he had these surf shops. The guy had like 10 surf shops. And we had one of our, one of our analysts ask for, I said, get the data and let's look at his data. Because he contacted us and he was complaining about business and business was down and his cash flow wasn't good, etc. And so he sent us his entire data. It was like this thick of data, right? It was all maintained markup, gross profit percentages, and they were all like 47%, 49%, 52%. And looked at our affiliate and I said, this tells us nothing. This tells us absolutely nothing. We can't tell anything about this business based on margin. What we need to see is, does he have too much inventory? Does he have too little inventory? Maybe has too much in certain areas and too little in other areas and he has bad balance. But there's something going on here that have nothing to do with his gross profit. And that, I think, Ashley, is the new metric. It's part of the new suite of metrics going forward. Post pandemic is start to look at the investment you've had in inventory and how Fast you sell it.

That's so powerful. All I can think about is the western store in my town growing up that had wranglers from like 1947 still on the shelf, you know, and like the oldest boots you've ever seen that were actually turning crusty. But I'm sure they had great margin but horrible sell through, right? And just stale inventory. I'm curious though, as I'm hearing you say this, my mind is going to something that I think is an issue with like a newer online only boutique brick and mortars. I don't see this as a problem. But new online boutiques, this is a problem and that is their initial markup is just way too low. They're selling just above wholesale to the point where they can't be taking, even if they had a great sell through, they can't be taking enough home to actually pay the bills at the end of the day. So where's the happy medium with your, your initial markup so that you can get enough sell through to your market?

Well, first of all, there is a, there is a formula. We don't have it on our website yet, but we're going to be putting it on our website. But if anybody wants to contact me, I can give them that formula. It's what is my paulanagement1.com Anyway, we'll link it. There is a formula they can use and the formula is essentially looking at three data points. The first is what are my expenses as a percent of my sales? So in other words, typically for I think boutique hub members, expenses run about 40% of sales. Then what is my markdowns as a percent of sales? What's my allowable markdowns? You could use a general number like 20%. That's an easy number to use, very common. And then the third, these are all as a percent of your sales. And then the third one is what how much money do I, what's my goal in terms of net profit? Net profit is my goal in that gross profit. What's that goal? 5%, 10%, 15%. If you have those three percentages, we can send them a formula and they put it in the formula easy. And within 20 seconds they'll know that they must get at least this much initial markup. They'll pay for the overhead to pay for the markdowns and still have left over the profit at the end. And that's an easy form for. That's the first place I think actually they start is are we even taking enough markup to get to where we want to be. That would be number one. The second thing is that we. Most retailers, it's. It's true in E commerce, it's true in brick and mortar, are not really taking enough initial markup. And they don't think they can because they think everybody is shopping prices. And the point is that there are some vendors you buy that have MSRP prices that they can go online and find them fine. You can't really budge there. But the majority of most members, I think within boutique up the inventory they carry, they have flexibility on pricing and the pricing. And I'm not talking about taking an item that you had priced at $25 and marking at $100. I'm talking about small things. My favorite story on that, and I think, I think, Ashley, you've heard me tell the story before, but it's important is Delta Airlines, you and I live in the same part of the country, so you and I fly Delta Airlines all the time. And pre pandemic, I was sickening on plane every three times a month at least. And I remember one year I was going through my receipts and for. For tax purposes and all the tickets I bought in Delta and I noticed something in the prices that they'd never seen before. And that was 20 cents. Every ticket I bought, 20 cents, $382.20, $424.20. And I go, well, I never even knew that. That's interesting. Did that affect me at all? No. In fact, I started thinking about it. I thought, I'll bet you there wasn't a human being on planet earth that bought a ticket on Delta Airlines last year that didn't buy one, because, you know, I would have bought it, but at 20 cents. So they didn't lose one sale. And I'll bet you that 20 cents is meaningful. If I look up how many tickets they sold, they sold 180 million tickets that year. 20 cents on each one of those tickets is $36 million. So they put $36 million on their bottom line for nothing, for just putting 20 cents on the ticket. Consequently, that's the way we need to think. It's little things. So everybody needs to understand psychological pricing. The customer always rounds down the reason why 1999 is not $20 to customers. Despite the fact we think we know it's $20. Psychologically, we round out it's not 20, it's $19 and 99 cents. That is something that is. And you know, this works because everybody does it. So it clearly does work. And the other thing too, that I would urge everybody that's listening to this start doing right away. When you're at a trade show, when you go to Atlanta or to Magic or wherever you go, and you sit down and you look at a new line and you see something that you really like and you really think, so let's say you and I actually are at a trade show. We're sitting down, we're looking at a new. A new vendor we've never used before in the store. And they pull out. They pull out this widget here, and they say, and I look at the widget and I pan it to you, and I go, we could sell that a great impulse item. We'll put it right by the counter. When people check out, though, this is a great item, I think so we should buy it. What's the next thing we do? We ask the salesman how much it is, Right? So we say, how much is it? That's where we go wrong. Because what we need to do before we ask how much it is, is decide. You and I decide what we can sell it for. And so you and I to say, $49. And then. And Ashley, you say, well, Paul, 49, 49, 50. Let's add the 50 cents. That's not going to change anything, right? So we go, sold, 49.50. Now we ask the salesman, how much is it? He says, $9. If we would have known the $9, you know, in your heart of hearts, you would have. We would have come up with 29, 50 and thought, wow, we're really getting a good markup on there. Right. And what that is, is that is a gravitational pull that pulls retailers in on their markup around the cost, when really we need to look at the intrinsic retail value of that item. The customer has no idea what we paid for it. None. In fact, in every survey done, the customer thinks we're getting 80% markup. I say, every now and then, let's prove them. Right?

Yeah. Oh, my gosh. False. I had this call with a customer yesterday, and this is playing right into your hand. She brick and mortar, higher price point pieces. And she said she brought in some fast fashion from la, which was, you know, typically much below her price point. And she thought, well, I got a good deal, so I'm just going to pass this on to my customers. And so she, you know, marked this up, you know, maybe two, three times, nothing. But it was maybe a $40 shirt versus all of her $100 shirts. So what did her customers do when they came in the store? They Held up this shirt and they said, what's wrong with this? What's wrong with it? And they initially had this tarnished view of her brand and her products because of this. So, I mean, it just all goes back to the value that you're assigning with your products and how you branded yourself in the eyes of your customers.

That's exactly right. That's exactly right. You know, we think we can't get more markup. That's the one area that retailers think, well, the markup is pretty much fixed. No, it's not. You can get more market and think little, too. I think, Ashley, that's the other thing. Don't think a lot. Don't ever. Can I tell another story? I tell the story all the time because it's a true story. All my stories are true. But three years ago, my oldest daughter got married in Northern Ireland. And. And by the way, every mom's out there. Whatever you do, don't let your daughter marry an Irishman because if. Because you have to. As the father of the bride. I had to pay for the bar bill, so that was expensive. So we go over. The whole family flies over to Northern Ireland. We're in Belfast. And my oldest son is an idiot. Let's start with the fact that he is an idiot. And he's. He's in the wedding and he forgets the. What? He forgets his shirt tie combination because everybody in the wedding, they weren't wearing tuxes. They were wearing a blue. A nice, like, nice bright blue suit and then a shirt tie. And so I. I took him in Belfast to a men's store, and we pick out a white shirt. And then we pick out a nice blue tie. And as the salesman's ringing it up, I said, I didn't even look at the price. And I said, by the way, how much is the tie? And the salesman looks at me and he looks and he goes, 18 pounds. Now we're in Northern Ireland, so it's part of the UK, so it's in pounds. Goes 18 pounds. And I go, well, that's a stupid price. And of course, he looks at me like, oh, here we go. The ugly American, right? Here we go. He's got to be complaining about the price. And I. And he looked at me like, I'm going to be. I think it's too expensive. I go, it's too low. Why would you price it £18? Am I going to go around Belfast shopping other places for blue ties to see if I can get that same one for 17? No, I'm buying it at 18, I would have bought it at 19, you know, and that's, and that's how I think all the members within Boutika need to understand there are things that you can get more markup if you just think about it. What are the impulse items? What are the things people are not going to shop around around for? You know, if you're, if you're, you're selling brand name expensive goods, yeah, they can go online and they'll find that easily. And so you do have to keep your pricing in line with what other people price. But there's so much you carry that you can get more market if you just think about it and it will not affect your sales and will not affect your image. They won't even know it.

I love that. Oh, that's so powerful. Because we, and especially I'll just say women in this industry, like we have this whole internal dialogue that gets really confused around worth value, how we are really like living our mission and helping other people who are our customers. We feel bad for charging too much. Like it's this whole money mindset thing that really we have to unravel first to really move into this process of getting the right market.

What they should feel bad about is not making enough profit because many, many independent retailers have mortgages on their house. They are, this is, this is their life's ambition and everything they should be doing is to ensure its success. I had a client years ago here in Minnesota and I remember he never would follow the plan because he didn't have good discipline when he went into trade shows. And so we'd always, if we said buy 10,000, he'd come back, we tabulate the orders and he bought 18,000. So it wasn't just over a little bit. I, I mean he was just, he really did not have discipline at market and I got really mad at him. And one day I was in a store and I was in his office and his two little kids and his wife come running in and they jumped on daddy's lap and they go, daddy, Daddy, Daddy. And he hugs him and he was a great guy. His name was Jim. Great guy, hugs him. And I met his wife and all that and then they left. And I go, you know what, Jim? You are, because of a lack of discipline, you are sacrificing those two little kids. College education. That year I added up over $100,000 of unneeded, unwanted and unplanned purchases in inventory that ended up on the markdown racks that never could sell at Profit and that would have been at that time, this was years ago, A tuition of at least two to three years in a really good college and you in one year. He did that because he just wasn't. He didn't care or he was lazy or he didn't have discipline. I don't know, Ashley, what it was. I am not a psych psychiatrist, but the point is, is that they have an obligation. I think you do everything you can to assure that this business is not only just successful, but you achieve your potential. That's the one thing I think that when we talk to boutique owners lately, we talk about more than anything, what is your potential? Are you going to live up? You did $300,000 in sales last year. I'm making up a number. And we look at some and we look at retailers and particularly boutique members that we know after looking at their data and how they handle inventory and what they carry, because a lot of them don't carry enough, is that their potential is considerably higher than that. And I'm not talking about $300,000 store to go to 3, 330. I'm talking about businesses that can go from 300 to 500 in 12 months. The beautiful thing about retail is that a problem on Monday can get solved on Tuesday. There are very few other businesses where you can, you can tack so quickly and make such a difference in such a short period of time like you can in retail. Wow.

Let's talk about that market experience. Because when people ask me about management one and I start to explain open to buy and merchandise planning, sometimes that feels overwhelming to some that have not really sat down and made a disciplined plan to go to market. Talk to me kind of in general what those terms mean and how they work. But I think even more specifically the fact that you guys have real time data, I find that so intriguing because you know what's working real time in these stores all over the world. So walk me through that process.

Well, we know and we're getting better at that too, by the way, because so many of our clients, we rep sku information, we get daily sales on our client base. So we know exactly what's trending. We don't not just know what's trending as of last month, we know what's trending by category as of last night. And so that's very, very important to help shape how we take these plans, these forecasts to our client base. So that's a very, very important thing that we provide and that's really getting back to Showing potential is that. Look, right now, I don't know how many boutique hub members we work with, but we work with a lot. And we can. We can tell someone to go, look, I understand that no two BTCub stores, member stores are exactly alike. I understand that. But there are certain overall trends, you know, that are happening right now in the business that we can at least share that with one of your members and say, look, right now we see skirts blowing out of every one of our stores, and you don't have enough skirts. So I'm begging you to buy more skirts because we know you'll sell them. And that's the kind of thing, you know, there is not a lonelier profession than being a retailer because you are. You have. Who do you have to really talk to as an independent retailer? Actually, when you think about it, you have your spouse who may be unhappy that you ever opened this store. You have your accountant who doesn't really understand retail. You have the salespeople who will tell you whatever they want to hear as long as their line is, you're buying their line. You have your banker. He's not the woman to talk to. Think about that. You don't have. It is a lonely life. And the one thing that I think that we give our clients is that they have someone to talk to that understand the business, that can have a window to the outside world that they can't see and understand their business. And because we work month to month with our clients, so we're totally accountable to make this work, that we have to make this work. And we're there solely for when we're not selling merchandise, we're not trying to do their books. You know, we're just there to help them grow their business. And I think that's. That's a unique position that we have with all our client base.

Sarah always says it's an unemotional, unattached to look at your numbers from someone who is in it to win it with you. So I think that's so powerful and as evidenced by those of you who are listening that are in the hub. You know, I'll use Mary as an example because we see Mary so active in the hub, but, you know, our members have each other to talk to, but they need somebody one on one that knows the ins and outs and the numbers on a monthly basis. And so I think that relationship, you know, Mary's a shoulder for so many of them in moments of need and in moments of celebration. And all of your affiliates that we work with have Been the same. So that's a very valued relationship for us. We appreciate it.

Yes. Yeah, we're very proud of it. We're very proud of our affiliates. Mary has done, just speaking of Mary, she's done an amazing job. She's really, she's really an amazing person. When I first met Mary I, I thought my God, this woman has got more drive and more, what would be the word, chutzpah and to go out and really get it done. I became, I became absolutely like one of her biggest fans and she has proven to me and to everyone imaginable one that that was true. She's really, she's been amazing and particularly with the boutique up, she's done a great job.

Yeah, I appreciate that. Gosh. Well, Paul, I feel like we've gone down a lot of rabbit holes today but such valuable information. I told you guys that we're listening that you're going to come away from all these rabbit holes with a notebook full of notes which I'm sure that you have. And this is just the beginning because we're going to get to spend time with you in Atlanta at the Boutique Summit. For those of us who can go in person or those of you that are going to watch online with our digital ticket as well, Paul will link up again how to contact you in the show notes. But I do have one last question. I feel like I do get this question a lot just about working with management one in general and if you have some baseline like what types of stuff stores you guys most often work with or what does that process look like if someone is interested in learning more?

Well, we have 1200 clients around the globe. They have certain things in common. Almost not 100% but almost all of them are independent retailers, family owned businesses. We have clients as large as. We're very proud that the Las Vegas Raiders NFL team is now of a couple client of ours. We work with a lot of college bookstores like University of Wisconsin, Ashley. All right. And, and we have Oregon Duck Shops and we have, you know, Alabama, Auburn, I could go down the list. But most of our clients are single store operations. Most of our clients, I would say over half of our client base has one store. And, and, and typically that client a profile is that they do anywhere where we have clients that do 150 to $200,000 a year in sales that are boutique of members. Now that's only temporary because we won't let that stand for very long. We never open up a client that does any whatever their sales are we said we're going to grow your business. That's the file we make. But particularly if you're doing 150 to 200,000, that's got to end. And we become more aggressive and show them how to grow their sales quickly. But yes, we work with stores that small. We have a special boutique up rate for small stores that we're very proud of up to. We have clients, I think our largest larger clients. We have clients that do maybe $300 million in sales so that, that those are rare. Much, much more Common is the 200, $300,000 a year client that boutique members. And our fees are affordable. Our fees are affordable. We're not expensive. And the monthly fees always end in $0.20 too. Just a little bit.

Yes, Delta, there's 36 million at the end of the year. Well Paul, one last final question. We've covered so many things today, so I'm just curious, you know, as you think about post pandemic life and the trends that you're seeing in 2021, which is massive growth for a lot of retailers, if there's one last parting piece of advice that you'd like to share with everyone listening today that you feel most strongly about taking action on, what would that be?

Well, there are, there are many things but if I had to pick one, I think that this is the year that is the like an opportunity I've never seen and I've been doing this for over 40 years.