Retail or Poker, It’s About Risk Management!
I love watching the World Series of Poker on TV. Beyond the competitive aspect it’s a great study in how people deal with risk management. These players have all honed their skills to reach that level, however there are other factors that influence the game. The intriguing part is seeing all the dynamics that go into each decision, to fold, to raise, to call or go all in. As much as they all rely on the math gut instinct plays a big part in their decisions. This sounds a lot like the everyday life of a retailer. What to buy, when to reorder and when to mark it down. All of these decisions have a direct impact on the profitability of a store. I preach the importance of having the right data at the right time to make the right decisions in managing a successful retail operation. The mantra I use is “If you can’t measure it, you can’t manage it.”
Using the right data at the right time doesn’t always yield the right result. In poker terms that’s known as a “bad beat”. In retail it’s known as one of the vagaries of business or the unpredictability of customer behavior in determining what will sell. Women’s clothing retailers have the greatest risk with the whimsical nature of fashion but all retail segments have risk factors, weather the economy and numerous other factors. This brings us to the last component of the risk management comparison of poker and retail, playing the next hand. There is no amount of data that can eliminate all the risk factors of either poker or retail. Risk aversion or as it’s called in poker playing “scared” is a bad option. The best thing you can do in poker when things are going poorly is walk away and come to play another day. In retail it’s not that simple. This last recession had dealt some “bad beats” to some of my clients. The survivors have become cautious but not defensive, prudent but not defeatist. A defensive posture permeates a business and customers can feel it. Colin Powell in his book, “It Works for Me” talks about the importance of optimism and the positive force it creates. Every retailer I know has had to face adversity at some time. The survivors meet the challenge and moved forward. In poker the losers lament and the winners say “deal the next hand”. Step back and honestly access the attitude your business conveys. Think about it, people want to feel good when their spending their money.
You can find more documents dealing with many other retail related topics on my website, www.rcalio.com.