Retail or poker it’s all 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 there decisions. This sounds a lot like the everyday life of a retailer. What to buy, when to buy it, when to reorder and when to mark it down. All of these decisions have a direct implication on profit. I preach the importance of having the right data at the right time to make the right decision. My mantra is “If you can’t measure it, you can’t mange 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 the vagaries of business or the unpredictability of customer behavior. Women’s clothing retailers have the greatest risk with the whimsical nature of fashion. 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. Risk aversion or as it’s called in poker playing “scared” is a bad option. The best thing you can do in poker is walk away and come to play another day. In retail is not that simply. This 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 new book, “It works for me” talks about the importance of optimism and the positive force it creates. I’ve been affected as most small businesses have, so no one has to tell me about the tough the business climate, but I approach everyday optimistically. When I get call from a perspective client about a project my whole focus is to convey a positive upbeat attitude. Step back and honestly access the attitude your business conveys. Think about it.