Chapter 5
Know Thy Industry
In This Chapter
• Think legally
• Buying groups
• Retail associations
After you’ve selected the industry in which you want to open your store, take the time to learn more about it and the laws that regulate it. Get to know what the analysts are saying about future trends for that specific industry.
Join groups and entities that support your industry, as well as your business. Education, better negotiating power with vendors, networking, and marketing opportunities are just a few of the many benefits you can get by learning about these entities and joining them.
In this chapter, I help you learn how to research your industry and find the groups that can help you improve your business skills, as well as build effective networks.
Laws and Regulations
Numerous laws regulate the way retailers can do business and sell to their customers. Most laws you’ll have to worry about are state based, so you’ll need to contact your local clerk’s office or local enforcement agency for details. For example, if you sell wines and spirits, you need to know what you can and cannot do and protect your business against liabilities that can put you out of business.
Selling Points
A good online source for searching these laws and regulations is the U.S. Department of Labor website’s Employment law guide at www. dol.gov/compliance/guide/index.htm.
If you plan to hire people, another key body of laws that you’ll need to worry about are labor laws. These impact the amount of wages you must pay, when you must pay overtime, health and safe standards, rules on benefits you offer your employees, and so on.
Sales of tobacco products are heavily regulated in many states. If you do plan to sell tobacco products, be sure to research the laws for your state. To give you an example of one state’s rules, take a look at what retailers must do in the state of California (www.rivcoph.org/healthed/law_explain.pdf ).
As you can see from the example, you have a lot of research to do about laws and regulations that might impact the way you do business. Two good places to start are your local chamber of commerce and the National Retail Federation (www.nrf.com).
def·i·ni·tion
The National Retail Federation, the world’s largest retail trade association, represents members from all retail formats—department, specialty, discount, catalog, Internet, and independent stores, as well as chain restaurants, drug stores, and grocery stores. The Federation conducts industry research, develops education and workforce development programs, and promotes retailing as a career choice.
Future Directions
In addition to getting to know the laws and regulations that impact your business, you need to know more about the industry you chose and its future trends. While you may be bombarded with news every day, does that news focus on items crucial to the running of your business? Probably not!
You need to develop a list of sources that can help you gather information specific to your store’s industry. Here are some tasks that can help you get started in developing the information base you need:
• Research trade publications for the industry in which you plan to work and subscribe to those publications. For example, if you plan to open a golf store, the Association of Golf Merchandisers (www.agmgolf.org) provides extensive information on its website, as well as industry reports you can purchase. Also, if you are a member of the National Retail Federation, you receive e-mail updates and its Stores magazine regularly, which are incredible sources of information on trends in retail and consumer behavior.
• Join local networking groups to learn more about local business trends. I talk more about this later in this chapter.
• Buy your local business weekly newspaper or magazine, if one is published in your community. One good internet source for researching news through local business weeklies is BizJournals (www.bizjournals.com).
• Talk to customers and vendors and listen to their responses. Find out their concerns about your store, as well as similar vendors, and think about how you can respond to their needs or complaints. You’ll probably get lots of good business ideas for new items you could sell in your store or for new ways you can provide customer service to beat out your competition.
• Attend regional and national conferences sponsored by the trade associations you join. If you find the speaker particularly helpful, talk with him after the speech to thank him for the ideas. Also get contact information so you can call or e-mail the speaker at a later time. Be sure to share information about your area that you think might be relevant to his area of interest. You could build a longtime source for your network. Whenever I speak at a conference, I always have retailers approaching me after the speech, and I have kept in touch with many of them and provided them with feedback on problems and opportunities that they have.
• Check out your local library, as well as the library at a nearby college or university. Find out what resources are available for you to research your industry and its trends.
• Don’t hesitate to hire a consultant when you realize that you need help to understand a crucial issue or implement a specific plan. You can never know everything and sometimes a specialist can help you get it done faster and better.
Buying Groups
One of the best types of groups you can join is a buying group. Retailers organize as a group to buy from manufacturers. Why is this an advantage? By banding together, retailers can order in larger volume and take advantage of volume discounts.
In addition to benefiting financially, many buying groups …
• Share information, problems, and solutions regarding sales, expenses, profit, and losses.
• Trade overstocked merchandise, which frees up funds for purchasing needed merchandise.
• Meet periodically (usually quarterly) and bring in speakers of interest to the group.
• Arrange special rates for the group with retail consultants.
• Develop marketing campaigns that can be used by any member of the group. Each retailer uses its own logo when using the advertisements, brochures, or mailers.
• Assist customers by finding them an item that is out of stock in your store, but available at a store owned by a member of the buying group.
Selling Points
To form a successful buying group, you must set ground rules about what topics can be discussed. All members of the group must be willing to discuss those topics. Your group should include only business owners. If the group includes both owners and buyers, the owners likely will be reluctant to share key financial information or problems if nonowners are present.
Businesses who sell the same types of merchandise but not in the same market area can get extensive benefits by joining a buying group. You shouldn’t form a buying group with one of your key competitors because you won’t want to reveal key financial data, which takes away some of the advantages of being in a buying group. Usually these groups have between 8 and 30 members—less than 8 cannot generate enough volume to get significant discounts and more than 30 tends to be unwieldy and less effective. Usually groups meet quarterly and stay in contact by e-mail in between meetings.
You can find a buying group or start one yourself in several different ways, including:
• Talk with your vendors and suppliers and ask if they can put you in contact with other accounts not in your area.
• Attend a trade show and ask suppliers to introduce you to retailers from other parts of the country.
• While at a trade show, talk with other attendees who are not in your area but sell the same products in other areas to find potential members or possibly a group already in existence.
Sometimes you may see an ad in a trade journal for a buying group, but that is rare. Most of these groups add members through referrals from other members or manufacturers.
Associations
As a retailer, you spend most of your day working with customers, vendors, suppliers, and employees and have little contact with other business owners. Memberships in trade associations give you an opportunity to meet periodically with other business owners and share information or bounce off ideas for improving their sales or operations. You will also find opportunities for training and education that target your specific industry.
When it comes to retailing, the granddaddy of all trade associations is the National Retail Federation (www.nrf.com) as we mentioned earlier. The association represents more than 1.6 million U.S. retail establishments with more than $4.7 trillion in 2006. It also represents more than 24 million employees—about one in five American workers.
The research and education arm of the NRF is the NRF Foundation, which conducts industry research, develops education and workforce development programs, and promotes retailing as a career. Its research provides industry and government leaders with analysis about public policy decisions and their impact on consumers, retailers, and the economy. The Foundation operates NRF University wired to encourage professional development and excellence in retailing. Courses are available online for retail associates, executives, and business owners.
Another key association leader is the National Restaurant Association (www.restaurant.org) for retailers in the restaurant business. The association represents over 300,000 restaurants and provides education and research of value to its members.
Each industry has at least one trade association, so seek out an association for your industry. As an association member you will find …
• Workshops and certification programs that can help you and your employees develop professional skills.
• Networks of business owners who operate similar businesses in other areas of the country. Through networks you can share information and get ideas for ways to build your business or solve a problem you’ve been having with your store.
• Marketing ideas that were used in another area of the country that you can adapt for your market.
• Representation in Washington, D.C., or in your state legislature, for issues that impact your store.
While being a business owner can sometimes leave you feeling isolated, you can break out of that isolation by joining trade associations and buying groups. You can develop networks, get additional training, and find specialized consultants that can help take your business to the next level.
The Least You Need to Know
• You must follow laws and regulations or your business can be closed down. Get to know the laws and regulations that directly impact your business.
• You can save money and exchange ideas by joining or forming a buying group.
• Trade associations offer you opportunities for education and training, as well as access to key research and government representation. Seek out and join trade associations related to your retail business.
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