Letting Go of a Familiar Way of Doing Business
I was communicating with M1 Retail Expert, Natalie Woods, about a client's unwillingness to let go of 2 classifications that were doing volume but losing money. Meanwhile, there were 4 other classifications that had the ability to grow, as they were turning quickly, had great sell-through at regular price, and had plenty of open to buy. However cash was tied up in those other non performing classes. The solution seems easy on the surface, liquidate, what is not selling and invest in the opportunity. I questioned Natalie and she expressed it well, “When you are emotional…your thoughts don’t always include logic.”
Letting go of what has worked or classifications, products and vendors you believe in emotionally is challenging for many business owners.
As I am not a psychologist I went to Microsoft’s Co-pilot and asked a simple question about letting go and found the results were spot on.
The following is an outline from Co-Pilot, with my additional thoughts on how this relates to indie retailers.
Emotional Attachment
Business owners often become emotionally attached to their established processes, strategies, and routines. These methods may have worked well in the past, leading to a sense of comfort and security.
Letting go of these familiar ways can feel like losing a part of their identity. It’s akin to saying goodbye to an old friend.
For Indie Retailers: I used to call attachments to established processes myths that indie retailers would use to make decisions. They became the operating rules of thumb to make decisions. Some examples are; how OTB is created only using ly and some subjective %, not based on any real science or trending. Markdown strategies that never change, even though conditions are not the same year over year, or for that matter, even season over season.
Another good example was when an owner in the luxury space had a bad experience with Trunk shows and events. It took time but through coaching and turning over the responsibility to another associate, we eventually built a very successful program. The emotional angst was very strong.
Fear of the Unknown
Uncertainty accompanies change. Business owners may fear that adopting new methods will lead to unforeseen consequences.
The familiarity of the existing approach provides a sense of control, even if it’s not optimal.
For Indie Retailers: We frequently discuss the challenge of change, and indie retailers have been immersed in change since Covid. In spite of adapting constantly, the fear of uncertainty continues to remain strong. Recently I wrote a blog about the things that are constant, emphasizing the work is to focus on building on the core pieces of your business that never changes, rather than worrying about what cannot be predicted. I thought Jeff Bezos said it best, that his customers want their products fast and at the lowest available price and no hassles. That does not change. What is true for indie retailers is the relationship they own with their clients. That should be a key to their focus.
Investment Bias
Sunk cost fallacy plays a role. Business owners may hesitate to abandon a way of doing business because they’ve invested time, effort, and resources into it.
They continue despite diminishing returns, hoping that persistence will eventually pay off.
For Indie Retailers: This speaks to keeping a vendor too long. It was great in the day but not so much today. When the margins shrink, and the turn grinds to halt, it is time to look for newer vendors. Another example is not letting go of unproductive staff, because a pulse is easier than the fear of not being able to replace them.
Risk Aversion
Fear of failure prevents many from letting go. They worry that changing their approach might lead to losses or setbacks.
The status quo feels safer, even if it’s not yielding the desired results.
For Indie Retailers: Albert Einstein said ”If you always do what you have always done, you will always get what you have always gotten.” Witnessing accelerated change, as recently as 10 years ago, M1 Co founder, Evan Wise, had a great rephrase for this quote, “If you always do what you have always done, you will get less.”
Comfort Zone
Habits are hard to break. Business owners may find comfort in their routines, even if those routines are no longer effective.
Stepping outside the comfort zone requires courage and adaptability.
For Indie Retailers: Competition is relentless. Changing habits can be effective in changing your view. Habits can also hold you hostage to change. There are habits that create standards and best practices, and there are habits that work in the opposite direction. As an analgy, there is effective inventory that sells and inventory that sits. There are habits that work and habits that waste precious time.
Attachment to Success Stories
Past successes reinforce the belief that the current way of doing business is the right path.
Stories of triumph become part of the business’s narrative, making it difficult to consider alternatives.
For Indie Retailers: Nobel prize psychologist, Daniel Kahnemnn, who died this past March, described this as a recency phenomenon. We tend to over emphasize that which we remember, especially if it went well or went poorly. He has the example that you go on a wonderful two week vacation and on the way home, you get a flat tire. The flat tire is more recent and can override to some extent the joy you felt on vacation.
Often when I meet an indie retailer for the first time, they tend to regale in their previous successes. And that is great. As trust begins, our conversation eventually turns to the pain points. Many self help experts correctly state that we are what we think. If we only think about our successes or how great we are, we become our own obstacles to growth.
Organizational Culture
Company culture often aligns with established practices. Changing these practices can disrupt the culture.
Resistance from employees who are accustomed to the old ways can hinder progress.
For Indie Retailers: How often are decisions made out of a fear of your staff not going along or showing strong resistance. This is an example of Leadership failing to teach, coach, and move the business forward.
Ego and Pride
Personal identity is often tied to business success. Admitting that a method isn’t working can bruise the ego.
Pride can prevent business owners from seeking alternative solutions.
For Indie Retailers: Risks are an integral part of growth. If you succeed 100% of the time you are not taking the necessary risks to grow. You open the door for your competitors to take market share. Ego and pride are not a substitute for confidence. Confident leaders take risks and lead the charge.
Adaptability and Vision
Successful businesses continually adapt. Letting go of old methods requires a forward-thinking mindset.
Visionary leaders recognize when change is necessary for growth.
For Indie Retailers: You are at war everyday, and understanding and embracing the concept of letting go involves a delicate balance between honoring the past and embracing the future. It requires courage, self-awareness, and strategic thinking. The M1 merchandise plans and reports armed with your consultant is the best instrument you can use to effectively win the war.’
Onwards and Upwards,
Marc Weiss
