The Psychology of Retail
2023 will be more about psychology than economy.
2021 and the first part of 2022 were driven by a once-in-a-lifetime supercharged demand event for products and services. Everyone knows the reasons this occurred. However, not everyone has recognized that although the post-Covid bounceback was marked by outside forces, their future will not be decided by these same forces. Your success in 2023 and beyond will be dictated by your own psychology.
Brian Tracy, in his landmark book, “The Psychology of Selling” starts with your own self-concept.
“If you see yourself as a $50,000-a-year person, you’ll continually engage in behaviors that keep your income at $50,000,” he says.
But if you “reset your financial thermostat,” you can adjust your self-concept of worth and the value of your work. The same can be true of how you set expectations in your business. When we think of behaviors, I think of how problems are approached. When presented with an opportunity, for example, do you ask how much it costs, or do you ask how much investment is required? Expense or investment? If your yardstick is an investment, you can make a decision based on an expected return. If you view opportunities as expenses, you’re likely to miss out on some good ones.
Your psychology alters your risk tolerance, your entrepreneurialism, whether you play offense or defense, whether you shoot from the hip and make intuitive decisions, or whether you use data and information. How influenced are you by biases, reason, emotions, and recency (memories)? Are you a better leader than manager, or are you a better doer than leader? Do you accept advice from others or call all the shots? One of the first key steps is to know yourself and your own tendencies.
One of the four elements of Williams Edwards Deming’s system of profound knowledge is the knowledge of psychology. In an article in April 2019, Tom Connor wrote in 10x Curiosity about Deming on the topic of psychology, “Those leaders must seek to answer questions such as: How do people learn? How do people relate to change? What motivates people?”
William Deming is considered to be the most influential person of the 20th century on the subject of modern management. For more information on Deming and his 14 key principles, click here. It’s important to stress that learning alone will not move the needle unless it translates into action. Peter Drucker stated it best when he said all good ideas “must degenerate into work if anything is to happen.”
Your psychology will play the largest role in the outcome of your business. What are your strengths and weaknesses, fears, and courage? Your willingness to move out of your comfort zone, creatively solve problems, and seize opportunities? These all play a role in the decisions that will ultimately shape your business.
If you think the economy determines your business, you will forever be playing catch-up and finding reasons things didn’t go the way you expected. Those who learn from failure as well as from success act on what they can control, act from knowledge and not from fear, and invest in the elements that can build their future stand the greatest opportunity to win. Ultimately it is your psychology that will determine how you manage through whatever economic challenges you and your team may face.
Our psychology tells us who we are, but it also tells our people what they can become.
Onwards and Upwards,
Marc Weiss - Co-Founder, Management One