Here’s A 105 Year Old Book on Retail Practices… But It Looks Like Retailers Still Haven’t Read It


Would you be surprised to learn that our ancestors wrote a book in 1912 to discuss the tenets of good retailing?

Would it surprise you more to learn that today’s retailers, 105 years later, categorically ignore the simple advice of good business laid out in the text? Nothing here surprises me anymore, but let’s dig in to remind ourselves why we no longer welcome bloodletting as an acceptable treatment for deformities.

While 90-some pages, the reading is quite light. The authors do a marvelous job using stories and examples to prove their points. Humans respond positively to tales and so much of the content is theoretical dialogue between fictional characters.

The book clearly demonstrates principles that are needed to succeed, and if anything the moral of the story is to use data to make decisions. While focused on the grocery retailer, the book’s parables are relevant for nearly any brick and mortar merchant.

The authors succinctly recommend, “Do the things which pay.” What are such examples?

  • Know what products are selling and stock them while eliminating non-performers
  • Use data to identify theft
  • Find which employees are the top performers and which are laggards
  • Decrease customer wait times with proper labor allocation
  • Carefully monitor inventory as to not have “dead capital”

Ultimately the book concludes the self-aware retailer should not want its customers to pay for “bad bills, unnecessary and expensive methods or false motions.” In other words, every measure of inefficiency is a cost that is ultimately aggregated and passed along to the customer. The authors argue the good retailer cannot possibly do this for long and expect to survive, as, “95% of retailers are on the brink of disaster.”

There’s not much change in today’s environment, and I’d argue the markets are even more competitive. Margins are compressed by ecommerce retailers and every month there’s a new technology trend threatening to upend the conventional methods of doing business.

But running a business is not difficult: it’s hard. It takes work to collect, analyze and monitor data. It’s much easier to dismissively say, “Oh, I think Jane is the best employee… so let me promote her.” It’s much harder to find the data, sort it, and synthesize an objective, corrective action accordingly.

Retailers should seriously heed the 105-year-old advice: do the things that pay. Are they?

  • Know what products are selling. Do merchants do this now? Not really. Only recently has the idea of a magic quadrant been implemented in retail software to break items into winners, losers and unknowns.
  • Use data to identify theft. Do merchants do this now? There have been such software available for 15 years, but very few merchants subscribe to them. 25% of restauranteurs can’t be bothered with a POS for data collection for heaven’s sake…
  • Find top and bottom employees. Do merchants do this now? The company that perhaps did this best (ObjectiveLogistics) had to sell itself after anemic growth. Merchants didn’t see the value in optimizing employees for revenue gains via coaching and sales contests.
  • Optimize labor to meet customer demand. Do merchants do this now? The tools we’ve seen do this abysmally. Most give the operator control over adjusting schedules for things like weather and events. Seriously?! Merchants cannot objectively determine the quantifiable impact of cloud cover and wind speed. So no, merchants are not accurately meeting customer demand, usually copy-pasting the same schedule and letting managers cut people as necessary.
  • Carefully monitor inventory. Do merchants do this now? Very few retailers are using analytics to stock appropriately.Hard goods retailers can tie up lots of capital in the wrong inventory, but at least it’s not perishable. Grocers today are leading the efforts because they have so many perishables, but the rest of retail seems content to sit on their hands.

In conclusion, even with the progress technology has made over the last 105 years merchant behavior hasn’t changed a bit. But consumers aren’t willing to wait another 105 years for brick and mortar merchants to get their sh*t together and pass along business efficiencies…

That’s why Amazon’s revenue looks like this.