The Two Mistakes Every Retailer Makes – With Retail Consultant Kevin Natapow

This week we sat down with Kevin Natapow, a retail consultant specializing in inventory management and business development. His company, Creative Retail Solutions, gives retail expertise to shops around the nation. Before starting Creative Retail Solutions, Kevin co-founded Momentum, a fair trade store in Boulder, CO.

Robin: So what led you to become a retail consultant for people with brick and mortar shops?

Kevin: I owned and operated a fair trade store here in Boulder, Colorado for about seven years. We opened right before the big market crash in 2008 when everything kind of fell apart. We were pretty worried, but the store ended up succeeding.

The store was highly successful and over time, many other similar stores around the country were asking how we were able to achieve such high sales. We had learned some great techniques for managing inventory and had developed some updated and electronic systems. Mainly around inventory control and creative ways to hire, manage, and incentivize employees. We also looked at systems to reward and honor loyal customers.

So the business was a success, and then my partner and I sold it in 2013. At that point I had been informally acting as a retail consultant with people over the years. People basically wanted to understand how and why the business was so successful. 

And so after I sold it, I was doing that more and more. And I had the idea of becoming a retail consultant full time. So that’s what I did. And I set out and figured out a way to work within my community and now beyond. 

I’m able to help my clients in their own unique situations develop comparable systems that benefit them. We work on increasing revenue, ease of management, and developing systems. I help make their retail experience better, profitable, and more sustainable. So that’s what I’ve been doing since about 2014.

Now I’m a retail consultant and I teach workshops at various different venues throughout the year and work one on one with individual stores to help them develop these systems for their day to day operations.

R: What did your store in Boulder sell?

K: We sold fair trade handicrafts from around the world. So accessories, jewelry, kids clothing, toys, things like that.

R: Why did you want to start your own store?

K: Well, the real inspiration for doing it was my wife at the time. She and I started the store together. We had been working overseas doing international development work and we had this vision that we wanted to create change in the world. 

And we thought international work was how we wanted to do it. But after about a year of being involved in that, I don’t want to say we were totally disillusioned.

But I think we kind of came full circle and felt that maybe we would be better served trying to create change in our own country. Specifically about how we consume and how we interact with the world. Because honestly, the way that the US, North America, and Europe all live in the world has a huge impact globally. 

So we had a vision of starting a fair trade store, where people could shop with their ethics, and shop with their dollars to try to create change with their everyday purchases. We also wanted to help people have a broader awareness of globalization and some of the ways they could create an impact in a micro level.

So we came back to the United States with the vision of opening a store where people could do that. And Boulder, Colorado, where we wanted to live, did not have a fair trade store. So our vision was to bring fair trade to Boulder.

Neither of us had a drive to be retailers for the rest of our lives, we went into it with a five to ten year plan of selling the store and moving on to the next thing. But we knew that we wanted to bring fair trade to Boulder. And our vision was to create a model of success, where hopefully it could be replicated. 

For the most part, fair trade stores have been focused on a charity model. That is great and all, but our goal was to create a model where the store would run like a well oiled machine and make money. 

Our goal was to sell as much as we could. Because the more we sold, the more money the store would make, the greater impact we’d have down the chain. We wanted to support artisans, our employees, and ourselves, for that matter.

R: If you meet with a new client, what are the first things you do with them?

K: I generally work with two types of clients, so the first thing I do depends on which type it is. One is somebody who comes to me and says, ‘Hey, I want to open a store, how do I do that?’

So then we kind of build the infrastructure from the ground up. We start out with the right point of sale system, the right location, and get everything in place from the get go so that they’re set up for success. 

The other client is one that comes to me and says, ‘Hey, you know, we’ve been open for x number of years, sales are slipping, or just okay. But we want to look at how we can do things differently or better, or adapt to the market.’

So in the latter scenario, I basically come in and do a needs assessment. I’ll look through sales data, financial data, basically get what I call the baseline data. I’ll figure out where they are in that snapshot in time, and then figure out where they want to be. And then collectively, we come up with the vision for how to get where they want to be. Then I develop the plan and the system, and help them know how to get to that place.

R: Are there common mistakes you see most store owners doing?

K: Yes. There are two big mistakes retailers make all the time. The first is location. Everyone always talks about this in retail, you know the old saying is location, location, location. And it’s true that location has an enormous effect on the success of your business.

Statistically, if you choose the wrong location, chances are that your business will struggle, regardless of everything else. Obviously I don’t have a whole lot of control over existing businesses. I’ll often come in and say, you need to move and let’s look at some options for you.

But after that, the most important thing for any retailer to do is inventory control. That is as simple as having the right merchandise at the right time in the right quantities.

What I often say is that people don’t get into retail because they like data. They don’t typically like analyzing spreadsheets and analyzing sales. They like selling stuff, they like buying stuff, they like the stories behind the products, which is all wonderful. 

But you have to have both parts of it. The mistake that most businesses make is that they have a vision for what they want to sell, but they don’t track anything. The store and products will look beautiful, but they keep buying without any data on what’s working. 

What typically happens is that the inventory system they start with gets too cumbersome, so they stop paying attention to it. One of the main things I do as a retail consultant is to help them develop inventory control systems that simplify their management lives. As I said, most people don’t get into this because they like analyzing data. So I try to make it as easy as possible. 

I make it clear that this isn’t really optional. You have to do this. So let’s make it as easy as we can for you. That way you can get back to doing the things you like to do. 

So yeah, inventory control is more often than not the aspect of running a brick and mortar retail shop that owners and managers overlook. Either they don’t know they need to be doing it, or they overlook it because it seems too complicated.

R: What in your background makes you aware of and willing to carefully analyze spreadsheets?

K: Well, I went to graduate school and got a combined degree in sustainable development and socially responsible business management. But the reality is there is no school that teaches you how to be a retailer. And there really aren’t any classes you can take either. 

When my former wife and I opened a store together, we had a unique complementary skill set. She was wonderful at choosing and displaying the products, she had what I consider the artistic side of retail. I was more the systems, the business end of the operation. So we were able to complement each other really, really well. And that can be challenging to do if you’re a sole owner, or if you’re a manager hired to run a store.

What I try to do as a retail consultant is to create systems that make it easy for someone who doesn’t like the science or the data side of business, to be able to easily analyze and manage it. They don’t need to recreate the wheel. They can just take a system that I helped them create and implement it.

R: How do shop owners know when it’s time to get rid of a product? Are there certain markers that are universal?

K: It’s unique per store. But it’s always based on sales volume, in terms of dollars per year and quantity sold. You create benchmarks for a product where either it has to sell so many items, units, or make so much money and profit. And you have to determine what that is per store.

Then, on a biannual basis, you have to analyze every single item in your store. And the problem is that something may sell well for a while, but then it trails off. If you’re not tracking it, you’re not going to pick up on that, and you’re going to keep buying.

And vice versa. If sales are going up and you’re not tracking them, you’re running out of the item all the time. And if you’re running out of an item, that’s missed sales, it’s literally dollars that you’re not capturing.

So the system basically takes the data in terms of its actual performance, and creates metrics that allow you to track that item and make sure you have the right amount at the right time. And that’s for existing items. You always have to be bringing new items into your store, and giving them a set amount of time to see how they perform.

And you create metrics for what the performance is, you know, how many do they need to sell during a given period of time? From there, you set ongoing metrics for how many you need at any given time. And otherwise, you get rid of it.

R: How often do you recommend people get new items in their store?

K: That’s pretty standard, you really should be bringing new items into your store every month.

R: So restocking quarterly isn’t good enough anymore?

K: Yeah, I mean, you need new stuff in your store every month. And if you’re a really high volume store with a lot of foot traffic, especially a store that’s highly dependent on your local population versus tourists, you need to be bringing in new stuff all the time. Because if you have the same customers coming in all the time and they’re seeing the same stuff, they’ll get bored, and they’ll stop coming. 

And every month you’re going to be evaluating new items that you brought in earlier to see how they’re performing. Then you can set new metrics for how many you should carry going forward.

And that’s going to be unique per store. 

R: The news has crafted a narrative about retail, where first it was the retail apocalypse because of internet shopping, but now it’s not looking as grim for local retailers because the stores hit the hardest have been outdated big box stores. What do you think about this narrative and the future of retail?

K: You know, it’s funny when you hear all this gloom and doom about retail, they’re mostly talking about from the global perspective. The most affected stores have been big box stores like Macy’s and Sears. The reality is we all love convenience and we all like it when our life is easier. The age has changed and Amazon is here to stay, people will always buy from there. 

But I think that there’s also a little bit of a push back from, ‘You can do all your shopping on Amazon prime and get it within two days.’ Humans are social beings, we like connection, we like interactions. So I think the future of retail does include the small mom and pop brick and mortar retailer.

Some of these retailers, even these big online retailers have been making moves to open brick and mortar shops. They realize people want to have that interaction, people want to have that experience.

It’s even more unique in the fair trade world where these products are hand made and pretty unique. They all have a story behind them. They all have texture and color to them. These are things that people want to have a personal experience with, they want to work with a sales associate or an owner who can know the story and tell the story.

So I think there’s really an opening for that type of brick and mortar retailer and not even just fair trade. There’s a real emergence of the handmade artists and maker market. People are craving it, they’re bored with this carbon copy, McDonaldization of our society where everything’s the same no matter where you go. 

The challenge for those retailers is to create an experience. Consumers want something that’s different, unique, and as powerful. That’s kind of the other area, beyond location and inventory control where retailers can drop the ball a little bit in terms of the customer service experience.

You really want someone to come into your store and leave feeling like it was the best experience ever. Having a customer say, ‘That store is amazing, I want to go back there, and I’m going to tell my friends about it,’ is the best advertising. 

When you blow somebody’s mind it makes such a lasting impact, and it really doesn’t take a whole lot in terms of effort and/or money to create that experience. That’s what’s going to set you apart from someone else, and especially a big box, or even a chain.

R: What’s the biggest challenge you have with your business?

The biggest challenge I have as a retail consultant is convincing people that doing these things is worth their time and money. The return on investment for taking a little bit of time to look at their business and take a critical look at what they could do differently can be really challenging. 

Retail is a hard world in terms of its demands on people and their time. The feedback that I get from a lot of people is, ‘I don’t have time to do this.’ It’s kind of like, okay, well, it’s the chicken or the egg. 

If you don’t do this, you’re going to have a lot of time because your business is probably going to close. Whether you do it with me or somebody else or just figure it out on your own, you have to do these things.

For the most part, we’re all good at displaying stuff, we’re all good at picking stuff out. That’s why we got into it. That’s what feels exciting and good and inspiring. But that’s not what’s going to make your business sustainable and profitable.

That would be the one message I would love to get to everybody somehow. Just take the time to do this stuff. The return on investment is huge.

R: It sounds like you’re basically in the business of assigning people homework they don’t want to do.

K: Yeah, being a retail consultant makes me feel like a middle school teacher because I feel like, just do it, you will benefit from this, you will appreciate this once you have this in place. It’s kind of like, ‘Why do I need to do trigonometry?’ Well, maybe that’s a bad example because I still haven’t figured out how trigonometry works into my life.

But I’m just like trust me please do it. I have so many clients who do this and they’re like, ‘Ah, my life is so much easier. I’m making more money. The way I’m tracking inventory is so much easier, and I have way more time on my hands so now I get to be on the floor working with customers.’

I love seeing that.