The 7 Mistakes Traditional Retailers Make

The 7 Mistakes Retailers Make

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Imagine this. You are sitting in conference room with a few hundred people and the speaker talks about the future of retail, technology and that retail isn’t dying.

Yet, while all of this is inspiring for a moment, when you head back to the office or your store reality sinks in. Sales are still declining and the notion to implement most of the ideas you just heard about are at best wishful. I have argued that most of what retailers are experiencing and it doesn’t matter the size of your business are all self inflicted wounds. You can get on the bandwagon and blame Amazon all you like. However the truth is retailers gave Amazon and others all the ammunition that they needed.  Think about it for over 30 years retailers have been improving productivity and cutting payroll at the store level. So why should a customer travel 3-5 miles for service that would be no different than it is online?

The challenge is one of choices. How do you build for the long-term if your strategies and financial endurance are all short-term? Before I get into that the 7 mistakes that retailers make will come of no surprise. There are likely a few retail chains and independent operators that will see the bigger picture and begin to rebuild their brands.

Mistake #1 Merchandising alone does not sell product – people and product knowledge does.

Retailers have mastered the art of merchandising planograms and inventory management, supply chain, replenishment, obsolescence, markdowns and write offs. Yet all of this proved that we weren’t as good at picking the right goods to sell to consumers. In fact, all merchandising did was show online retailers where the low hanging fruit was. Initially, it wasn’t a problem until retailers began to lose share. Today, retailers have an opportunity to gain back that share because as much as online claims to be able to accomplish, even with the potential of AI and the connectivity to products. They can’t tell the product story like a human can. Now we can argue that a great high quality video online can overcome that. May be they can but when it comes to convincing a consumer on the benefits and features of a product, the buyer wants to have a connection to human that they can trust. This is the first line of separation between online and traditional retailers begins. Albeit the traditional retailer has to be willing to invest in their employee’s product knowledge.

Mistake # 2 Relying on sale events versus brand events.

I came from a retail world where we minimized the number of sales events and placed a great deal on the brand being the focus. What you learn from Premium and Luxury retailers is that once you go down that path of discounting you are also discounting the value of your brand. Being focused branding is a scary proposition. It can rattle the best of executives who rely on those promotional events to drive sales and move product. However, the way I view branding events, it is more about focusing on customer loyalty and showing those customers your appreciation. It could be as exclusive an event as you want to make it. The more personalized the better.

Mistake #3 Paying Incentives to Sell vs Incentives to Serve.

I absolutely disagree with hardcore incentives based on sales only! They don’t work, they can be abused, falsified and I’ve even heard of executives making them impossible to achieve.
If you want to make a difference, base your incentives on service scores, make sales the multiplier not the other way around. If a customer scores their experience high, you will gain their trust and loyalty.  Of course you need to have service standards that are exclusive to your brand, your employees have been trained to deliver them and they must be easy to execute.  If you want to make it about service make it about up selling, whether that is to a higher end brand, multiple or accessory sales. The point is when you  grow your revenue with one customer you are serving not selling. You are identifying needs and showing the customer how to fill them. That’s what service is about. Anyone can hire an order taker however to hire someone that is comfortable in serving is another set of skills that traditional retailers need to capitalize on very quickly.


Mistake #4 Focused on the Deal vs Quality.

Yup this is the one that I believe seals every retailers fate. Think about it! When you offer one product at full price and a second at 50% what are you telling your customers? That you are making enough profit to sell the second pair for 50% off. You are not building trust or loyalty, in fact it is the other way around. Now I know that if I were in a crowded room a few (many ) people will challenge me and say; “the pricing online has made it impossible not to do these offers”. You are right. However if your products have a brand story behind them that makes a significant difference in your own differentiation strategy. In addition to pricing right the first time so that you are not trading deals for quality.

Mistake #5 Friction vs Convenience.

The more complicated and time consuming (fiction) a retail shopping experience has, the more likely you will be faced with customer defection to online retailers. The most vulnerable are traditional retailers who don’t invest enough in people and technology to improve their browsing, assistance, price/product checking and checkout experience. Traditional retailers that still hang on to managing retail productivity as an expense (Yes, of all people I said that!) are destined for difficulties. Convenience, it must be a seamless experience without bottle necks in and out of the store swiftly. I even see BOPIS as an interesting stepping stone for retailers however it is not without friction. Convenience demands that the customer is not slowed down their in and out experience is what will make a major difference.

Mistake #6 Slow to Change versus First and Fast to Market.

Your first inclination may be to pass on this one because you already know how important it is. On the other hand my management experience leading retail brands tells me that most retailers are moving at snail pace. It is estimated that only 25% of companies across all sectors are any where near being digital leaders. That is a frightening statistic because the vulnerability factor for those not at that level is significant. What has to change? It certainly begs to point out that this is all about investment, in the right technology, culture and leadership to make this level of transformation happen. It’s not only time consuming there are far too many implications and risks if it is not well thought out. And just as important first and fast should mean that you are getting a head of your competitors not just catching up. The additional challenge as I have stated in my new book “The Great Transition – The Emergence of Unconventional Leadership” retailers need to understand the concept of COST and no it is not about financial management. C=Culture, O=Operational Execution S=Strategy T=Talent as a Competitive Advantage, there is a formula to all of this that is laid out in the book, it is my thesis that you cannot be first and fast without being exemplary at COST.

Mistake #7 Not Enough Brand Training Throughout the Company.

There are few important lessons leading a premium or luxury brand and they are obvious. You need to do everything possible to protect your brand from proliferation of ideas and competitive forces that are not really threats although they shouldn’t be ignored. The problem with traditional retailers is that they all started this way and gradually slipped from their perch giving way to ideas in desperation. How do you overcome this? At the very least a quarterly review with the CEO even if that means store managers are on the phone for an hour (that is if your technology is that limited) to cover off direction, current strategic thinking and give people the opportunity to ask questions and make comments. Always bringing back the organization to the sanctity of what is important to the brand. If you don’t even your most experienced leaders can fall into the “idea of the month” trap. Recognize and reward what has been accomplished by those who proved the strategies were viable. However be sure it was your strategies that were responsible for growth and not just a sudden surge from the pent up demand after a storm. At the end of the day the organizations that fail are the one’s where it is only the CEO and perhaps the senior executives that really know what the brand should stand for. If that is the case your brand will fail.

As A Bonus

The number one mistake online retailers are making?

The online retail space is also getting over crowded. While traditional retailers have felt all the culling, online retailers are in for some interesting times over the next few years. This is the opportunity for store front retailers to take advantage of this impending weakness. Look I know that all the tech people will call me on this one, but here is the truth. If you think that traditional retailers are alone in chasing Amazon? They are not online players constantly have Amazon on their radar. They know that this 800 pound gorilla in the room is dominating everything. So what should a traditional retailer do about this? Nothing, you can’t catch up to the gorilla. However you can win on the street. Because the online retailers mistake is that they believe AI will give consumers comfort in a seamless experience. That may be true of a near future, perhaps 5 – 10 years. However right now if you are going to win at anything it will be addressing the 7 mistakes highlighted in this article.


My name is George Minakakis I have led retail chains globally. I am also the author of the soon to be released book “The Great Transition – The Emergence of Unconventional Leadership” and my previous book “The Last Retailer Standing – Relevant Leadership Relevant Brand”

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