Disciplined retailers will find that one specialty in which they can decimate the chain stores.

 

I'm tired of all the negativity. I wish people would stop talking about how this will be the year that kills us. This year will make our future. Disciplined small chains and mom and pops will make more money in the next five years than they have ever made.

Friedman's, Crescent, Whitehall, Mervyns and Value City have failed. There is less and less competition, and the customer is smarter than she has ever been. She's looking for value and will shop (whether in print or in person) every local store and the Internet before she buys. Romantic ads won't distract her from bad value or trashy quality. That means you have a shot.

Your buying prowess will determine whether your shot becomes a sale and your discipline will determine your buying prowess. So I asked hugely successful retailers to vote on key buying disciplines.

Here's the shortlist I came back with:

Disciplined retailers know more isn't cheaper. Commodities like diamonds are often more expensive by the carton load than by the flute. When you buy 10,000 carats you actually increase the market price of that diamond. Smart retailers will stop working with vendors who keep trying to convince them otherwise.

Disciplined retailers work with liquidation specialists. Affiliating your company with one of these wholesalers and working hard to find the best deals in their inventory can make your year. Many of these suppliers will offer stock balancing and won't kick and scream when you ask to return a couple pieces.

Disciplined retailers don't overload on fashion jewelry. Their focus is bridal and anniversary items. Fashion items are meant to bring customers in and should be tied to stock balancing deals, usually a 10-25 percent exchange privilege. Remember too, that these items should be cheaper than the competition's.

Disciplined retailers know their risk profile. Many small retailers are less risky than large chains. They should be getting the same or better prices and longer terms than a large chain because someone who buys $100,000 is not as much of a risk as someone who buys $4 million.

Disciplined retailers buy items with great perceived value. We must remember a customer isn't always looking for a great investment. She may just be looking for a statement piece. Colored stones, bluff diamonds, or silver can easily help increase your profits.

Disciplined retailers are buying off the street. Once you have a sense of what a liquidator will buy diamonds for, you can buy at least $100,000 off the street a year with the right effort. Depending on the item you can make between 10-40 percent and get cash in your pocket within five days from a liquidation company.

Disciplined retailers will divest out of bad product. They reinvest that money in saleable product at a great value or just pay off the bank. An integral part of sharp buying is accepting you were wrong. Liquidate your weakest product.

And the most important of all … Disciplined retailers will find a specialty. Whether it is 1-carat solitaires or diamond studs in three sizes, they will find one basic item in which they can decimate the chain stores. The tool that drives traffic in a recession is great product at an unbelievable price. Call multiple vendors, prepare ahead of time, and find the cheapest supplier for your specialty. Don't be afraid to buy this one part of your inventory on short terms. Inserts, e-mails, phone calls, newsletters, postcards and online advertising should all include your specialty.

For the skeptics … I have a customer in one of the top three foreclosure capitals of the United States who follows these principles devoutly. In 2008, he did over $2 million in sales from a 1,000-square-foot location up against a Whitehall GOB sale. If he can succeed in those circumstances, anyone can survive this year.

Start here: Rate yourself from 0 to 10 on each of these items and add the total together. The goal is to get to between 65 and 70.

 

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Neel Madhvani is a vice president at SimplexDiam Inc., a provider of liquidation and GOB services to retailers, wholesalers, and manufacturers, large and small.