How much does it cost to buy a business?

We’ll be sharing with you the average cost of buying a business. This includes a breakdown by industry and a quick overview of how to calculate the small business’s value based on earnings. You will also be able to determine a budget and see which businesses you can afford.

Our complete guide to valuing small businesses provides a detailed explanation of how to value a small business.

Average costs of buying a business by industry

If you have less than $250,000 to invest
  1. Beauty Salons/Barber Shops – $80,000
  2. Landscaping and Yard Services – $128,500
  3. Restaurants – $128.750
  4. Other eating and drinking places – $130,000
  5. Apparel and Accessory Stores: $160,000
  6. Entertainment and Recreation $165,000
  7. Convenience Stores $175,000
  8. Bars/Taverns – $195,000
  9. Dry Cleaning/Laundry Services – $199,000
  10. Auto Repair, Parts, and Services: $240,000
If you have more than $250,000 to invest
  1. Gasoline service stations – $252,500
  2. Liquor Stores – $270,000
  3. Supermarkets – $270,000
  4. Educational Services – $275,000
  5. Health, Medical, Dental – $325,000
  6. Construction-Special Trades – $356,000
  7. Durable Goods – $431,500
  8. Hotel and other Lodging Places – $542.750
  9. Fabricated Metal Products – $725,000
  10. Lumber and Wood Products – $1,175,000

You don’t have to wait too long to begin thinking about how to finance. You should think about how you will finance the purchase of a business before you meet with sellers. A buyer who is able to move quickly, just like when buying a house. Start by checking your credit score. You can get a free report if you don’t have a credit score.

Lenders will require that you contribute at least 30% of the purchase price, even if your credit score is excellent. You can also use funds from your retirement fund. You don’t have to pay an IRS penalty for using a ROBS. We recommend that you read Is it right for me?

The Average Price of Buying a Business

You may be interested to see more data if you don’t have a narrower focus on the industry you are looking for a business. Here are the most recent data on median prices for small businesses. BizBuySell is the most popular business-for-sale website where you can find thousands small businesses to buy.

  • $185,000 = Median Sales Price Businesses sold in the 3rd Quarter of 2015.
  • $438,000 = Median Revenue for businesses that were sold during the 3rd Quarter of 2015.
  • $100K = Median cash Flow businesses that were sold during the 3rd quarter 2015.

These figures are called medians, which means they represent the middle point of each data set. If one business sells for $100,000, another for $250,000 and one for $750,000 respectively, then $250,000 would be the median. This is because the data set has exactly the same numbers on both sides of the business. Although median figures may not be as precise as averages, they can give an estimate of the price you should expect to pay for a business.

Median Sale Price

For the past 4 years, the median sale price for a business was between $150,000 and $200,000 It fell slightly between 2014 ($189,000), and 2015 ($185,000). BizBuySell says this could be due to lower prices because of the higher running costs of a business in 2015. The average asking price for a small business in 2015 was $200,000. In 2015, the average asking price for a small business was $200,000.

  • $200,000 = Median asking prices for businesses that were sold during the 3rd Quarter of 2015.
  • $185,000 = Median Selling Price in the Third Quarter of 2014.

Median Revenue

The median revenue of small businesses that were sold has increased by $438,000 over the past four years from $375,000 in 2011, to $438,000 in 2015. This shows that people are now buying larger businesses than they were in the past.

  • $375,000 = Median Revenue from Sold Small Business in the 3rd Quartary of 2011.
  • $438,000 = Median Revenue from Sold Small Businesses during the 3rd quarter of 2015.

Median Cash Flow (Seller’s Discretionary Earnings).

BizBuySell’s Insight listings and reports refer to a business’ cash flow number. This is the net income after subtracting the owner’s salary (full list ). This number is also called the Seller’s Discretionary Earnings of a business.

It is important because this number best represents the amount you can expect to make as a business owner. It is also crucial because it is the number used to calculate the business’ value (explained below and in this article).

Over the past 3-4 years, the median cash flow from small businesses sold has remained fairly stable at $80,000 to $100,000.

  • $80,000 – Median Cash flow for Small Businesses Sold in the Third Quarter 2011
  • $100,000 – Median Cash Flow from Sold Small Businesses during the Third Quarter 2015

Use Seller’s discretionary earnings to determine specific business pricing

These sales figures are great for estimating the general market. The reality is that people often spend more or less than the average on a business purchase. Seller’s discretionary earnings (SDE) can be used to get a more precise estimate of the business’s value. The following formula can be used to estimate the business’s value once you have SDE.

SDE x Industry Multiplier
+ Real estate
+ Accounts/receivables
+ Cash on hand
+ All other assets that are not included in the SDE multiplier
– Business liabilities

= Business’ Estimated Value

This is how it works step-by-step:

  1. Calculate the SDE

SDE can give you an accurate estimate of the business’s true revenue potential. SDE can be calculated by adding certain expenses to the net income of a company, as reported on its tax returns. Add back the owner’s salary and any other expenses that aren’t necessary to run the business.

Wayne Quilitz, president of Murphy Valuation Services business brokerage, explains that there are certain things that can be added to the net income of a business to calculate SDE.

  • The owner’s salary and perks
  • Family members on the payroll
  • Other expenses, such as amortization and depreciation, are not cash.
  • Business golf outings are a great leisure activity.
  • Charitable donations
  • Personal expenses such as the purchase or lease of a vehicle that were not included in the business tax return are noted as expenses
  • It is not necessary to travel for business purposes.
  • One-time expenses that are not likely to recur following the sale of the company, such as the settlement or litigation costs
  1. Get the correct SDE multiplier

Businesses typically sell for between 1 and 3 times the SDE. This is the SDE multiplier or multiple. It varies depending on market risk, industry and geographical trends, company size, tangible and intangible assets of the business, owner risk, and other variables. This is the most subjective aspect of valuing businesses because there are so many variables that can affect which multiple to use.

BizBuySell data can help you find an estimate SDE multiple. Multiples are listed by industry. BizBuySell uses “cash flow multiple”, but this is not the same as SDE multiple. In 2015, the average SDE multiple of all businesses sold was 2.28.

SDE x 2.28 = Average Business Value

  1. Add business assets to obtain business valuation

You must also add assets to the equation that are not part of the SDE multiplier. You must add assets such as real estate, cash on hand, accounts receivables and cash on bank. Liabilities (e.g. To get a final value for a business, you must subtract interest and debt.

This may sound too complex, but you can hire an appraiser to do the math for you. The professional appraiser will assess the business and charge you between $2,000 and $3,000. A professional appraisal is more accurate than a personal appraisal, but it leaves less room for negotiation between buyers and sellers.

How industry affects the value of a business

There are many factors that can affect the sales price of a business. It is important to consider industry-specific details when purchasing a business or trying to determine the price tag.

Because restaurants account for almost a quarter (24%) of all sales in small businesses, we decided to look into them. They easily make up the most popular category of small business (buy a substantial margin).

Other high-selling small businesses include dry cleaners/laundromats, bars/taverns, and convenience stores.

Because Dry cleaners/laundromats are the third most popular business category, and because they are so different from restaurants in nature, we included them in our statistics.

The report contains information about sales in the Dry Cleaning/Laundry and Restaurant industries.


There are many interesting differences worth discussing.

Sales Price

The data shows that restaurants are on average $70,000 more expensive than dry cleaning/laundry services businesses. If you’re not sure which option you prefer, or are looking for the cheapest, this difference in price could be a reason to consider purchasing a restaurant.

Revenue and Cash Flow

There are significant differences in median restaurant revenue and median revenue from dry cleaning businesses. Restaurants bring in almost twice as much revenue than dry cleaning businesses.

Restaurants have higher operating costs than laundromats. The primary expenses for Laundromats are wages and equipment maintenance. They also have to pay utilities like water, electricity, and water. Restaurants have on average more employees and higher ongoing costs (purchase of food and drink, etc.). Both industries have similar cash flows, even though restaurants generate more revenue. This would explain why the SDE multiples for the two industries are so different, 1.89 (restaurants) and 2.69 (dry cleaning/laundry).

Dry cleaning/laundromats generally have repeat customers and are therefore more likely to be reliable. Customers should not switch washers and dryers unless they have purchased washers and dryers. They are ready if the environment is safe and the equipment functions properly.

Market Risk & Owner Risk

The value of a business is affected by its industry and geographical trends. This is commonly referred to as “market risks.” Restaurants are more volatile when it comes to customer retention. Restaurants are constantly in competition with each other on many fronts, including price, quality, and service. One bad experience or poor quality of food can turn a customer off.

This means that the sustainability and transferability of a restaurant business are less likely than those of a dry cleaner/laundromat. However, there are exceptions.

Owner risk is the degree of independence a business has from its owner. Transferring ownership of Laundromats is easy and has minimal impact on customer base. Restaurants, on the other hand, are often dependent on their owner. A restaurant may be owned by someone in the community, or because a chef works there. They may not return to the restaurant if this happens.

It is important to look at specific industry multipliers when determining how much you can pay for a business.

Are you looking to purchase a business? To download our FREE Guide: How You Can Buy a Business, click here

Bottom line

All of this is meant to show how statistics (averages medians multipliers) can give you a good idea about what you should expect to pay for a business. These statistics can also help you understand why some businesses sell for less or more than others.

You can use industry-specific multipliers to get a fairly accurate estimate of the amount you can expect to spend on a business purchase. A business purchase can be expensive, as you can see.

The Five Ps of Peak Performance: A Guide for Preparing Your Infrastructure For High Traffic


Your journey to success during your peak season, whether it’s the traditional holidays or a specific period in your industry, starts with ensuring that your digital storefront’s infrastructure is up to the task. Your ecommerce website should be ready for peak season, regardless of what it looks like for you business.

Adobe has provided a guide for preparing for peak season performance. We call it “The Five Ps of Peak Performance” These recommendations are a minimal investment of time but should be high up on your priority list for your company so you can easily ramp up to your peak sales traffic.

To ensure you are prepared, we recommend you begin this work at least 3 months before your most important calendar dates. This overview can be used to help you talk with your partner (or systems integrator) about how they will prepare your site for peak season.

Graphic displaying people using their personal devices to online shop

1. Predict your traffic and order volume

While wild guesses made based on intuition are fine at your local racetrack or casino, data-based planning should be the norm when planning for your company’s most important opportunity. These four key benchmarks can be easily accessed via Adobe Commerce Business Intelligence or MBI to help you make accurate predictions about peak season traffic that you will need to support.

  • The traffic load of your site over the past six month on a daily or weekly basis
  • Last year’s peak season was a busy time for your site.
  • The percentage increase in peak season traffic last year compared to the six-month average before peak season.
  • Year-over-year traffic growth rates between the last year’s and this years site traffic

After your team has gathered the data, you can first predict peak season. This is done by comparing last year’s calculated percentage of growth to your site’s traffic running daily and weekly. To validate the prediction made in the previous step, you can use the year-over year growth rate by comparing this percentage to the peak season numbers last year. Talk to your team about how to resolve differences if the numbers don’t agree. Plan for traffic volume at the higher numbers to resolve questions regarding large differences.

A second method to predict the resources required is to identify peak sales hours and examine the load they place on your infrastructure (such memory, CPU, disk space). To get a rough estimate of the resources needed to handle heavy peak traffic incidents, multiply these metrics by 3. Your site may need additional resources to handle peak demand if your resources cannot meet the tripled metrics.

Remember to consider how COVID-19 may have impacted your digital storefront, and whether you might see peak season traffic levels that are different from last year.

2. Use your resources to test the waters

To validate your site’s ability to handle the anticipated peak season traffic, load test your infrastructure using your resource model. Review Adobe’s recommendations for load testing Adobe Commerce sites is a good place to start this process.

This testing often exposes many deficiencies. You should have a process to document and communicate these failing points within your organization. This will allow you to create a common action plan. When working with an SI partner, ask them to share their findings with you.

3. Make sure you prepare your site according to the following steps

Increase server and/or database capacities
After you have done site load testing and identified areas that require additional capacity, it is time to plan how to address those needs. Flexible capacity may be required to meet peak periods. You might consider increasing your capacity if your site is used to a high level of load. This will allow you to meet peak season demands and also give your company more room to grow. You might think that web traffic and transactions will continue to increase since many consumer habits have changed in the wake of the pandemic.

You might also consider adding Web Nodes in order to meet the load test’s resource requirements. Adobe Commerce customers can request temporary server increases by requesting surge capacity as detailed in the Knowledge Base article. Contact your Adobe Customer Success Manager (CSM) if you are interested in a permanent increase in memory, disk size or CPU.

Use a content delivery network
A content delivery network (CDN) is another way to meet peak season performance requirements identified during load testing. A CDN powers your cache by creating a global cache network that stores your static media files, HTML and JS Style Sheets. This helps to reduce load and improve response time. There are many CDN options available, but Adobe Commerce users have access to the Quickly CDN.

Change your caching configuration
A better caching configuration can help you reduce the hits to your server and solve infrastructure issues. We recommend Full Page Caching as a great way of speeding up your Adobe Commerce website.

4. Be a good example of good habits

Optimize images to create a fast eCommerce website
Images are an essential part of the sales process. However, they can also be a negative if not managed properly due to slow load times which impact site performance. WebSafe 72-dpi images are recommended for merchants. More information can be found in our article Resizing Product Image.

Latest ece-tools package
To take full advantage of the new enhancements in our deployment tooling, ensure that your cloud environment is running the most recent ece_tools. Recent releases include improvements to the local development experience, faster deployment of static content, and self-service capabilities that enable merchants to be more productive. For more information, see the ECE-tools Release Notes.

Don’t let deployment get you down
Visitors should be able to shop without interruption during holiday season. However, you may need to make changes to your production environment. You can set up your project to ensure that there is no downtime for customers during deployments. You can use these steps to set up Adobe Commerce for Zero downtime deployments. This is one of the best ways to practice cloud infrastructure management. These best practices will ensure that your customers interact with live sites regardless of how they are deployed.

Backup your eCommerce website
To avoid a costly and time-consuming environment rollback, ensure you have proper backup management. Snapshots allow you to quickly back up and restore specific environments from any location at any time. This can be a time-saver and cost-saving tool that can help you save time and money in the event of unforeseen circumstances. Snapshots are quick to restore your Adobe Commerce environment because they are read-only files. For more information on creating and using Snapshots, please refer to the Adobe Commerce Developer Guide.

Track your performance
To keep an eye on site performance, it’s always a good idea for monitoring tools to be well-designed. There are many tools and processes available to monitor site performance. Make sure you choose one that is compatible with your company. Adobe Commerce customers that use the cloud infrastructure management system should take advantage of New Relic services to monitor site performance.

Customers can also take advantage of Observation to Adobe Commerce, an New Relic nerdlet. This application gives you a quick overview of your site’s performance and allows you to drill down to find out more about potential issues.

Stay in touch with your Adobe team
Always log in to Adobe Commerce and verify your contact information under Account Settings. Make sure your Adobe CSM contains information about key technical contacts for your company. Discuss your solution partner’s support plans for the holiday period. This will ensure that everyone is able to execute the plan in case of an unexpected event. These steps will help us alert the appropriate people within your organization to any security or technical problems that may arise.

5. Protect your site (and customer data)

Upgrade to Adobe Commerce
It’s important that Adobe Commerce merchants have the most up-to-date software as hackers get more sophisticated. This is especially true as we approach Peak Season. Bad actors know that busy businesses can be distracted and use the holiday noise to commit their biggest frauds. We recommend that you upgrade your website to Adobe Commerce before peak season.

Stay safe
Security patches enable businesses to stay current with security trends even if they don’t use the most recent version of Adobe Commerce. We recommend that security patches be installed as soon as they are available. Do not let them accumulate. You can access and apply patches with the Magento Quality Pack, to ensure your site is always up-to-date.

To learn more about security patches and best practices, visit the Security Center.

Use the Adobe Commerce Security Scan
The Security Scan Tool can be used to scan all Adobe Commerce websites, including Progressive Web Apps (PWAs), for known security threats and malware. This tool performs over 21,000 security checks and gives insight into the security status of your store. The tool can be used to automatically run security checks on a daily, weekly or monthly basis. Security scan output provides guidance on best practices and lists all identified issues.

Three Ways Retailers Should Use AI to Increase Sales

The retail sector has enormous potential thanks to artificial intelligence (AI) technologies. These technologies are widely used in finance and healthcare. Total articles previously mentioned the potential of AI to revolutionize online shopping. But instead of dreaming about the future, let’s look at three practical uses of AI currently available for ecommerce sites.

To help them find the best products, shoppers are increasingly looking for reviews and opinions from other customers. E-commerce sites have two problems. They don’t have enough reviews which can lead to potential customers abandoning them for other sites. Or they have too many reviews which can cause text fatigue.

Sites such as use AI technology to collect opinions from consumers and display them on their site. Natural language processing is able to make sense of large amounts text and allow shoppers to quickly understand the opinions about specific products. uses AI to create easy-to-read and comprehensive reviews.

Once you have applied AI to the vast amount of consumer opinions, you can now use the review information for your e-commerce website’s search bar. This is crucial for retailers as it means that up to 30% of people will use the search box when searching for a product. The technology behind search has made huge strides, and users can now type text based on their intent instead of product description. These are just a few examples.

  • “Strollers that can be used for beach walking”
  • “Kitchen gadgets that are easy to use on sore wrists”
  • “Good vegetarian restaurants for a first date”

These are just a few examples of intent-based searches that show how consumers can search for products. AI’s ability include user-generated material to power these results means shoppers will not only find more relevant products, but also trust crowd wisdom as opposed to the descriptions brands give for their products.

Chatbots are computer programs that use text and data analysis to communicate in natural language with other computers to complete automated tasks.

1800flowersChatbots have become a hot topic as many retailers are trying them with mixed results. uses chatbots to great success: 70% of its customers who order through the chatbot are brand new.

Bots are powered by AI and can perform many tasks including customer service, retention, sales, and customer service. The popularity of messaging apps (Whatsapp Messenger, Facebook Messenger, Sina Weibo), and voice-activated search assistants Siri and Cortana has increased the ease with which retailers can communicate directly with customers on the platforms they are most comfortable using.

Macy’s and IBM began testing a mobile webtool, ” Macy’s on Call,” in July across 10 stores. This web tool allows you to enter natural language questions and get information such as stock availability and store layout specific to your store.

Retailers who don’t keep up with the latest developments in consumer research will be left behind. The good news is that retailers of all sizes can now take advantage of the technology.


Fossil to Close Some Stores, Reorganize

Fossil Group, a fashion accessories seller and manufacturer, announced last week that it is planning a multiyear overhaul that will include closing down some stores and focusing more on less products. Fossil did not say how many of its 610 stores it planned to close in the U.S. and Europe. The U.S. has 284 Fossil shops

Total Retail Take: It seems like Fossil had to reorganize, especially as it is designed to better align the company with customers’ shopping habits. Fossil’s online sales increased by 50% in the third quarter, while sales at its stores fell by 3 percent. Additionally, today’s consumers seem to prefer fewer products and higher quality merchandise, which has led to a reduction in merchandise.


Walgreens close to Rite Aid Deal

As reports about U.S. pharmacy consolidation increase, Walgreens Boots Alliance could be closer to selling hundreds of stores in order to get U.S. regulatory approval for its Rite Aid acquisition. Fred’s Pharmacy revealed that it was in talks with a Walgreens partner. However, management at Fred’s warned that there is no guarantee that the deal will happen. However, executives stated they are interested in expanding U.S. pharmacy operations. Although it is not clear if Fred’s will partner with Walgreens or Rite Aid, Fred’s CEO Mike Bloom stated that “acquisition and partnership activities” were in the company’s future.

Total Retail Take I’m less certain that the Walgreens-Rite Aid deal will get U.S. regulatory approval. With Walgreens having to sell at least 500 stores in order to make it happen, the longer it takes. The FTC seems intent to ensure that antitrust concerns are addressed before approving the deal, just like the Staples/Office Depot merger. Even with the divestiture and consolidation of 1,000 stores, Walgreens and Rite Aid combined would have the largest number of U.S. pharmacies, surpassing chief rival CVS Health.


Five Tips to Deal with Stressed Holiday Customers

It’s not surprising to see frustrated and frazzled customers during the holiday season. They are not wrong, and who could blame them? Retailers can’t blame them. recent survey conducted by alldayPA found that 76 percent of respondents were unhappy with brands’ inability to apologize for their problems. While 47 percent claimed they had been personally blamed for the complaints.

Retailers, this is a poor plan. What are the alternatives? These five strategies will help you keep your customers happy, your salespeople healthy, and your business afloat during the madness of the season.

1. You should be a partner and not a salesperson in stressful situations. Customers want to know that you are there to assist them with any problem or complaint. It might seem like you are only trying to solve the problem to make a sale or profit. It is your responsibility to ensure that the customer feels you both are working together towards a mutual solution.

2. Do not take it personally. However, they are dissatisfied with the service or product that they received. You, whether you are good or not, are the cause of their discomfort. Keep your cool if a customer starts to yell. You will have the best chance to make things work, even if the customer seems rude. Don’t be the problem, solve the problem.

3. You should have options and understand the value of each. Then you can offer a solution. To do this effectively, you need to be aware of all options and their value. You want your customer to be happy. However, it is important to ensure that you provide a solution that is both valuable and beneficial to both you and the customer.

4. Listen. Customers are often looking for someone to listen when they vent or express anger. Listening with patience and respect is the first step to negotiating a positive outcome. To show that you understand, you can repeat to them the complaint. Ask them any additional questions. Positive body language such as eye contact, nodding, and avoiding crossing your arms will show that you are listening. Finally, show sympathy. You can help them by showing sympathy.

5. Even if you don’t feel like it, you must apologize. No matter the validity of the issue, or the nature of the complaint, you should apologize. If you want to keep the customer, apologize. It doesn’t matter if they are expressing their dissatisfaction with your product or service or simply that they are upset, a simple “sorry” can make a big difference. Even if it’s not necessary or that the customer is at fault, an apology can help keep the customer coming back to your store in the new year.

The holidays are a wonderful time of year, but they can also be stressful. Your customers can feel supported and helped by you every time they come to your front door.


Black Friday begins with a smaller crowd

The number of people who visit stores opening in the morning on Black Friday is lower than previous years. Reuters as well as the Los Angeles Times show that shoppers are getting less competition for bargains in-store. Adobe Systems has released new data that shows consumers are more likely to shop online for Black Friday deals. According to this morning’s update $490 million has been made online between midnight and 8:30 AM. ET. ET.

Total Retail Take While the decline in importance of Black Friday is something that has been debated for a while, this year may be the year we see a drop in brick-and mortar shopping during the official kickoff of the holiday shopping season. Online shopping is growing in popularity, and retailers now offer Black Friday deals over longer periods of times.


Black Friday is here to stay

REI has announced that it will once more close its doors on BlackFriday. The outdoor retailer will close all 149 stores on Black Friday ,Thanksgiving and will process no online sales. All 12,287 employees will be paid to go outside. The decision of the specialty retailer to close down on the largest shopping day of the year was positive and pioneering. It will be a model for other retailers.

The conversation is not so positive for large retailers such as Macy’s and Target, which are open on Thanksgiving and traditionally Black Friday. If you look at the comments to any article about the topic, it is clear that people believe these big-box brands have become too family-centric. They are furious that people don’t spend time with their families and claim that only they care about their bottom line.

This is a large part true.

Take a look back
Since 1932, Thanksgiving Day has been considered the start of holiday shopping season in America. The Black Friday that we all love and hate has held the title of busiest shopping day since the early 2000s.

In 2008, the financial crisis ravaged stores and shareholders were determined to solve their profit problems. To boost Black Friday sales, stores opened on Thanksgiving. Although there has been some decline in Black Friday sales over the years (in 2014, the spending volume for Black Friday was the lowest since 2008), it is not something retailers can reverse. Wall Street has set its expectations and shareholders won’t accept a loss on Black Friday.

You can open it and they will come.
These mega-retailers cannot afford to miss Black Friday. It’s appealing to close on Thanksgiving and Black Friday. This is in addition to the message of unplugging and engaging with family. The reality is that REI’s annual sales are much lower than the major retailers’ Black Friday sales.

People fail to realize that stores are open as people continue to come by and spend billions of dollar. According to media reports, shoppers will not only show-up but will also do everything necessary to get top-quality items at a fraction the retail price. They’ll wait hours (read: camp), and then line up at cash machines to purchase the faux feather puffer coats for $19.99, $15.99 boots of brand-name brands, or whatever else their children want from Santa. This has become an annual family tradition, with many Americans embracing it as an annual Thanksgiving tradition. The majority of consumers will shop and will be pleased about it.

Contrary to popular belief, retailers make sure their employees are always in mind when they decide to stay open on Thanksgiving weekend and Black Friday weekend. These 72 hours can be exhausting for millions of Americans, but store managers make Black Friday weekend enjoyable. They make the chaos of the crowds into an opportunity to motivate and work hard with co-workers. The adrenaline rush from the day flows down the chain of command, and back up again.

REI will be celebrated for opting out of Black Friday. Many consumers will be influenced by its message that family is more important than corporate sales. However, most major retailers can be confident that secret sales, low prices, and early openings will continue into the future.


Online Retail’s Future is Offline

Retailers have had a busy year, to put it mildly. Most of the discussion has revolved around how brands should think digitally first. Drew Green, the CEO of Indochino (a made-to measure menswear company), ended the panel discussion at East with a powerful statement.

Green stated, “I believe that in the next five year’s, every online brand in one way or another will be offline.”

Green was joined by Kevin Lavelle (founder and CEO of Mizzen + Main); Cheryl Kaplan (president and cofounder of M.Gemi); and Emily Hofstetter (vice president, business development, and communications at Bombas. The panelists discussed the importance of combining a data-driven digital strategy and offline events. While the brands represented on this panel — Indochino and Mizzen + Main as well as M.Gemi and Bombas — may not have created strong online communities, offline strategies have allowed them to grow their customer base.

Kaplan stated that offline retail allows online retailers to connect with customers one-on-one and capitalize on experiential retail to create an experience customers will never forget. She stated that it was important to be creative and flexible.

Hofstetter continued by saying that retailers must have a clear goal before they use resources, i.e. time and money to go offline.

She explained that you need to know your reason for going offline. Pop-ups are for a purpose. Pop-ups have been a great way to tell our brand’s story, and connect with the audience. “Offline is a way for consumers to engage with us.”

Lavelle emphasized the importance of an effective offline strategy and said that it is possible to use an online strategy with an offline strategy. He said that the most important thing was to be able to plan and manage your resources.

Green shared his top tip with the audience. He said, “I think that the keyword for an internet-only brand is “commitment.” This means that the entire company must commit to an omnicommerce strategy.


This is the Evolution of Retail

This is being called the retail apocalypse. According to recent reports, over 8600 retail stores will close in 2017. Comparatively, 6200 retail stores shut down during the 2008 economic downturn — an all time high.

Retailers such as The Sports Authority are now gone, and many others are following their lead: Gander Mountain and Macy’s, J.C. Penney, RadioShack, and J.C. Penney are just a few of the many retailers on the verge of collapse.

Do we need to start planning for the demise of retail as we know? Probably.

Despite the potential disaster, there are still retailers that rise above the rest, showing that the future is not bleak but bright. These retailers aren’t just online giants like but brick-and mortar retailers like Sephora and REI. These retailers are not only surviving but they are thriving. Their success is not a fluke.

These brick-and-mortar stores have discovered a way to differentiate themselves from Amazon, rather than trying to compete with Amazon’s endless selection of products at low prices. They have won the hearts and trust of their customers by doing this.

This isn’t the retail apocalypse. This is the evolution in retail and it’s long overdue.

Three Ways Retailers Can Help Change the Industry’s Fate

1. Make your experience dynamic

Sephora uses the differences between online shopping and offline shopping to tailor its customer’s experiences . This beauty retailer found a way that allowed technology to be integrated into its store experience, without sacrificing the traditional brick-and-mortar experience. This balance is not something that most retailers have found.

Sephora allows customers to interact with the products without the assistance of associates. To find the right products for you, scan your face to see your “ColorIQ”. Sephora’s mobile app allows customers to virtually “try on” all available lipstick colors through augmented reality.

Sephora offers ungated access, which is a benefit to those who are less tech-savvy than others. Sephora offers customers the opportunity to test out aspirational products at their convenience, rather than forcing them to interact with employees.

Sephora associates can help shoppers achieve perfect pouts, contour their eyebrows, and improve their contouring skills. Sephora is committed in hiring and training beauty enthusiasts who are available to share their passions and experiences.

Sephora shopping is more than just the product. It’s about the dynamic experience you have in store.

2. Stand up for something

REI declared it would not participate in the Black Friday shopping frenzy in 2015. The outdoor apparel and equipment retailer encouraged customers and staff to #OptOutside , rather than encouraging bargain shopping, crowds, and door-busters, and instead, they encouraged shoppers and store teams to .

It must have seemed absurd at first to close down a shop on the busiest days of the year. Since 1938, REI has been committed to getting people outside. This campaign was an ideal way to make a statement while also supporting a long-standing cause.

These are the results

Outdoor gurus and gear junkies flocked to the outdoors in large numbers. This campaign generated positive buzz that led to many more skiers heading out on the slopes. Forbes reports that REI saw a 9.3% revenue increase and more than 1,000,000 new members as a result of the campaign. Following its success, REI launched #OptOutside again in 2016. Similar results were achieved.

REI continues to look for new ways to inspire and demonstrate its passions. The retailer launched the Forces of Nature movement in April to transform the way the industry views women, both as employees and customers.

Mary Anderson, a woman who co-founded REI, is the founder of the company today. Despite REI’s strong internal history, the outdoor industry is dominated by male-dominated imagery, storytelling, and acknowledgment. REI hopes to change this by featuring women in its advertising and marketing materials. REI has donated $1 million to nonprofits that provide opportunities for women in the outdoor. REI will also host more than 1,000 events that are specifically for women.

REI shopping is more than just about the products you purchase. It’s about supporting causes.

3. Exclusions Available

Flight Club is a destination for sneaker enthusiasts from all over the world. Flight Club is the perfect place to go if you are looking for the pre-released Yeezys or the uber-exclusive Air Jordan 1’s. It all began with in 1999, which was an online marketplace that allowed consumers to buy hard-to-find shoes. Flight Club opened its first brick and mortar location in 2005 to showcase its authenticity, selection, and customers.

Online customers travel to New York City and Los Angeles to check out a Flight Club store , despite the seemingly endless access to their favorite sneaker. Sneakerheads spend hours discussing the history of shoes, footwear technology, and the latest fashion trends once they are there.

Flight Club is a highly competitive market and welcomes thousands of people every day to its two stores. It ships many products to its adoring customers around the globe and has been recognized for its ability to provide sought-after sneaker grails.

Flight Club shopping is not about great deals, it’s about finding a shoe that no one else can. You are the only one who can find these shoes.

It All Together

While retail naysayers might preach doom, there are some retailers who have found compelling reasons for consumers to interact with their brands. These retailers are succeeding. Their customers are also winning.

Retailers who can create memorable experiences, raise their cause or add an element of exclusivity to their retail offerings will change the face of retail. We’ll all be happier.


Petco Launches a Service-Oriented Store Model

Petco has left behind its big-box roots and is now opening a new type of retail store. This will offer pet-friendly amenities like dog baths, play yards, and treats that are suitable for humans to appeal to picky pet owners who might otherwise shun the main brand. The PetCoach pilot store in San Diego County, which was unveiled this week, is a reimagining of the traditional pet store. Instead of offering a wide range of products, services like veterinary care, grooming, and dog day care dominate the in-store experience. Toys, food, clothing, and toys are also available. However, they are displayed according to task so customers can both get the care they need while still finding the right product. Petco plans to open two more PetCoach locations within San Diego County in the next six-months, with the possibility of additional locations across the country depending upon their reception.

Total Retail’s View: Petco is changing its strategy for brick-and-mortar stores to offer customers services that are only available in person. It makes sense. Petco believes that experiential retail is applicable to animals, as well as people. PetCoach’s stores will be convenient and one-stop shops for all their pet care needs. PetCoach customers can pay a $9 per month membership fee to receive discounted products and services, taking cues from Amazon Prime and its Prime loyalty program. Old retail is dying but retail isn’t dying. Petco hopes to bring new life to its brick-and mortar business with the opening of its PetCoach shop.


Predictive Analytics, Omnichannel Fulfillment Help ALDO Group Be More Profitable

ALDO Group is a retailer, designer and manufacturer of footwear and accessories. It has 3,000 points worldwide of sales. After thorough due diligence, ALDO announced it had partnered with Celect to optimize its order fulfillment goals.

Marc Chretien (Director of E-Commerce Operations at the ALDO Group) discusses how the retailer uses predictive analytics to make better, faster, and more profitable order fulfillment decisions.

Marc Chretien is Director of E-Commerce Operations at ALDO Group

Total Retail: Why does ALDO Group invest in technologies and tools that will better enable it to fulfill its orders across all channels?
Marc Chretien: The ALDO Group, a fashion retailer that focuses on delivering quality products to customers in a timely manner, is always looking for ways to improve and adapt its supply chain technology. Retailers’ survival and success depends on the digital and omnichannel shift. The ALDO Group dedicates substantial resources to technology projects. Celect technologies allow the ALDO Group optimize inventory position opportunities when working with an Omnichannel Fulfillment Network.

ALDO Group’s goal to deliver product as quickly as possible is the aim of its business. Celect’s technology analyzes demand patterns across the network, then finds opportunities at specific product levels in different locations. Celect Fulfillment Optimization module allows ALDO Group to detect customer demand in real-time and gives it the ability to intelligently use store inventory to fulfill online orders.


TR What behaviors have your customers shown you that lead you to this conclusion?
MC : Customers are becoming more flexible with their buying habits and have adopted omnichannel. This has led them to expect the same options from retailers. Online shoppers may shop in-store tomorrow. They expect the same product options, pricing and service. Inventory placement must be flexible to meet this goal. ALDO Group’s strategy is to place the maximum inventory in-store, rather than in distribution centers. This allows both walk-in and digital customers to access it.

Celect technology adds a new dimension to this strategy. It allows ALDO Group more accurately forecast customers’ needs in real-time and determine which stores have inventory potential. This allows the company to target stores that will have a lower demand and avoid selling at locations more likely to sell out. A large portion of ALDO Group’s 2017 e-commerce sales were handled from its stores. This created hundreds of smaller distribution centers that served customers faster.

TR What are the challenges associated omnichannel fulfillment What is the impact of Celect’s analytics solutions on these challenges for ALDO Group?
MC The ALDO Group, a complex company, offers products via a variety of channels including online and in-stores.

Companies that use omnichannel fulfillment strategies need to know how to best leverage their store inventory to fulfil online orders. One product might be over- or under-sold in different regions simultaneously, as we discovered. The buying behavior of customers is becoming more unpredictable. It’s difficult to predict demand for a specific location.

Celect Fulfillment Optimization analyzes demand patterns across the company and identifies potential opportunities at specific product levels in different locations. This module reacts in real-time to fulfillment decisions. This technology allows us to intelligently use our stores’ inventories in order to fulfill online orders while also ensuring there is optimal stock for customers who visit our brick-and mortar locations.

Learn more:

TR What level of training do your associates need to be able to fulfill online orders in-store and at the same time, What is the best way to combine this task with other responsibilities?
MC Since 2007, the ALDO Group has fulfilled online orders through its stores. This process is easy and is now part of the daily tasks that a store associate must perform. Online orders are sent to store associates via an electronic platform. Once received, they are responsible for shipping the order. This involves locating the product, cleaning it, and preparing the shipping labels. It is often completed in just a few hours. The average time for this task is less than 12 hours. This includes overnight hours as well as peak times.

Aldo’s success online and in-store is largely due to the role of store associates. These tasks are included in new associate training. Sometimes a store has a designated associate who processes orders online, but in other cases the tasks can be performed by either a stock person or store associate.

The success of ALDO Group’s Omnichannel Fulfillment Initiative is largely due to its customer-centric approach. This puts the customer’s happiness first, online and in-store. We are able to fulfill online orders through our stores in another way that we can meet our customers’ needs.

TR What business benefits does the ALDO Group hope to achieve through its omnichannel fulfillment efforts
MC This stage in the ALDO Group’s transition away from pure retail will see the optimization of its Omnichannel Fulfillment efforts. It will allow the company to achieve greater structural speed and more flexibility in its inventory initiatives.

Incumbent brick-and-mortar transformation is one of the more tangible business benefits. The Celect Fulfillment Optimization module allows the ALDO Group to compare the more complex “Celect” logic against the simpler “distance based logic” which would result in orders being fulfilled at the closest store to the customer. This comparison has shown us how brick-and-mortar sales could have been lost if online orders were fulfilled using distance-based logic. Instead, we leverage the analytics provided by Celect. So, orders from two customers can be fulfilled, and not just one.

ALDO Group is thrilled to continue its growth through Celect’s predictive analytics and inventory optimization. To make our systems more efficient, we will continue to use the technology’s real time calculating capability across thousands of customer order and add countless additional data points. The company has seen strong results from its fulfillment optimization efforts. They have been very successful to date. We are looking forward to maintaining this positive trend and optimizing the efficient fulfillment customers’ online orders across our global network.


Party City opens 50 Toy Pop Up Stores

Party City will Open 50 Toy City Pop-Up Stores This Year after Toys”R”Us closes its last stores this week. Party City announced yesterday that it will open temporary locations in conjunction with its Halloween City pop up shops in “optimal markets” where it discovered “attractive leasing possibilities. Due to a shortage of stores, many retailers have been able negotiate favorable rents or lease terms. The company hopes to fill the Toys”R”Us void. As toy vendors search for new venues to sell their merchandise, companies like Target, Walmart, Barnes & Noble, Five Below and Target are likely to gain a share of the market. KB Toys also plans to make a comeback.

Total Retail’s View: Party City made a smart decision. Party City recognizes that there is a gap in the market after Toys”R”Us closed, and will capitalize on this opportunity by using its existing pop-up model (see the Halloween City stores). Party City doesn’t have to take on the financial risks associated with long-term leases for retail space. Instead, it will opt for pop-up shops. Party City will be able to find a bargain with the number of recent retail closings. Party City may also consider converting some spaces to full-time employment if its pop-up shops do well in the holiday season.


Report: Amazon Plans Holiday Toy Catalog

According to Bloomberg, plans to publish a holiday catalog to try and win the toy business that was left open after the demiseof Toys”R”Us. Bloomberg was told by people familiar with the strategy that the catalog would be sent to millions of households in the United States and distributed at Whole Foods stores, which Amazon purchased last year for $13.7 million.

Total Retail’s View: Another example of Amazon trying to take advantage of the Toys “R” Us bankruptcy is a holiday toy catalog. As it expands its brick and mortar footprint, Amazon began looking at purchasing vacant Toys”R”Us stores earlier in the year. Amazon also has a print catalog that shows it is open to trying other marketing channels. Despite all its problems, Toys “R”Us was still a major force during Christmas. Toys”R”Us’ “Big Book” toy catalogue was a holiday classic. Toy manufacturers often began their holiday advertising to coincide with the arrival of the catalog in late October. Kids still love browsing through toy catalogues, which Target and Walmart also produce, to create their wish lists.


Changes in store models mean that C-Suite must harness technology change initiatives

We are used to hearing about stores closing down dozens of shops, but there are many new technologies that promise to revive those remaining. The options available to retailers who are trying lifesaving technologies are overwhelming. While it is a positive thing that executives have signed off on systems to improve the way their employees interact with customers, they are not able to guarantee success. Many of the new platforms are not being used because the customer-facing associate, who is crucially the one using them, isn’t comfortable with the technology. Retailers are not achieving their goals and should reprioritize brick and mortar technologies so that they can focus on the store associates and customers.

Senior executives must understand that the right time is now to implement change initiatives. Decision makers must take the time to evaluate the true value of technology to customers before investing in another store system. The following areas need to be evaluated:

  • What will associates do with it to satisfy in-store customers’ needs?
  • How can management communicate with hundreds of employees about new technology and train them?

As a house cannot be built without framing the foundation, new store systems must be supported by store associates. This will increase their comfort with new initiatives, communicate instantly between all employees (store, district, and region) and objectively assess new system effectiveness.

Mobile is a key disruptor

The future of physical stores will be disrupted by technology, with mobile leading the charge. Tablets allow consumers to search products and prices in-store. This gives sales representatives the tools they need in order to satisfy customers’ needs and provide exceptional service. The mobile platform allows for instant two-way communication that helps retailers support their employees better.

Associate mobile devices improve the shopping experience by providing real-time inventory information and customer data. They also have the ability to serve customers and process transactions from anywhere within the store. Boston Retail Partners survey found that 89 percent of retailers plan to provide mobile solutions to store associates within the next three years. In most cases, mobile apps can be created internally in fractions of the time it takes to implement a complete mobile point–of-sale system. The study also found that many retailers focus only on the technical solution, and neglect the necessary process work to make the implementation a success.

Change driven by mACP (mobile Associate Communications Platform).

Retail leaders who are successful can equip themselves with scientific communication platforms (such as the mACP) that enable them to build efficiency, customer and associate engagement, and increase sales. Technology must be adopted by senior executives to ensure that their store associates are more knowledgeable about the products than the shoppers.

A recent industry survey titled Consumer In–Store Shopping Survey found that 79 percent of respondents believed knowledgeable store associates were “important” or very important. 72% of those who responded said they had a better shopping experience if they used their mobile devices to get information, check out inventory, and make purchases. Nearly half of those who responded said that a knowledgeable associate would encourage them to shop in store if they could suggest products based upon their past purchases.

Learn more:

Mobile can be used to help physical stores meet higher consumer expectations when it is used well. Mobile can help senior executives be more successful in introducing new technologies to their stores and helping associates adopt new initiatives that will improve their knowledge and enhance customer service. Be sure to have a plan in place for ensuring the success of any systems that improve employees’ interactions with customers and their work. Because you will be constantly challenged by change.


Sears to Shutter 72 Other Stores

Sears Holdings announced Thursday that it will close more than 70 stores in 2018 due to its continuing decline in sales. The retailer had identified 100 non-profitable Sears/Kmart stores earlier this year and today announced that 72 of those stores would be closed “in the near future”. Sears released a statement to announce its fiscal results for the first quarter. It stated: “We continue evaluating our network of shops, which are a crucial component in our transformation and will make further adjustments if necessary and as warranted.” According to the company, the list of stores that will be closing will be released sometime Thursday. Sears also announced that an independent committee is currently evaluating a deal in which the company would sell certain assets to ESL Investments CEO Eddie Lampert.

Total Retail’s View: Sears continues its downward spiral and is trying to survive. The retailer plans to reduce costs by closing down unprofitable stores. The retailer is looking to cut costs by closing down unprofitable stores. However, sales have declined further without showing signs of a turnaround for its iconic retail brand. Sears reported a loss in its first quarter and revenue dropped more than 30% to $2.89 Billion from $4.2 Billion a year earlier. The key indicator used to assess a retailer’s health is the same-store sales. They were down by 11.9 percent. Many industry experts believe Sears is in dire financial straits and are considering filing for bankruptcy.


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