Monday, May 10, 2010

Trade Secrets Exposed

Free Racine readers may know that I own a retail business in downtown Racine. I tend to separate my business interests from my political interests, but on this occasion the two are somewhat intertwined.

Every so often I hear rumblings that I am engaged in unfair or at least unfriendly business practices. The allegation typically goes something like this: I send spies into other retail businesses, I steal their ideas (lines, prices etc...) then I carry the same line with a lower price. I have reason to believe this silliness is happening again and I will use this as a teaching moment.

For starters, the accusers in these situations have some explaining to do. In order to buy products and or lines and avoid duplication and or undercutting other retailers, I would need to know beforehand every product and line being sold and at what price they are being resold by every nearby retailer. This would be a full time job and a complete waste of my time.

So instead, here is my secret that I will freely share with other retailers. I base my purchasing decisions without any regard to other retailers. Instead, I try to meet the needs of my customers. This is a tried and true retail strategy - give the customers what they want.

More secrets: There are only so many ways to make your offerings attractive to people who may freely choose to spend their money elsewhere. Among them are good prices, quality, quantity, and good service. These tend to be our focus. Whenever possible, we will purchase from the source. This involves traveling to other countries and avoiding wholesale markups. The problem with this strategy is that you have to buy large quantities to make it worth your while. Sometimes it is hard to move enough product to make this worthwhile. So what we do is take our show on the road. We sell at festivals, fairs, we do fund raisers at hospitals throughout the midwest. We can't simply sit in our store and hope for customers.

I realize that not everyone has the resources or knowhow to jet around the world looking for good product. Not everyone has cultivated the relationships that we have over the years to allow us access to markets outside Racine. Not everyone had the foresight, resources and luck to buy a large building that allows us to implement our strategy. Now I am not apologizing here. We have worked hard, we have taken advantage of opportunities, we have made sensible decisions for the most part, we have created a store and an atmosphere that attracts customers who are willing to part with their money for our stuff.

My accusers are making a huge mistake. Instead of focussing on their own business, they are getting worked up and distracted over what I am doing. I can't help but think this will lead to internal neglect of their own businesses and possibly a toxic attitude and atmosphere that will negatively affect customer relations.

Another mistake I will call the static pie fallacy. It goes like this: There is only so much money being spent downtown, so any money spent at my store is money being taken from potential customers in your store. The mistake is the assumption that the pie, or the money being spent downtown is a constant. Not true, the pie can grow. And I am helping it grow by attracting customers to my store. The customers who in some cases drive long distances to come to my store might just notice yours as well. And this works both ways of course. In short, my business threatens no other businesses. Rather, it helps other businesses, and theirs mine. This is why businesses congregate near other businesses. If they were hell bent on avoiding competition they should open a business far away from potential competitors.

I want downtown businesses to thrive. It will help my business in turn. The best way to make that happen is to focus 100% on internal operations, honestly assess strengths and weaknesses, and forget about what your neighbor is doing. In short, we will all be better off if you, quite literally, mind your own business.


BradK said...

Um... does that mean you DON'T want my scouting report on the ice cream store?

BradK said...

Cuz they got some flavors this year... mmmm-mm-mm-m-mmmm

Denis Navratil said...

BradK, give me the brand name and preferred flavor and I will get it for you at half price.

Anonymous said...

Much like your "Enough" post from two weeks ago, someone else has determined that you have made enough money. Perhaps you could contribute 2/3 of your profits over, say, $10 per month, to the other businesses who are hurting. Maybe you could teach them how to succeed. Nah, it's easier to complain. Besides, they wouldn't listen to you anyway, after you stole their ideas - ESPECIALLY their idea to have a door on the front of their stores to let customers in. Absolute genius, must have learned that one at Gateway!

Downtown Brown said...

You can have a door on the FRONT of the STORE...WTF wasn't I told about this?? Somebody better send me some stimulus money!!

Anonymous said...

Politically we are miles apart but on running a business you are dead on. DT Racine retailers need to concentrate on their operation and quit looking for someone to blame for their failures.

Anonymous said...


Denis Navratil said...

Thank you for your comments anon 3:43 and anon 5:07.

Anon 3:43, I am glad you appreciate and agree with my business philosophy, so I am a bit confused as to why we would be miles apart politically. In my view, my business and political philosophy are consistent. As in business as in life and politics. We should first look at ourselves and refrain from blaming others for our problems, for the most part. Yes, we should blame the armed robber for our gunshot wounds. Liberals tend to look for whom to blame for problems and then present themselves as the solution. Society has done wrong to such and such group and society must make amends, typically by taking from earners and giving to the politically connected and the preferred victims. Nowhere in this formula is there any need for personal responsibility for the potentially self reliant or charity for true dependents like children, mentally handicapped etc... Government and force is the answer to every problem. My accuser is behaving in a similar manner insofar as he/she wants to have power over my decisions.

Anyway, thats my 2 cents.

Anonymous said...

3:43 -
Economic freedom and political freedom are tied together.