I learnt at Tech School that I didn’t have a head for accounting. I simply could not understand the debit and credit thing. Mind you, my business studies teacher, Bruce, didn’t seem to understand the concept either! All he said to us was, “For every debit there’s a credit”.
You see, teaching accounting to a bunch of inner-city larrikins was not what he imagined he would be doing when he agreed to come to Australia. He had been a high school PE teacher in ‘Smalltown, USA’ and was seconded Down Under to play basketball for the Melbourne Tigers. He had no idea about Australia, or accounting! So while his, and our, accounting skills were not too sharp, our basketball team certainly was!
And all these years later my ears still ring with the sound of Bruce screaming; “Run Nicholson!” (I never did!) and “For every debit there’s a credit” (it’s true!).
I never quite got my head around accounting, but I was able to master contrarian thinking, largely by accepting the whole ‘debit and credit’ thing. Of course it’s the same concept as “For every negative there’s a positive”, though most people never get past ‘every negative’, preferring to live life in ignorance of ‘a positive’.
And that’s especially so when change occurs, because there is a predisposition to initially view change as a negative. We are, or have learnt to be, comfortable in the ‘now’ and when things change it can upset our normality.
And just when we get used to the new norm after change, there’s a new negative that requires a new positive. I believe it’s the speed at which one recognises and adapts to the positive that sets the successful apart from the not so successful. It seems to me that the speed of change in business has accelerated and another ‘new negative’ is always just around the corner.
In our industry, I think this debit and credit notion is best exemplified by branded jewellery. It was only a few short years ago that branded jewellery was virtually unheard of. Selling this new product meant you had to deal with big brands with big demands telling you how they expected you to run your business.
It was a break with the norm. It was change and therefore negative. The smart operators quickly recognised the ‘positive’ and adopted branded products early, ahead of their competitors. Some still haven’t!
The positive was that it was profitable. For some, immensely profitable! Customers came streaming through the door, largely because the brands had compelled them to. Their advertising and marketing was not only professional, it was influential. Isn’t that what marketing is meant to be?
But, alas, new negatives were just around the corner. For every debit there’s a credit!
Under this new order, the customer was no longer yours; they ‘belonged’ to the brand. They were in your store because the brand had told them to go there. Worse still, customers could now shop solely on price, because the product was available in numerous stores and, terrifyingly, could easily be price-compared on this thing called the internet. Oh, so many new negatives!
The smart jewellers, once again, were the ones who quickly saw these negatives and adapted accordingly. They created a relationship with the new customers that were being introduced to their store courtesy of the brands. They welcomed the arrival of new, ‘free’ customers gifted to their stores by their supplier. What a world!
The successful retailers turned these new visitors into their customers, and the unsuccessful retailers – the ones who never get past ‘for every negative’ – well… they just sold the product and handed it over the counter, never to see the customer again.
So what’s the positive in all of this? Jewellers have the unique ability, unlike almost all other retail categories, to benefit greatly from a mix of branded and generic product.
So the trick is how to do that. I’ll cover that next month but in a nutshell, Bruce would also say, “Compete, or go home!”