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Small retail operations can be any number of combinations that to the public look to be pure retail They might include resale of merchandise only, or combine to include wholesale, manufacturing, and/or catalog sales When these businesses include signi cant revenues apart from straight retail, each element must be examined for its contribution to profits or losses These businesses are more apt to take on the personalities of their owners because of direct customer contacts Elements of business operation may change with each new owner s particular interests and skills It is not uncommon for parts of these businesses to remain with sellers as they dispose of the mainstay of operations through sale Thus one must examine product-line issues not just for pro tability but also for what remains to be valued and/or sold Forecasting is complicated where such multiplicity of product lines exists Seasonality, waxing and waning within lines, makes straightforward forecasting of sales and cost of goods sold inappropriate for major items of sale Inventories are more apt to contain larger measures of unsalable or slow-moving merchandise than in most other types of businesses in general Sales promotion and product display devices add considerably to the costs of doing business in many retail stores Samples and display apparatuses generally are not provided free to the retailer, and a mortality in such items can be quite signi cant on an annual basis Thus, in larger stores there will tend to be inventory of retained sales promotion items as well as expensed items of a discontinued nature Repair and maintenance expenses, for lack of interest, may contain many costs that do no more than support the retail selling effort Retail stores, since they are so bent upon point-of-purchase merchandising, make
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innumerable cosmetic improvements in facilities to encourage consumer preferences Annual write-offs can grow quite large in bigger stores Thus this category can seem unduly high to the nondiscerning eye
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This business was purchased in a condition near to bankruptcy by its present owner in 1986 Sales were substantially below subsistence levels, and service to customers was nonexistent The entire operation had suffered years of neglect; however, its earlier history revealed successes and a gradual winding down At the time of purchase, the business offered carpet, draperies, wallpaper, paint, kitchen cabinets, and light xtures The new owner leveraged his purchase by pledging personal assets, reserving cash for facility and business rehabilitation He remodeled the real estate and revamped product lines The kitchen cabinet and light xture lines were dropped, distributor carpet lines cut back from 17 to 8 and a direct-mill purchase added, wallpaper books carved from 500 to 200, drapery lines reduced from 21 to 10 and a designer-exclusive line added Both paint lines were replaced with a major brand name Extensive residential and commercial drapery hardware lines were added along with drapery material and supplies Because of the new owner s background, three lines of tile and stone ooring were added, along with an art gallery line of prints that the owner produced and also sold wholesale to various gift shops locally and nationally Carpet installation and drapery fabrication stood in shambles due to poor workmanship and installation Two full-time ooring and tile installers were hired, and two drapery seamstresses were employed for improved quality and overall control Installers are paid a combination of base wage and piece rate Seamstresses are paid by piece rate only Two decorators were employed and paid in a combination of base salary plus commissions paid on product sales made external of store resources The operation was contained in 4,000 square feet of a 10,000-squarefoot building, and 6,000 square feet was revamped for rent to other retail shops In 1988 a two-story specialized ministorage building was added to the six acres of prime road-frontage land Occupancy rose to 100% in late 1991 when all construction was completed The business implemented and maintains a separate direct-mill wholesale carpet line that is drop-shipped to various locations without overhead costs beyond the owner s personal time However, the store bene ts by a 31% discount on carpet at wholesale Since this aspect of the business is
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