What 1,512 means for natural retailers

What 1,512 means for natural retailers

One thousand, five hundred and twelve is the number of distinctly different services that the city of Tulsa, Okla., provides to its citizens.  How the city got to this point, and what they are doing about it, provides some good food for thought.

Tulsa, like many cities, is dealing with budgetary challenges— trying to balance demands for services while tax revenues are declining and costs are increasing. A citizens' group paid to have a management consulting firm assess the city’s performance and to come up with recommendations for improvements and cost cutting.  The firm, KPMG, came up with more than 1,100 recommendations.  A former student of mine and elected official, Preston Doerflinger, was asked to lead a team of city employees and civic leaders in evaluating these recommendations to see which should be enacted, modified or discarded.

This is where 1,512 comes in. The KPMG audit revealed that the city is currently providing 1,512 separate services, including the police department, fire department, trash pick-up, etc.  If you took a few minutes to think about it, you could come up with a pretty good list of things that cities provide for their citizens.  Could you get to several hundred?  How about five hundred? A thousand?

While sharing this information in his guest lecture to my entrepreneur class, Doerflinger pointed out that all of these services were, at one time, deemed valuable enough for the city to spend time and money on.  However, he also noted that many of them weren't relevant today or they represented valid needs that the city isn't in the best place to meet.

The opportunity cost of 1,512

Let's think about "opportunity cost." It is an economic term that means that doing one thing, if it costs you nothing else, costs you the opportunity to do something else. Money and time can only be spent once. Space can only be used for one thing at a time.

Ask yourself: How many departments and sub-departments are in your store? Are they all providing benefit for your current customers? Are they the best use of your retail space, your inventory dollars and your staff's time? Are the products that you are selling today meeting the needs of today's customers? How long has it been since you have made a thorough check?

Let's take the low-carb section as an example. Every store had one five years ago, but you may not need one today.  Peripheral departments such as sports nutrition, bulk foods and home cleaning products may not need the same space as five years ago, either.

If you have a huge low-carb department or another large amount of space devoted to a hot trend from years past, what arenot able to emphasize or sell? Remember, although 1,512 seems like a great number, more for the sake of more isn't necessarily better if you're not meeting your customers' needs.

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