How Decision-Making Styles Determine Success
A recent study conducted for the Pet Industry Distributors Association revealed a close correlation between business success and how a retailer gathers business intelligence.
When deciding what to stock in your retail pet store, do you rely on multiple sources of information to guide your purchasing decisions? If so, you might be a “Progressive and Inquisitive.” Do you seek out other information sources but rely heavily on your own personal experience and opinion? Then you may be a “Successful and Self-Reliant.” Do you rely almost entirely on your own personal experience and customer feedback? You are likely a “Die-Hard Sunsetter.”
These characterizations are drawn from a comprehensive survey of independent pet stores conducted for the Pet Industry Distributors Association (PIDA) late last year. The research found that there is a close correlation between business success and how a retailer gathers business intelligence. Do you fit neatly into one of the three decision maker styles? Does your style contribute to your business success, or is it hindering you from reaching your full potential?
The Progressives and Inquisitives
Comprising 30 percent of the survey respondents, the Progressives and Inquisitives were predominantly female. One-third had annual sales of over $1 million, and nearly as many took in between $500,000 and $1 million. Similarly, just under one-third reported annual sales growth of more than five percent, with slightly more saying sales grew one to five percent last year.
As their name suggests, the Progressives and Inquisitives are the most avid users of nearly all information sources to make decisions about what to stock and sell. Although they are somewhat less likely to attend distributors’ open houses or trade shows like Global Pet Expo or SuperZoo than the Successful and Self-Reliants, they are significantly more likely to use every other information resource. They are the highest users of:
- Customer feedback (92 percent)
- Online and print product reviews (85 percent)
- Advice from distributor reps (74 percent)
- Advice from manufacturer reps (72 percent)
- Manufacturers’ websites (82 percent)
- Sales analysis tools (63 percent)
- Visiting competitors’ stores (57 percent)
- Talking with other pet store retailers (46 percent)
- Active participation in online groups for pet store owners (46 percent)
The Successful and Self Reliant
Thirty-two percent of the respondents ran successful businesses but drew on limited sources in determining which products to stock. This group had the youngest members on average (53 percent under age 50) and the strongest sales revenue and growth. Forty-three percent had sales of more than $1 million per year, and a majority saw annual sales growth of more than five percent for the past two years.
To make stocking/selling decisions, the Successful and Self-Reliants rely most heavily on their personal experience and opinion (84 percent), attend distributors’ open house events (80 percent), ask for customer feedback (73 percent) and attend Global Pet Expo or SuperZoo (68 percent). But unlike the Progressives and Inquisitives, fewer than half rely on other information sources.
The Die-Hard Sunsetters
This was the largest subset of the survey respondents, comprising 38 percent. Store sales revenue was the lowest of the groups with 62 percent of respondents reporting sales of less than $500,000 per year. Sales growth also lagged behind the other groups, with more than half reporting flat or declining sales during the past two years. This was also the oldest of the three groups, with 55 percent of respondents being age 50 and older.
The Die-Hard Sunsetters rely on very few sources of information to make stocking/selling decisions aside from their personal experience and opinion and customer feedback. Only 14 percent attend distributor open houses and only three percent attend one of the major industry trade shows. They rarely seek advice from distributor sales reps or manufacturers’ reps, and only 13 percent talk with other pet retailers. Not surprisingly, this group was least likely to say that their store is treated as a valuable customer by their distributors.
Implications for Future Success
Although information sources used to make purchase decisions vary widely by segment, personal experience and opinion far outweigh any other consideration for all three groups. Consequently, manufacturers that give pet store owners the opportunity to try products—through samples, demonstrations, video or any other means—will be more likely to gain their support for a product.
The businesses of the largest percentage of pet store owners—the Die-Hard Sunsetters—are probably the most vulnerable when the next economic decline occurs. Given that they are the oldest of the three groups, they may retire or otherwise go out of business if they cannot find a way to make their stores more profitable.
If your decision-making is too reliant on your own intuition, you may be limiting your own success. Take a page from the Progressives and Inquisitives’ playbook and broaden the scope of your search for information on products to stock. It could be the key to greater sales growth in the future. PB
Steve King is a 35 year veteran of the pet industry. He is president of the Pet Industry Distributors Association and executive director of the Pet Care Trust.