What Makes a Shoe Store Sellable? The Metrics That Matter with Alan Miklofsky

In this powerful conversation, Pete Mohr sits down with industry legend Alan Miklofsky to unpack the real reasons some footwear retailers thrive—and others close their doors too soon. From building a business that's not dependent on you, to understanding KPIs, valuation, and exit readiness, this episode offers essential strategies for every independent shoe store owner.

💬 Topics Covered:
 → How to calculate seller discretionary earnings
 → What KPIs matter most in footwear retail
 → Inventory valuation, markdowns, and customer retention metrics
 → The mindset shift from owner-operator to investor
 → Delegation vs. abdication and building real accountability

💡 Guest: Alan Miklofsky
 Alan is a long-time footwear retailer turned business coach and writer. Find his Shoe Store 3.0 Encyclopedia and connect with him here: https://www.linkedin.com/in/alanmiklofsky/

📩 Want to connect with Alan?

Linkedin: alanmiklofsky

🎙 Host: Pete Mohr
 Pete is a Certified Exit Planner helping retail store owners create businesses that thrive with or without them. Learn more: https://theexitreadybusiness.com

📩 Want to connect with Pete?

Email: pete@simplifyingentrepreneurship.com

Website: Shoetopia & Pete-Mohr

Podcast: The Footwear Retailer Podcast

PLUS: Whenever you're ready, here are 3 ways I can help you move from the Operator’s seat to the Owner’s seat in your business:

1. Take the Value Builder Assessment to better understand the areas of your business that add the most value to your business - Click Here

2. Uncover your Kolbe. Whether just for you, or for your full team, better understand leadership strengths and ways you can advance your People - Click Here.

3. Listen my other podcast Business Owner Breakthrough podcast as well for quick tools and tips - Click Here

Transcript

0:00

Alan, it's a pleasure to have you here on the footwear retailer today. Thanks for inviting me. I appreciate being here. I think you and I shared passion for helping other shoe retailers. Yeah, for sure, Alan. It's a big piece and I mean I know several years ago you exited your shoe stores and that's a big part of what I do today in my coaching business, being a certified exit planner and all that sort of stuff. But I'm still knee deep. I just came off a trade show yesterday and as we're recording this, heading down to the Atlanta show or later this week and kind of excited to roll through this stuff with you today. I mean, you've had a storied history in the footwear industry, both as a retailer, as a coach director on the National Shoe Retailers association, all sorts of different things that you've done and quite. And it's been a big part of your life, hasn't it Alan? Yeah, I, I started in the shoe business slightly, a little bit before I got married. I met my wife. My wife's family was in the shoe business for generations. We, I went to work for my father in law, quickly bought one of his shoe stores, we expanded it and we sold it about 25 years ago. We got back into it, took the stores back, ran it again and sold it again about three years ago. Yeah, I mean, and now, and now you're working, helping other shoe business owners, you know, succeed and do better and live the life that they want to through their shoe stores. Right. As I, you know, as I really started to progress and improve along the way, I took a really deep interest in numbers. I took a really deep interest in merchandising through the help of mentors in the shoe business. And you know, I just, it's really been not only my vocation but my hobby. So when I retired I was trying to figure out what am I going to do now? Well, I wasn't going to do something else. So I decided part time I would help other shoe retailers because I want to make sure some people don't go out of business and I just want to make sure that the segment of independent shoe retailing continues to thrive and there's a reason for independent shoe retailers to exist. And so I also decided to dabble in writing some articles. So I'm a regular contributor to a couple of trade publications and I stay out of my wife's hair. So we're not arguing 24 7. So it's about half a day's work, Bob, four or five days a week. I love it. Good for you. And, and you know, we share a lot of things in common. Likewise, I do a little bit of writing and this podcast was something I've been thinking about for quite some time now and wanted to get rolling along with the other podcasts that I've had for several years called the Business Owner Breakthrough. But this one I said, you know, a lot of what I do is around the footwear industry, so we need to have one specifically for the footwear retailer. And that's why I wanted to have you on Alan. I mean, we co authored an article a few months ago. We got talking about some AI stuff. We both love that kind of piece of the puzzle and how it can help productivity, help shoe store owners do even better. But you know, from your experience, since you put your coaching hat on outside of just that piece of the puzzle, one of the biggest challenges that you're seeing the footwear industry from the retail side of things in particular go through these days and what are the things that your clients are saying? Hey Alan, you know, I'm really thinking about this a lot. What are your thoughts and how can you help this? Well, the first thing is that the purpose of being in business is to make a return on your investment. And part of the return on investment is the day to day income you make from running your business. And part of your return on investment is how much you're going to make or not make when you decide to go out of business. So I help retailers crunch their numbers, so to speak. I help them look at their business and create some sort of numbers to run their business off of and plan for the future. So as we both know that there's KPIs around a selling experience. So a salesman waits on a customer and we want them to sell X number of pairs per transaction and a certain amount of accessories in percentage of sales or number of accessories or items for a transaction. There's also KPIs that exist for the expense ratios and the gross profit ratio and then and the, you know, profit that you would take out of a business and the KPIs of what you're going to expect when you sell a business. And most retailers are just not engaged around those. They tend to employ some bookkeepers, they have a tax, a CPA that does their taxes and they don't get involved in a lot of these numbers that if they did, they probably run a more successful business and when they decided to sell their business or liquidate their business, they would probably end up with a better return on their investment. Yeah, you're talking my language as a certified exit planner. And I also do work with the value builder side of things, which on my website@theexitreadybusiness.com I've got this assessment and it's called the value builder assessment. And when you take that value builder assessment, you go through kind of what you were just talking about. It's all of these different things that create the value in your business. And I always find it interesting. You know, before I got into shoes, I was a business broker helping people buy and sell businesses. And that's one of the things that I've done in my past. And you know, you put all these packages together on the sell side, but you're also looking through them all on the buy side. And so many of these businesses weren't really ready to sell. And it's an interesting thing because for so many small business owners, our business is the biggest asset in our investment portfolio, yet we don't even know what the value of it is. We don't know how to make it go up or down necessarily. We kind of just trug along doing the day to day without this sort of goal of building value in the business. Because someday you will exit your business. And someday, no matter what, we all are going to exit our business. And you know, it's got to do with a whole bunch of things like legacy to the family. It's got to do with money, of course. It's got to do with what you want this business to be like when you exit your business. Because not everybody exit their business. You've had some awesome opportunities to exit your business, but not everybody exits their business when they want to. Sometimes you exit your business because you have to. And, and you know, there's a couple things that, as anybody's listening, you probably know someone who's passed away prematurely and they're, you know, and wasn't expecting that and nor was their business ready for it. Or maybe a divorce has happened and that causes a lot of premature exits or disability where you're out of your business for three, six months, nine months, maybe cancer treatments, maybe it's a car accident. All of these things can cause diseases, detrimental effects to your business. Maybe it's a partnership disagreement for those of you who have had partners. And it's like, okay, well there's good chance if there's a partnership disagreement to any severity that one of those partners won't be in the business any longer. Is the business set up for that? Is it all of these things Are they in alignment so that you can maximize the retention of the value you built in your business for X amount of years? And I think it's something so many small business owners think about, you know, getting everything going, but they don't actually think about the end. And the one thing that's a given is you will exit your business one day. I, I think that everything you said is true. Most people aren't prepared. They don't know their metrics. They're not. And, and what I focus on is the, the numbers. So a lot of businesses aren't prepared to show the transparency to the buyer so that the buyer will understand the value proposition that you are trying to create here. You're trying to say that I've created this cash flow machine. Yep. Now you got to prove it. And the buyer has to understand what you're trying to prove. You yourself may understand all the little nuances and you plug this expense under the year, but the buyer really considers it that expense. And you know that this works. So you don't think you need to prove it to anyone because it works under your set of reasoning. But the buyer and the seller have to have value in a transaction and it exists. Even if you don't sell your business, even if you pass it on to the next generation, there has to be value. That next person, your son or a relative or your employees, they got to be able to run with that business, they got to be able to finance that business. They got to be able to have credit lines so that they can meet all the obligations you did. And if you keep track of all these ratios and it's not going to be that difficult, I make it sound technical, but it's really not, then your business will have a future. And if your business has a future, you've built an asset that's worth selling. I love that. And you know, in my. Here's an interesting thing, right? You know, and it's a normal thing for small business owners. What do we want to do? We want to minimize the profit on our P and L every year so we don't have to pay as much tax. Right. But when you flip the switch, when it comes time to looking at your business for sale, and we're talking about profit here in my sort of six P's that I often use, it's the place that you want to get to. But if you can't prove the profit, like you said, if you can't actually show the profit there and you don't have all your notes down and you don't have all the things because you know, do you need a Mercedes four door sedan to run your shoe store? No, but it's on the balance sheet, you know. And do you need to go to Italy to do that? That trip to Italy to buy 20 pairs of shoes at the Italy show so you can write it off? Not necessarily, but that's a $20,000 spend. And so all of these different things as you go through your income statement and your balance need to be recasted out to show the true worth of your business to that potential new owner. And if you can't prove those, and you can't remember from two or three years ago where those are, and we're starting now to talk about multiples, when we look at what's the multiple of my business and you can't actually prove that multiple, they won't pay you for it. And that's a big piece of the puzzle. When we get into due diligence that most people don't think about, it's like, okay, well if let's say a multiple is two times or let's say it's seven times, it doesn't matter. But if multiple of zero is zero, so if you can't prove that profit and you don't have the lines of information and make it really clear and due diligence, they're not going to pay you those multiples you're looking for. Yeah, I certainly agree. And right now, purchases of other shoe stores, every buyer wants to buy it on an asset based purchase and they want to be able to assign a value to each one of these assets. Inventory is easy, even though it's difficult, it's easiest. Of these other ones it is, which would be goodwill and depreciated value of fixtures. However, inventory usually ends up being the obstacle because most independent shoe retailers carry their inventory at cost and it's not worth cost the minute you bought it. Okay, it's really lost worth the lower of cost or market. And the variables to get to lower cost or market are a few that need to be taken into consideration. But sellers who've been carrying it on their balance sheet of cost and don't have some sort of figure in their mind, at least for the depreciation they're going to have to take when they sell it, they become shocked and tend to walk away if they're not properly instructed. And then you take the asset values, you total them up and you measure them against this multiple of seller discretionary income. Obviously these things you mentioned, you already know that you could take that Mercedes and you could add it back. Okay. You may not be able to take that buying trip if you assign it to the merchandise that you bought and add it back, but you would do that anyhow. Okay. There are a few add backs and you would come up with the seller discretionary earnings and you would put a multiple on that. And no well thinking educated buyer nor his advisors would allow you to buy retail business more than a certain range of that multiple. Okay? And my rule of thumb is 3 to 5 times x seller discretionary earnings. And the best businesses might get five and the worst businesses with the risky thing might get a three or less. Okay? And the problem is is that no buyer is going to think that a business is going to worth more worth five. And no seller likes to think his business is worth less than 5x. And it usually becomes a discussion about inventory, as I said, and that's usually what breaks things apart. What the real education of looking at these numbers is to keep a realistic expectation in the seller's mind of what he has built and allow him to look for alternatives of how to replace those decreases in value. By pumping up the revenue, by improving the ratio of net income to sales in various ways. By investing in marketing so that he gets new customers in the door. By investing in various programs to retain customers, make your existing customers buy more. And those are the things you start to think about intimately when you do this report card for yourself, either quarterly or annually about where your business stands on a value based analysis. I love it. I mean, so many of my clients, that's one of the things we do is set up these quarterly rhythm meetings so that we're reviewing these key metrics and we're going through this stuff. If I put my business broker hat on or my exit planner hat on. When you have your business running on rails and when things are in alignment and when you can step away and things get done without your involvement, basically for every little decision now you're looking at your business and you're saying, okay, I've got this much invested in this business. And if I'm looking at my return, which is where you kind of started the conversation, I'm looking at my return on the amount that I've invested. Is this a good investment outside of the fact that it's what I do and it's my job, let's say. But is it a good investment? And when we look at it on a quarterly basis, it's like, do I still want to keep this business or do I Want to start the process of selling it. And I think it's just healthy to be going through that on a quarterly basis to say, is this in alignment? Because let's go back to that other person that's coming to maybe look at your business as you put it up for sale down the road. They're going to be in the same boat. Let's say the business is listed for 2 million bucks and the new owner's looking at it and saying, for 2 million bucks, would I be best to spend it here with this particular business? Or would I buy a pet store, or would I buy an auto shop, or would I buy bonds or securities or, you know, or am I buying General Electric or Tesla? I mean, it doesn't really matter. But somebody who's got this amount of money has other options. And this is another thing that a lot of small business owners don't understand that well is the fact that not every business, not every time, and I'm a prime example. When I bought into our shoe stores 15 years ago, I wasn't a shoe store owner. I'd ran service businesses for 15 years prior. I bought our shoe stores because it was a good investment. And I think there are business owners out there that will look at your business. I'm talking to you, the listener, and are going to be interested because it's a good, solid business. The next piece of the puzzle is can they run this business without you being there? And that's an issue for a lot of small businesses in our industry, isn't it, Alan? You know, it is a problem because there's a balance that some of these people need to consider. If you're. Most of the shoe stores in our industry are one store operations, more than half of them, at least by the measurement of who joins the trade association and some of the lines that they carry. And they might be in the county seat and, you know, the. The one block in the area of that one county seat that all the retail businesses are operating. They may own their building, they may not own their building, and they. They tend to be people that have run their business and have worked in their business and they have brought somebody up over a long period of time that they could rely on. There are a few businesses, yours might be in a. An outlier that where the owner isn't really in the middle, involved in some sort of way. There are some absentee situations, but most of these shoe stores are being run or supervised by a person that has figured out his own winning formula. And it's very difficult for them to follow somebody else's winning formula. And therefore it's very difficult to sell that business because you need to sell it to somebody that has confidence that the seller is not the integral party that is involved. In other words, I had a person that looked at my business and said, how much do you work on the floor? And I wasn't working very much on the floor because we were running multiple stores and e commerce business. And he said, good. He said, because I want to know that when you retire, this business doesn't fall apart. And most shoe stores are like that. If they're small shoe stores, there are rare shoe stores and there are a number of them that do significant volume where the owner's contributions are not totally integral to the operations. So someone could take that over and they could find a second person in that story who could do their thing and they could probably replace the bookkeeping oversight functions in some sort of way from the owner. And they probably can figure out who's going to do the buying. And what I'm getting to is that the seller of a business, anyone interested in selling a business has to understand what is he building here? Is he building something that he's not going to be able to sell because he's too involved in the operation of it? Or is he selling something that has legs, so to speak, can be run by other people and has value beyond sellers contributions to the business? I completely agree with a lot of that. I mean, we don't have a huge operation here. We've got two stores. But at the same time, I work, give or take a day, a week within Shootopia, our two stores. And we do have everything sort of set up and exit ready. My last piece of the puzzle really was to hand off the financing side of things because I wanted to. I'm taking a month sabbatical and so, you know, everything still needs to be paid when I'm away. So from that perspective, earlier a couple weeks ago I signed off or I gave authority to make all final payments to the bank accounts, to the person that looks after finance for us. And you know, my next step here for the next month as we're recording this just before I leave is I. I'm not going to have any conversations whatsoever about Shootopia, literally unless one of the stores burns down or something. I mean, it's not like I won't. But our test for whether or not this is exit ready is this final piece. It's like, hey, listen, make all payments, make all, everything is done without my involvement. Whatsoever. And, and we'll see in another month we'll have a little recap and, and see what went wrong, what went right, just as a final test on this piece of the puzzle. And, and I'm, I'm kind of excited about it because it's one of the big pieces that I talk about. It's like you should, shouldn't have to be involved in every little piece of the puzzle. Even if you are a one store owner. You should have things cross trained. You should have other people that are able to open and close for you. You should have people that allow you the opportunity to take a vacation. You give your employees vacation time off. And I find it so frustrating when I talk to different business owners that say I haven't taken a week off in years. And when I, and if I do take a week off, I'm tied to my phone. Well, being tied to your phone when you're away is not a week off. It's just working from another location. I have to admit that I was tied to my phone. However, I had a pretty big staff, a pretty good central office and we ran multiple stores and our stores were pretty big, you know, 11,000 plus square feet, 8,000 square feet, you know, operation. Another building that we own where we occupied half of it, we sold that one before we ended up selling another store. And so we had a staff, so we had gal that could handle the payment of the accounts payable and we had a system for checks and balances. So that brings up the topic of delegate versus abdicate. I mean I really think you need to have reports so that you understand when you come back, you know, what happened and what didn't happen. And I would always have this fear or concern that it seemed that when I was on, you know, a trade show trip or a vacation that I wouldn't get a call if someone fell down in the store and broke their leg. But if someone had a corn, you know, they came in with, I'd get a call about that. Okay, so sometimes you have to make sure the staff is alerting you to the right thing. Yeah, I think that's part of the regular communication and meeting structure and a lot of the different things that we need to set up in our businesses. And you know, I call, I call moving from detail to dashboard in our businesses, as leaders in our businesses. Right. And you have that dashboard that you mentioned, those KPIs, when you have that dashboard. And it's not just about the upts, it's not just about the gross daily sales you know, it's. It's about a lot of things that aren't even on the pos, your pos reporting structures. It's on. It's on all these other things, too, that make a difference for your business. And that's the kind of stuff that I'm always interested in looking at. And when we go through and talk about our. In our weekly team meetings and our quarterlies and all that kind of stuff, it's like, where are we sitting with this stuff? Because we have the process in place and we have all these different things lined out, and we have the right accountability structure, as you said. Elevate and delegate that accountability structure. It's an interesting thing. Here's one that, that I want to ask you about, Alan. You know, there's lots of people that will hand off a title. And when we look at, okay, you're now the assistant store manager or the store manager or the bookkeeper or whatever the case is, you now have a title. But I find in a lot of small business, it's not. It's not specific to our industry by any means, but you. You're okay with giving somebody a title, but you. You're not actually okay with actually giving them the authority to live within that title. You know, in most small shoe store businesses, a person's title really encompasses a bunch of smaller roles. What we did is we created a job description for each role, not necessarily each person's position. Yeah. And then a person's position might encompass several roles. So I'll give you the simplest one. So you create a job description for what it means to be a sales associate. And within that job description is a sub description for cash sharing responsibilities. And that's a role at a cashier. The assistant manager has to be both the cashier and the sales associate, and the person that also closes and opens the store and makes sure that you receive merchandise correctly. So they have like four or five job roles. They might get four or five sheets from me, and that will be confusing. So they need a header sheet to explain it. Store manager, of course, that's multiplied. So it. Talking about their roles became a little bit easier. The role in a specific interaction within the store. Okay. And then their job description encompassed several roles. Yeah, I love that. I mean, we use the term accountability chart as opposed to organizational chart. And I got that years ago from Gina Wickman when he wrote the book Traction. And I just like this idea of I'm more interested in about what you're accountable for than what your title is. And from that perspective, it's like, all right, if I'm actually aligning and assigning accountability to you, then I'm going to hold you accountable for that. And I do. And it's kind of like this idea. You own this now. So you tell me what we need to do here, and as the business owner, I'll offer my opinions and things like that. But until we determine else wise, this is your accountability. And we work that way with sort of whether it be marketing, whether it be sales, whether it be store manager, whether it be bookkeeping, any of the different parameters within the store. Everybody has their accountabilities. And yeah, I sit in the owner's box of that. But operationally, I really don't have much left to do operationally anymore. At times I think I should be more involved, but at other times I'm looking at our process and I'm looking at the variety of different things, and I'm saying, hmm, I don't know that I need to be. And what sort of like, as you think, from detail to dashboard, And I'm asking you as a business coach, you know, where do you think the level of dashboard is needed and when do you need to dig down into certain things? Alan, so let's talk about a couple of things. One would be metrics around merchandising that I think is really important. Metrics around sales. Yeah. But before I do that, I want to talk to you about the tale of two types of managers. Yeah. So I, at the time that I had, was running four or five operations. I'd have. I happened to have two male managers in two of the stores and two female managers. Yeah. You could eat off the floor of a stockroom in the female manager's stores. You could not eat off the floor of the stock room in the male manager stores. But their sales emphasis was stronger for some reason. I'm not saying females did pretty good by themselves, by the way. We had store managers of pretty sizable storage that were, you know, at the time, and this was 15 years ago, writing$300,000 each themselves. Yeah. In addition to managing some staff and receiving and whatever needs to be done here. And. But they would really overemphasize certain things of their job, as if, you know, if, if we can't eat off the floor, the whole business fails. But I didn't really care that much about it. I really wanted to make sure every customer was maximized. Okay. Because. And so when you give out these rules, you also have to have a meeting of the minds, and it's established over multiple meetings of what is successful. And then these metrics help you measure success. So a metric for a shoe store that's a comfort shoot store operation with a little athletic, which I think the proper ratio these days, if you have the right brands, is about 30% athletic of your shoe sales, maybe more in some of them. And, and the metrics that I like to see is I want to make sure that the markdowns as a percentage of sales do not exceed a certain amount so that the maintained margin is withheld because maintain margin gross profit dollars is what you use to pay operating expenses and the difference becomes net operating income. And so if you. And we count this percentage in tenths of a percentage, we freak out if we drop 2/10 of a percentage. That's an important metric, right? Darn right. And what's built up and what's integral of that is shrinkage and markdowns. And so those markdowns to have to be including coupons and loyalty discounts and, and just regular markdowns get sale clearance. They have to be 8 or 10% of your sales and no more. And that metrics have to be measured. And if you, and if you are measuring your buyer based on those metrics and the gross profit percentage, they're probably doing a good job if they're meeting those metrics. So you probably don't need to get into every little detail of. Because you've always had talk over many years of what's appropriate to buy. You probably have the final say. So adding new brands, okay, you probably have a metric or a ratio or some sort of list that you want achieved if you're going to add that new brand or some sort of process you go through if you're going to drop a brand. And so those metrics are really important. The sales metrics are just as important, in fact, maybe more important because it costs you money to get a customer in that door and you don't want to lose them. And it costs you money when you lose a good customer. And you want to make sure every customer goes home with the if possible or a high percentage go home with the maximum purchase that they're going to be happy with when they get home. No, no more. But I'm willing it to be a little bit more because I'm willing to take a few refunds, but certainly no less. And so you have metrics that you establish and you share with your people and you measure them and someone on your staff, if you're not doing it, Pete is looking at Those metrics every pay period and having a discussion where a discussion needs to be had. And you're not overloading your salespeople with more than four or five benchmarks that they need to meet. The person looking at the report is looking at 10 benchmarks, but you're reporting four or five. And those people know that these are the four or five they're responsible for meeting, right? Yeah. I mean, I love the idea of four or five. I even go down to three as the most most popular for me is like, here are the three things that are most important right now when we look at these. And it's different for every individual person for the most part, because out of those 10 benchmarks, let's say there's three that they may be lower on, or there's three that we may able to learn from them because they lead the pack and then be able to share that with others too, which is the other part of the conversation. It's like, who's doing these things the best and how can we take that and share it with the rest and train to that and. And to set up process so that everybody can learn from that and do better and pull the whole thing up. I think that's an interesting thing too. You know, Alan, I know you're a big person on customer experience and setting up all of this sort of stuff as part of the sales structure and what keeps customers coming back and the loyalty side of things. I. I've read several of your articles around different stuff with regards to that over the years. And, you know, what are some of the things that you're suggesting these days that will help retailers build customer loyalty? First of all, I think that as a store owner, you need to understand that, try as you might, you can't violate the 2080 principle, that 20% of your product is probably responsible for 80% of your gross profit. And when you try to violate that, when you say, oh, this is cute and we should try this, and that has to be held to a tight percentage of your business. Those are tests. Those might happen. Those are cute shoes. They're not buying the purple pumps, trust me. Yeah, the purple pump is so you could sell the black pump. And by the way, I didn't sell pumps very well. No, we don't either. So the first thing is the owner needs to be disciplined. And through his discipline, he instills discipline in his staff. And the staff need to be disciplined. They need to have regular ways in which a customer is treated in the store. Now, you're not going to do this with 100% of your staff because you're not going to be successful with 100%, but you really want it to be the majority and those majority, the top 20% of your staff, it's hopefully bigger percentage are responsible for a big majority of your sales. But what you really want to do is make sure that you have the shoes in the wall that the customer wants today. Listen, within the comfort segment of the business, the top 25 brands have not changed very much over a long period of time. They're the top brands. And you know which brands these are because you're every good shoe store in America and Canada is probably carrying those brands and chances are they're carrying the same SKUs you're carrying. So as a buyer you got to make sure that you can stock. That means purchase future out, back up appropriately, fill in and recover on the best SKUs that the customers want. Because generally what they're doing is they're tailgating the brand name recognition of those brands and you're trying to sell a few unknown and exclusive high margin products in addition to it. Some people are trying more than others, okay? Because the margins attached to brand name products are very difficult to expand and we really need those higher margins to make our business successful. So when you carry all this product appropriately and there's no such thing as a perfect buyer, you have low markdowns, you have high customer satisfaction, you have a returning customer at a higher rate. Because if a customer walks today, they're unlikely to come back at a high percentage if they want. If they come back and they walk the second time, you're not going to see them again. So you want to sell, have in stock what they're likely to want or a selling system to be able to sit down and give them a full presentation, at least get them into something. Okay? So all of these are the things that come to mind when you want to think about the right type of sales floor mentality that you want and the reasoning behind it. I think one of the things that I find interesting as I look at our value builder assessment that we have, there's one there called recurring revenue. And whenever I have a shoe store owner fill that out, they usually say, well, we don't have recurring revenue, but you do. And I mean from, we use Shopify and from a Shopify point of sales, we can actually go on there and it says how many of our client base over the last month or week or year is recurring revenue. And when we look at that, depending on the time of year. In the winter months, it's, it's higher than in the summer months because we have more transient customer base in the summer. But you know, we're returning, give or take, at this time of year, 68% of our customers are already in our database. And to be able to prove that, getting back to sort of the value of your business, if you can't prove that you have a returning customer, those multiples go down. When you're talking about the difference between three and five, like that's, that's an issue. You gotta be able to prove to somebody else that you have a returning client base because then they can say, well, out of the X amount of dollars that you do at your store, 1 million, 5 million, whatever it is, that this amount is pretty guaranteed. The rest of it's coming in in a transient way, whatever the case may be. But all of these things, when we can start proving these things and legitimizing them and clarifying them, it really adds to the value of the business. And I encourage anybody listening here. It's good to have your, your loyalty programs. It's good to have, you know, emails that you can actually prove, have a significant open rate and a variety of these different things. But be thinking about these metrics as well as part of building the value in like what is your open rate? How many emails do you have? What, what's your overall pool of social and how active are they? What's the engagement rate like? All of these different things add up to the value of your business and you should be thinking about it in a long term basis because when they go back to look at these different things and this includes when you go to the banks. We talked a little bit about cash flow and stuff earlier in this call too. It's like if you go back to your banker and you want to plant a new store, you want to buy a new store or whatever the case is, have all these metrics in behind you. The avenue to get more money is a lot easier when you can prove this stuff. And I think it's really interesting when you look at it. What's your thought on that, Alan? Listen, I love feedback customers. I love customers that come back year after year. I'm going to introduce a term, maybe you've heard it. There are franchise shoes in our business. So I'll name. Let's take New Balance for example. Sure. If you carry New Balance and you are a sit and fit business. There are three franchise silhouettes. The 1540, the 990 and the 928. There are customers that come back on an average every nine months to buy a new pair. It is not a fashion item. Any of these three SKUs, it's a neat item. They, they love the fit and feel. I want that feedback. Returning customer. Now I'd like them to bring their daughter or their son or their husband or their wife and start to introduce a second customer in that family to buy it. I'd like them to buy an insole with that product. We put a lot of effort. We put a lot of effort into our stores, into selling aftermarket insoles. And I sold most of our aftermarket insoles, my company, to people that were buying a shoe with a extra cushion insole. Anyhow. Like the 1540 has a pretty decent insole. And it's not great. It's not the top of the line, but it's certainly adequate for the shoe. But we would say, let me show you A and B. Let me show you with that insole. Let me show you with the. It was either our linko or the replacement for the linko. A cadence or we. In between, we had an abeo insole. And there's always something. And one out of five people that bought a performance athletic shoe in our shores bought an aftermarket insole. So Those became over 200 customers that came back on average every nine months to buy another pair. So I loved this business. Listen, I loved selling dumb shoes. I only bought the fashion shoes. It's all the dumb ones. Yeah. Because the dumb ones have less markdowns. And I would early in my career compare my metrics against Stanley Strong, which was a. Is now a deceased previous chairman of the National Chewy Devil association, that at one time had so many stores in Texas, 40 of them, they ended up playing that he flew between the stores private plane, and he had a fashion business. And his markdown ratio was a lot higher than mine. He had. He started higher and he ended up about the same place, but slightly below. But his markdown. And every year his. His reason for customers coming back was they were going to see something new and fashionable and he ran a great business. But eventually, you know, change happens. And now what's happening is comfort beginning for a long time. And with the pandemic, if you've been paying attention as a retailer and anyone listening to this needs to go to shoe shows, you need to stop staying in your store. You need to see what's trending. But since the pandemic, and actually before, an athletic has been pretty damn strong. Birkenstocks have been pretty damn strong. They have not broken their trend. Uggs have been pretty damn strong. Okay, that's comfort shoes. And while you should carry some fashionable items, fashion might mean something different to each customer. We bought a store several years into our shoe retailing career. It was a Birkenstock store. We had never sold Birkenstocks before. I had never tried Birkenstocks on I have a flat foot. Okay, We. We go into the store. I. I worked into an opportunity at first right of refusal to buy the store because I was a real estate agent also, and I was trying to get this guy to move his store. He says, I've decided to go out of business, but I'm gonna give you first right of refusal because you own other shoe stores of my marketing. You're a nice guy. I'm starting my job tomorrow. Alan, you have a week to buy it. We made a deal because his volume was a lot higher than my volume of two other small stores. Walking in the store. We closed the store because he depleted the inventory, which is why I mentioned that you know some of the details. I go in with my partner's wife. We go into the store, we try on the shoes. We both say, you're not comfortable to us. But. But eventually they became comfortable because we didn't understand the product. Someone knocks on the door frantically. They need to get in. I. I need to buy a pair for a wedding. And I said, we don't carry dress shoes. No, I understand. I need a white pair of Birkenstocks. So within the buyer's mind is what fashion is. It may just be a high color or a special color white for a wedding. Or it could be something different than you as a buyer normally think. You need to understand your customer, and you need to understand what typical customers in stores that you're trying to emulate think are fashion. So you need to go to shows, you need to visit other shoe retailers, and you need to create some things that can't be quantified by numbers so that you can teach them not only to your staff, but you can measure your business. I love it. Alan, we've had some good chats here today. We've talked about team things. We've talked about key metrics. We've talked about building things out. We didn't get too much into AI today. We'll save that one maybe for another episode down the road. We talked about those key metrics and building systems and processes. We talked about accountability. I think we've covered a lot of great things on the call today, Alan, and I'd like to, for anybody listening here for them to have your information. So why don't you just let them know where they can find out a little bit more about you and what you're doing these days. Well, if you can see my name on the screen, which I can, so I'm assuming you can you search for me on LinkedIn and you will find my profile. And in my profile, you'll be able to link to my website. You'll see within my profile, LinkedIn, some of the things I'm working on. When you get to my personal website, you'll see that what I've created is more articles than you have time to read. However, I've been working on The Shoe Store 3.0 Encyclopedia, which covers a bunch of different subjects. Again, more data than you're interested in, but of every aspect that I can think of about running a shoe store. And I'm trying to make sure that people understand that they can learn from each other and that they can learn things and they can measure and they can ask questions. So I've got plenty of links for people to ask questions. I sometimes, sometimes have people reaching out for things that they think are unusual. And somewhere, if I haven't figured it out, I have someone that I can ask to figure it out. I love it. Thanks again for sharing some time with us here, Alan. And I'm looking forward to seeing you at the upcoming Atlanta Shoe Show. Thank you very much. Make it a great day. You, too.