Specialty Retail Blog

My client had come through 2009 with sales down and profits up. That was good news. She recognized that she had done better than many retailers, but she wanted to get much more from 2010. Bottom line, she wanted to make more money – and expected me to show her how. My problem was that we have been working together for 5 years, so she was already doing so many things right!

I worked her numbers the way I always do using my inventory planning solution from Management One. I analyzed her store using their trademarked Fresh Factor. The Fresh Factor is a guide to determine freshness of current inventory. The purpose is to illustrate the importance of having a flow of fresh goods and to see how sales react to the “newness” of inventory. I have used this formula with many retailers as part of my decision process in determining current open-to-receive. It is common for sales to improve as the “Fresh Quotient” increases.

I uncovered areas of profit that could really explode in the next 6 months. We discussed those classes and implemented her open to buy plan. She followed through very well.

The open to buy plan I provided her solves the question of how much inventory to buy and when should the inventory arrive. It is the blueprint that accurately forecasts sales and inventory. It produces a dynamic cash flow management tool and guides me to create a cash flow plan that works for clients. End-of-season markdowns are reduced and stock-outs minimized.

After 6 months, we compared the results from this year to last year. The numbers were fantastic!

$31,262 Sales Increase – I had accurately predicted trends and the client made sure to have the inventory as I had planned so she could maximize the sales in those classes

$18,451 Fewer Markdowns –because I had correctly forecasted the sales and inventory requirements

$11,621 Additional Profit Potential Dollars due to increasing the initial markup over last year

$53,976 NET INCOME INCREASE.

In addition, the client’s cost of goods was decreased by 5.7% according to her financial reports. Let me stress, that this client was already highly profitable! Another way of saying this is that her GROSS MARGIN INCREASED BY 5.7%.

The client is very happy.

Cathy Wagner

(847) 226-1375

Affiliate- Chicago

Retail can be a very tough business. There are lots of pressures, lots of things to do, problems to solve, customers to help, employees to coach, vendors to negotiate with, and that’s just before lunch on Monday!

All of us who are part of Retail Smart Guys provide open to buy planning, sure. But we also find that we have to help in other areas of the business, too. As retail consultants who are in retail stores every day of our lives, we see the good, the bad, and the ugly in this business. We see what works and what doesn’t. We admire those who take the time to build out beautiful stores, who really establish solid connections with their customers, who understand how to make their inventory presentations exciting and fun. I suppose this is true of many retail consultants around the world.

But one of the things that we’ve noticed recently, is that we provide one other thing that is perhaps one of our greatest values. It’s that our customers can talk to us about their business, freely and openly, and get the help they need. Let me clarify this a bit;

Many retailers certainly seek out advice from a number of sources, and most commonly from vendors. Vendors certainly have a great view of the marketplace, and they too see a lot of what goes on in the retail space. But in the end, the vendor’s solution to a retailer’s problems will be to buy their product. It’s a little like that old saying, “To a carpenter, everything is solved with a hammer.”

For us as consultants, the only thing we honestly care about is whether or not that retailer has made money, and if they are happy doing so. In terms of product or vendor solution, we don’t “have a dog in the fight” (a new saying for me – but it basically means that it doesn’t matter to us which vendor the retailer buys, as long as it contributes positively to the store and makes the retailer money.)

The same can be said for nearly anything else in the store – marketing, employee relations, technology, finance. We know a lot about each of these areas, so retailers can freely talk to us about it. And, just as I wrote above, we don’t have a dog in the fight – we just want the retailer to do better, to win at the game of retail, and (dare I say it) have fun at the same time.

You could say that there are others that the retailer could talk to – spouses, friends, etc., and that is probably true. However, unless these people are also in the retail business, they may not be as good a source of counseling and information as an impartial person who is deeply connected to the marketplace as we are.

That’s what makes consultants an important part of the mix for most retailers. Someone they can REALLY talk to. And to be honest, that’s what makes me the most proud of what we do. We help people, who just happen to be retailers, become more successful.

Talk to us. We’d love to hear from you. I even put my cell phone number below so you can reach me anytime.

Dan Jablons
Retail Smart Guys

818 720 2585

By Evan Wise

Managing Director- Management One

Every store has good times and bad. When the tide is rising it is easy to be lulled into the belief that you are really doing the right things and making the right decisions. Too often that leads to complacency that translates into a lack of vision, creativity and experimentation with new ideas.  After many years of a great retail environment, many retailers began to suffer from that rising tide mentality. The recession brought a new reality to retailers and forced them to rethink their business on many fronts. Customers are tired of the same thinking, designs, promotions and shopping experience and with fewer dollars to spend, are being more critical about where they spend them.   The time is ripe for a new creative and exciting retail idea.  Where is that idea?

Actually it is locked in the minds of your staff. It is up to you as the leader of your business to create the environment that allows that creativity to surface.  Unfortunately, most organizations stifle creativity due to competition, hierarchy and a fear of being wrong.  Ask any kindergarten class of 30 five-year-olds for a show of hands if you can dance and 30 hands go up.  Ask 100 adults in a group who can dance and 5 hands go up!  What happened to the willingness to have fun, take risks and just dance?

Now is the time to try new things and create new options. Now is the time to hold that promotion that is way out there. A furniture store in Chicago had a promotion that said if the Bears were shut out the next weekend, all purchases during the previous week would be free. Sales soared! The Bears were skunked. The insurance company the retailer got to insure the venture paid off big time. The publicity shot the store to the top of the mind of many new furniture shoppers.  What have you done differently and creatively in the past 60 days?

Management One^® affiliates brainstorm ways to find new ideas. The difference between excuses and reasons is the difference between success and mediocrity. Unfortunately too many retailers find excuses:

• The weather was too cold or too hot
• The snow kept people in the mall
• The price of gas keeps people from shopping
• The fears about the economy are hurting business
• And my latest favorite; the water in the ocean is too cold so surfers are not shopping

What makes these excuses instead of reasons is that there is nothing that YOU can do to control the weather, the economy, the water temperature or the price of gas.  REASONS are things that are within your control.  You can do something to make them better.  Training, creative thinking, aggressive promotions, buying with more style and better management are all part of taking responsibility, planning for success and making success happen in your business.

Customers are desperate for a new and exciting shopping experience. They are anxious to find new and exciting merchandise.  They want to find a relationship and a comfortable place to call home with an environment that is unique and inspiring.  All you have to do is provide it, get the word out, and motivate them to come in and see for themselves!  Management One affiliates help stoke creative thinking  but however you accomplish it, your success depends on it.

The secret I will share is to make sure your staff is having flops and making mistakes.  Without the ability to do that, they become so conservative and cautious that they simply will not get out on the floor and dance!  Your customers want to dance and if they can’t do it with your staff, they will find the retailer that is playing the music they like!

Nicki Weiss, a sales consultant that happens to be a cousin of Neal Esserman, writes an excellent newsletter (you can sign up at www.saleswise.ca)    She wrote an intriguing  article this month which is relevant to those hoping to benefit from consulting, discussiong how disturbances are necessary for effective consulting.

A disturbance is an “outbreak of disorder”  and it is a cause for reflection. On a grand scale the oil spill in the Gulf is a cause for reflection on drilling more wells, our environment and our sources and uses of energy.  The recession caused us to re-think our oversights and limits on the financial industry.

On a more meaningful scale for consultants and those who use them, disturbances are cause for evaluation and productive thinking about new solutions.  The monthly plans are a great tool to cause disruption and highlight disturbances. M1 plans help businesses highlight disturbances that are cause for re-thinking what is being done in the business AND changes that are needed to redirect efforts.

EVERY month a consultant’s role in the business is not just to deliver plans. To maintain maximum effectiveness they must:

1.       Create appropriate disturbances

2.       Collaborate to find appropriate actions

3.       FOCUS- FOCUS- FOCUS

Businesses are bombarded daily with personnel issues, inventory problems, sales issues, merchandising problems, marketing challenges, financial considerations and vendor queries. They probably are also dealing with family issues, parent problems, children and social demands as well.  If consultants are not providing FOCUS for them to make sure the most important things are being done, they risk becoming another complication in their lives and not a solution.

There is a dichotomy in that to get action consultants must create a disturbance. To get results they must create focus on which of the many disturbances in their lives are the most important.

Those are some of the conclusions I took from Nicki’s article.  Read it and let me know if you agree or find other conclusions.

Have a great Month

Evan