Specialty Retail Blog

Hi all,

Here is a front page article in Today’s Arizona Star featuring one of Neil Norton’s clients in Tucson.

It discusses how retailers in communities like ours and across the country are using social media to prevent and catch shoplifters.

Hi All,

Management One® has 92% of all classes processed for October. We are proud to announce that Management One® clients outpaced the report released yesterday by National Retail Federation. The NRF posted an increase in September sales vs. LY of 5.8%. Management One® clients had a total increase of 9.0% or 55% higher than the NRF average!

October is an important month for revisiting break evens and focusing on cash flow. The decisions made now will have a direct bearing on a retailer’s cash position on December 31st.

o What classes need to be fed?
o What classes will need cancellations and adjustments?
o What were the sell thru’s for fall? What additional actions need to be taken?
o How will the end of year targeted inventory be achieved? What actions need to be taken?
o What is the marketing and selling plan for Thanksgiving through New Years?
o What expenses can be better managed?
o Is there a special 4th Qtr. incentive for sales staff that can be implemented?
o What are the action plans on non performing classes?
o Are some classes being driven by a single vendor? Should that vendor become its own class to open dollars for new vendors in that class? We call these classes “Category Killers” that are dominated by a single vendor. Examples are Michael Stars, Brighton, Uggs, Toms, VSA, Southern Tide.
o What is the hiring and training process for temporary staff for the holidays?
o Are first delivery Spring orders in line with planned receiving?
o What is the markdown strategy going forward? When will it be triggered?
o What events are planned and how is the staff prepared to take advantage of those events?
o How is the flow of new seasonal goods positioned? Is off price part of the plan? Is Margin Buying part of the plan? Do key seasonal classes have the correct flow and amount of inventory coming in. Short season deliveries must be correct or business will be lost.

An in-depth discussion NOW will assure a happy follow up meeting in January! Beating the NRF averages is not an accident. The devil is in the details. This is not about gimmickry but solid fundamentals in every aspect of the business.

This is the best quarter of the year for our retailers to acquire new customers! What is being done to achieve that?

Happy Retailing,

Marc Weiss
Managing Director
Management One®

Summer time is the time when families go on vacation and workers take time away from the job to enjoy some great weather and outdoor activity. For me that meant a recent whitewater rafting trip for 100 miles down the Colorado River. I figured a rafting trip out of cell range was a sure way to take one’s mind off of business. Okay, I was not right about that part. As I sat in the raft on the calm portions of the trip, I thought about a lot of things but for me that river represented growing a retail business. The river would meander back and forth as it found its way south from Moab to Hite, Utah. A business grows in the same way, the strategy determining the direction while the daily activities and tactics make the trip a meandering journey. The difference between the two journeys is that a retailer should have much more control over the path the business takes than we did in the river. The better the forecasting and planning and execution, the less meandering the business takes.

Even though the river dictated our direction, we still needed a guide to make sure we avoided the rocks, sandbars and hazards that lay before us. Our guide was an expert who had faced the challenges on countless trips down this same river. His expertise was critical to our safety, enjoyment and reaching our goal. Many retailers avoid obstacles and sandbars in their path using a qualified expert to help guide their business journey. Others bump some rocks and spend some time on the sandbars. Without a guide, these retailers end up in the river when they hit the rapids just as we would have without the expertise of the river guide. Just as our guide had a plan, timeline, strategy and tactics developed for our successful trip, a good retail guide has an accurate merchandise plan supported by retail experience and a team of experts to call upon… just in case.

Eric was our guide and he had been taking adventurers down the river for 24 years. Notice that we were not clients or customers but rather “adventurers”. That set the mood for our experience right from the start. Did I mention that this was an experience and not a raft trip?! I bet a lot of your shoppers are looking for an experience and not just another pair of shoes or a new dress. Disney had the imagineers so maybe you should have the fashioneers?

After 24 years of guiding a raft down this same stretch of river, I would guess that there is not a lot on a rafting experience that Eric has not seen. Even so he was as excited as a little kid. When he saw a hawk fly overhead, you would think it was the first bird he had ever seen. He informed us that the river was flowing at 35,000 cubic feet per minute which in reality meant absolutely nothing to us. After 5 minutes, Eric made us so darn happy to be travelling the river on that trip because we were the lucky ones that caught the river at that flow. We could not wait for the experience since it was such a unique opportunity. We actually felt sorry for the poor people who had to take the trip when the river was 36,000 ft3/min or, heaven forbid, at 34,000 ft3/minute. Imagine if you and your staff had that peak level of excitement for the shopping adventure that your customers were about to embark upon in your shop! It is not just, “Why don’t you try these on?” but rather (and excitedly), “I really want you to EXPERIENCE the comfort that only this shoe can provide!” or “I love the way you look in this hat”

The four of us on the trip had a lot of questions and Eric knew the answers to them all. The white stripe on the rock was a petrified coral reef when the ocean sat on this very spot. The top of the mountain we saw was actually covered by 3,500 feet of silt! The green rock was actually covered by a type of moss and the black was a hydrate of manganese. The point is that training is critical to credibility. How much training does your staff get every week? Do they know the details, features, history, story and benefits of every item you sell? Are they able to bring a top to life with its own unique story? Eric can do that with a rock!

Then as a special show of trust and opportunity, each of us was allowed to travel to the back of the raft and steer! He explained what he looked for in the river and how to avoid it. We were taught how he spots and avoids sandbars and rocks. We now entered into his world. It reminded me of one of our clients who offered valued customers the opportunity to go to market with her. They paid their own way but they were allowed to enter the retailer’s world. She showed them how she evaluates a vendor and a line. They could see how she places orders and the risks she takes with every order. By allowing them into her world, she increased the trust, bond and relationship — just like Eric did.

Before you think that the experience was all fun and games, consider the safety aspect. Eric laid down specific rules and the safety lecture was not to be taken lightly. Eighteen people had gone missing on the river in Utah this year alone and he was passionate about the safety of each adventurer. “If you see a body part or torso floating in the water, cross your neck with a finger to let me know to cut off the motor.” That got our attention. A retailer needs rules and policies as well. Passion and consistency are what make policies work as part of a consistent experience for the staff and the customer. Just as Eric does not want to lose adventurers on the river, you should not be losing fashioneers due to inconsistent or weak policies in the store.

What deeply impressed me about Eric was his consistent optimism. For him, the sun was coming out, the clouds were always breaking up, the rain was always a momentary event and the rapids were always the best experience in memory. The night we camped out, we built a camp fire. Even though Eric had talked about sleeping outside under the stars as an important part of the experience, the thunder, lightning, heavy clouds and pouring rain would have seemed to be a hindrance to stargazing. Eric insisted for two hours that we were going to have one of the best stargazing nights ever. Then finally, as the rain continued to pour and the clock struck 11 p.m., he was forced to admit that maybe setting up some tents might be a good idea. We were all tired, soaked and chilled, but because of Eric’s optimism and the great job he did of establishing and guiding the experience, we were all delighted.

Retail is filled with obstacles and unexpected actions and reactions. The best retailers, like the best river guides, manage the total experience and leave as little as possible to chance. Forecasting sales and buying the right merchandise at the right time in the right classifications make the trip to your destination smoother, straighter and faster. The right merchandise plan is critical to staying afloat and not becoming one of the missing in action. We had a great time and that is exactly what your customers should be saying about shopping in your store– “We had a great time!”

Part 1
Imagine (if you are a store owner or manager) – that you went on a vacation and the business ran better when you were gone. Imagine if that happened every time you left! Surprisingly, some owners would feel hurt and even disappointed. Often the same owners who complain that they have to do everything and they cannot get good help are the ones who micromanage to feel in control. If you have not taken off a week in the past six months, you could possibly be a latent control type manager. That means during a vacation, you could not keep from going into the store or from calling daily to “check on things.”

Let’s go back to the imagination of your business running better without you. Perhaps you are the type of manager who not only strives to make that happen but are delighted when it does. In this case, your reaction would be to return to your store to thank your staff members, congratulate them on their fine work and maybe even celebrate their success. Let’s imagine that this was not a fluke or accident but that you had developed and trained a staff with the intent that you could leave them and they could flourish without you. You have succeeded in establishing trust with your employees!

So what do you do if this latter scenario is the case? You are free to find ways to enhance the business and expand it beyond its current level. It takes creativity plus hard work, and it is not nearly as easy as making sure the same old work procedures happen each day. Now you can shop the competition to see what direction other owners are taking and you can expand your learning beyond your four walls. As your staff can well handle of customer service, you are enabled to take charge of the business trajectory and the path to take into the future.

Granted, some owners would play more golf or sleep in a few days a week. Others would travel or spend more time with family instead of growing the business. Those options are fine if that is what is important to you. Others will spend time on strategy, assortment planning, marketing or finding new vendors. Regardless of where you choose to spend your newfound time, you cannot help but do a better job at it with the enhanced focus.

Part 2
Imagine now you are a manager who relishes the fact that your staff can do things better while you are gone – but your staff is not that good. When you leave, the staff members stand around and talk, customers are not well served and the appearance of the store deteriorates. What do you do when you return to a scenario like this? Maybe you should fire the entire staff!

There are three reasons that people do not do what you would expect:

• They are not knowledgeable – they need training.
• They are not motivated.
• They are not capable.

So, while you were away, one or more of those three kicked into play. If this is the case, you have either not provided the training or you hired the wrong people. The latter error has more dire consequences. It is much harder to fix employees who are broken than to find ones who do not need fixing in the first place.

Go ahead and take off a week. Don’t call. See what happens. It may surprise you.

Excerpt from Bloomberg Business week

Customer service: marketer vs. merchant

By Jeanne Bliss

Thinking Like a Merchant

Anderson explained what he meant to be a “merchant” in this way:

“We are all merchants. And for me, that is an honorable and vital identity—even in this day when it is fashionable to hold forth on the subject of marketing in all its forms. I don’t decry that exactly, but I’m more comfortable considering myself a merchant. And here’s why.

• A marketer deals with many; a merchant deals with one.

• A marketer moves from the mind; a merchant moves from the heart.

• A marketer is logical; a merchant is perceptive.

• A marketer does business across the world; a merchant does business across the counter.

• And finally, a marketer bets his all on a system; a merchant bets his all on his store.”

And in a world where products and services are available in hundreds of variations, the companies that think and act in this manner still get a disproportionate piece of the overall pie.

Too often retailers get swept up in the latest technology to methodically reach out to prospective customers. The thinking is that if we email 5000 and get 2% response we are doing well. You will never do this better than the national chains and big box stores. This article is great in getting retailers back to their strength. Being a merchant. Making customers and sales one by one.

Evan Wise

Everyone strives for good results in their business. Cash in the bank, profits on the bottom line and sell through that keeps the shelves clean at the end of the season all sound like a pretty sweet situation to most retailers. There is danger, however, in good results.

Good results can keep retailers from attaining great results. The great retailers, the best of the best, are always innovating and coming up with new ideas, new lines and exciting events to drive more traffic and attract new customers. The good retailers have a solid client base, vendors who work for them and a marketing program that is comfortable. These are the retailers who do not feel a need to change or improve. They are not the ones who are innovating and striving to learn more and achieve more. They are comfortable with their “good” status quo and their good results keep them from getting great results.

The problem is that customers get bored with stale goods and are excited with fresh merchandise and fresh, new marketing approaches. Technology is changing and there are tools that provide ways that can help to make businesses better. Outsourcing parts of the business to experts who can do things that a busy retailer cannot find time to do – or who can even do a better job than the owner in this aspect – can make a marked improvement on the bottom line.

Besides finding ways to excite the clients, training staff in new techniques and finding ways to get employees excited and motivated can make the whole store more vibrant and attractive.

One thing that goes a long way to motivate employees is to let them create their own ideas for improvement, be allowed to implement them, have them be successful and then praising the originators publicly for the ideas and the effort. That policy blazes a very clear trail toward great results!

There are many factors that all contribute to the success of a business. Not improving those things because they are “good enough” is the start of big problems. Improving each of those multitude of factors is what can add up to a great store!

The strength of a company depends on the strength of the employees. Many times sales are made solely because the people at the front line are knowledgeable, helpful and friendly. A smile and customer recognition is a great asset to selling and building sales and is often more important than great product!

Providing a great customer experience starts with a staff that is comprised of people who get together well. When the entire “crew” understands each other, a foundation is built that has a meaningful and tangible effect on the bottom line. Everyone learning about each other’s likes and dislikes can be as important as understanding the skills and abilities each person possesses. The understanding that is reached is critical to helping an organization work together to achieve results, provides a positive customer experience and builds a profitable business.

By Evan Wise

This one word is at the heart of every retail business. Motivating your employees to sell a little more and motivating your buyers to search out deals and exciting new merchandise can make all the difference. Motivating prospects to come into the store to see what you offer is at the heart of marketing; motivating existing customers to come back to in to shop is crucial to retail success. Motivation is at the heart of every successful retail store.

Motivation is not a switch that is either on or off. It spans an entire spectrum from “I don’t care!” to “What else can we be doing?”. The tough part is that different people are motivated in different ways and finding that trigger is the key. That is a constant battle! There is not room here to discuss all the things that can motivate customers, staff, vendors and owners, but by discussing some, I hope you will get some ideas of motivators you have not tried in the past that may work in your future.

Let’s get MONEY out of the way early. Too many retailers look at money as the only qualified motivator. They give bonuses, raises and spiffs to sales staff without measuring the return in increased sales that the motivator actualizes. When that does not work as well as hoped, they then run promotions, sales and discounts, using money as a motivator in the direction of the custo- mers. Certainly money can motivate but for how many people and for how long? Without measurement, you really can not know. Every retailer has used money as a motivator to a some extent.

The next great motivator is RECOGNITION. People love recognition, respect and admiration. The utilitarian philosophy says people will do what brings them the most pleasure – and status and respect feel good! It starts by knowing your customers’ names, important dates and their personal history. Spending time researching what your best customers are doing on the internet can help you recognize their interests and accomplishments. Even telling other customers about the recognition will often get back to them by word of mouth.

Employees seek recognition as well. Sure, they want that bonus but they also want everyone else to know they got it. Public recognition is more important than the bonus. The bonus merely tells them that you are sincere about the recognition. As long as you are sincere, you cannot overdo public recognition of positive actions, results and effort.

People want to feel like they belong. They like being a part of a COMMUNITY of people who like, understand and appreciate them for who they are and what they think. Political parties, churches, synagogues, mosques, gangs and work groups are all examples of com- munities that motivate people to come back. The more your staff members feel and work like a community, the more motivated they will be to adopt your goals and expectations and to work together to make them happen. Making them part of decisions is a part of building the community.

When people feel like they have more STATUS because they shopped at your store, they are likely to come back. Status comes from listening and caring about your customers. When they are important to you as people and not just customers, they have risen in status. When you ask your customers for opinions, when you use their ideas and when you give them the credit, they rise in status. Status feels good. The more status you create, the more sales will be created.

Employees also love status. They want you to be open to their input and love when you use their ideas. People want to feel important so anything you can do for the right reasons to make them feel that way will motivate them to do more.

There are many other motivators but very few that motivate everyone. The more you listen and find out about a person, the more you will be able to figure out what is his/her motivator. Make the call to action clear and the motivation effective and the results will speak for themselves!

By Evan Wise

Most stores have customers who shop for the newest items and the latest fashion. The store buyer, in selecting the merchandise, needs to keep not only that in mind, but also must be attentive to achieving targeted margin and GMROI goals. Accomplishing that requires a strategy and discipline to be effective.

At the beginning of the season, the buyer must start with an Open To Buy budget to use as a guide for purchases. The budget can be stretched by holding some back to buy off price items as well as potential re-orders, during the season. That is where strategy enters. Planning how much to withhold at the beginning of the season can be a critical decision for the success of the entire season. Adjustments during the season are important but require a view of cash flow and OTB in making those changes. Often the strategy leads to effective negotiations at markets and during initial buys to assure the ability to get the best goods off price during the season.

Buying off price in season is challenging as well. Price should not be the only attraction. An off price buy that cuts into the store’s ability to sell its regular price merchandise can be counter- productive. The buyer should analyze if the merchandise fits the customers’ tastes and the store’s assortment plan. The buyer should determine if the purchase is something that would have been made at full price at the beginning of the season. Just because the price is low does not mean it is a good buy. It needs to sell. An added benefit to the purchase would be if the item drives sales of the other regularly priced merchandise. A good question to also ask is “Can the goods be brought into the store at the full price before issuing the markdowns?”

A further question is what do I do as the season progresses? Have my sell-throughs been weaker than expected and do I already own my own markdowns? Will an off price buy help my margins offset an erosion in my margins or be a potential drain on cash flow? Should I take the hit on my own goods and move on to the next season?

An additional strategy is to blend both regular goods and to sprinkle buys in from the Management One® Buying Service (MBS –exclusive to M1 clients) or to buy more opportunistically as you develop your assortment strategies.

There are a lot of variables to consider as you look to build your merchandise plan for the season.

Everything in retail becomes more complicated and interconnected as you continue to grow your business. The more guidelines that can be established, the easier and more profitable the journey becomes!

By Evan Wise

I was reading an article on soft power (by Joseph Nye Jr, former dean of the Harvard Kennedy School) as it applies to foreign affairs and I found it very interesting and applicable to our business environment. Power is defined as the ability to influence the outcome to be what you desire. The article compared the effectiveness of using hard power (military force and economic enticements) and soft power (the ability to use strategy, leadership and vision) to achieve the goals of our country.

Soft power appeals to the intangible assets of culture, values and policies that are seen as legitimate and having moral authority to get people to desire the outcome. These tend to be more important in achieving objectives than using force in the way of military or economic sanctions or inducements to require the outcome. Soft power is taking advantage of the information revolution happening around the world. Even thought the article was written in 2004, we are seeing Facebook and the internet applying power in the middle east in countries like Egypt, Tunisia, Libya etc. Knowledge and information are power and communication is the tool that applies that power toward a desired outcome.

There is a lot more to the article but you get the gist. Our military efforts have been costly and marginally effective while our use of soft power has also been marginally effective at a lower cost. So why bring this up here, in a retail blog?

As I read the article I thought about Management One. Rather than run our business on the basis of hard power where affiliates are employees and wages, promotions and directives are the hard power that is used to get the ends the company desires, we rely on soft power. Every affiliate is independent and is linked by strategy, values and culture. Information is the power that binds the team. It has worked as the best method to achieve results for Management One and our clients for the past 21 years.

But there is an insight for retailers too. Too often they use hard power to achieve ends with customer s and employees. Discounts, sales, and economic enticements are the application of retail hard power. Relationship development is the application of soft power to build your business. Just like our diplomatic efforts, the results can be as good but at a lower cost. Choosing the right merchandise and providing the right shopping environment is also soft retail power to get customers to desire to come in and buy.

Nye has a quote that defines why so many retailers turn to Management One affiliates for help. He addresses the abundance of information available to retailers to make decisions. There is too much information available. He says, “When people are overwhelmed with the volume of information confronting them, it is hard to know what to focus on. Attention rather than information becomes the scarce resource, and those who can distinguish valuable information from background clutter gain power.“ That is part of the power a Management One affiliate brings.

I hope this alternative view of retail in terms of international diplomacy helps you think about your business in a different way. The better you are at using soft power effectively with customers and employees, the more real and lasting your results will be.