Specialty Retail Blog

Thanks very much to Cathy Wagner for sharing <a href=”http://www.stores.org/stores-magazine-april-2010/guess-what-men-shop-too”> this article!</a>

Imagine it’s the old west. There’s a scrufty man who looks older than his years because he is unshaven and worn from the sun and time spent looking for gold in mountain streams.  He has a pack on his back and a shovel by his side.  His only protection is the gun lodged in the holster strapped to his belt. His boots, once black, are a gray from the scuffs and years of hard use and abuse. He is sitting by a stream looking for his fortune in nuggets of hope.

Fast forward to 2010 and the streets of NY. There is a scrufty man who looks older than his years because he is unshaven and wron from the sun and time spent pan handling for loose change and morsels of food to get through the day.  His only protection is from a blanket lodged in the bag hoisted over his shoulder that contains all of his possessions.

Two strikingly similar pictures that evoke two strikingly different responses. The first reaction is romantic and nostalgic while the second is pathetic and sad.  I struggled to find the reasons why our emotions are sent in such vastly different directions. It might be because one is here and now and the other seems far away. It might be that there is no chance we see ourselves in the first picture but in our heart we know that the second picture does not contain us due to the grace of god.

I prefer to think that the difference is lodged in the hope for the future that the first picture paints. There is a man with nothing, full of hope that he will find a morsel of gold that will lead to the strike that will bring him riches and good fortune.  That hope brings purpose and direction to his life.
The second picture is of a man that has given up hope and is trying to survive each day. He has no direction and no future.  In our mind he has no vision for the future.

Purpose is so important to our mental health and health of our businesses. What we hope for powerfully influences the way we think and feel. Our customers form impressions of our businesses based on what purpose they see a business as having.  I was at a client this week in Norfolk Virginia. They have a jewelry shop and they also have a strong commitment to make their business be a part of making a better community. They give generously to charity and community functions. When there are no requests the seek  out chances to make a difference.  Now they are adopting a drive to get the entire staff more involved.  Their business has a purpose that transcends jewelry and their shops and it affects the entire community.  Their business is growing as well.

Adapting has been a series of topics as to how the recent changes in the market, economy and retail world are affecting your business. This is the fourth of the series by Evan Wise.

Another trend that the recession has accelerated is the rapid change in marketing. In days gone by, retailers would send direct mail pieces frequently and fill the newspapers with weekly advertisements. Today that is quickly changing. The postal service is upside-down economically, so twice a year we see postage rates increasing to keep up with its finances. Certainly the drop in mail volume is due in great part to the e-mail that is sent for free over the internet. Another factor, however, is the drop in bulk mail and direct mail advertising sent by retailers and other businesses. Newspapers are shutting down their presses too as there is less print advertising being done which supports the papers.

The replacements to these forms of advertising are many, including social networking (Twitter, Facebook etc.) that are more targeted and less expensive. Marketing has become more fluid as customers move from venue to venue. An upscale customer may shop in a luxury boutique in the morning and stop into a local shop on the way home.

The ability to stay in contact with customers rather than advertise to them has become the key. A successful retailer stays at the top of his/her clientele’s mind so at any time a shopping decision needs to be made, his/her store is the first option the customer sees. That is difficult to do with a weekly ad or a monthly postcard.

New breakthroughs in communication technology have created the opportunity to provide a more targeted, personal way to match your offerings with the customers’ interests. With Twitter reaching them once a day and e-mails reaching them three times a week, the historical goal of sending a message seven times is easily reached.

In addition, the technology is becoming so sophisticated that customers can be broken down into 30 different groups with like needs and wants, and targeted communication that hits their personal hot buttons is more effective. Hitting those personal hot buttons is more important now as people are bombarded by more marketing all the time. The close contact and personal messages that the independent retailer provides are a major way to rise above the din created by constant marketing by competitors. That is one reason it is critical to define your niche and stay there! You must mean something to your target market.

Another important marketing tool is your website. Although internet sales are beyond the scope of many independent retailers, an attractive and targeted website is essential. The Yellow Pages are struggling like newspapers and the post office because people now search the web to find stores. A website provides much more information and is more adaptable to exactly what the customer is looking for. Isn’t it time to give your marketing a makeover?

Retailers may have some very helpful allies in places they would least expect to find them.

This article seeks to highlight some useful, but typically ignored synergies between science, engineering, business and retail. Karl Popper elegantly described the purpose of science as a process which generates predictive theories.  Science, economics and all kinds of business applications rest critically upon a common need; the need to accurately forecast a complex and dynamic future.

While the goals of science, economics and business are worlds apart, the actual process of forecasting is common to each. Similar challenges in forcasting allow lessons learned in one discipline to be applied in another.

Here, we’ll look at what forecasting insights can be gleaned from raindrops and market drops to help make our retail profits a little more stratospheric.

The most basic, even instinctive, method of forecasting involves guessing what will happen. Humans naturally learn to link certain events together. A midwestern corn farmer might say “knee high by the fourth of July.” If the crop isn’t tall enough by the given date, the farmer knows in advance that the crop has gotten a bad start and will therefore yield a weak harvest. Other times, the process is more intuitive, what we call “gut instinct.’ A person might “have a bad feeling” about some situation, even if he’s unable to explain the rationale behind it to another person. Recognizing patterns is something people do without even trying. It’s nearly impossible to look at a word written on a page, for instance, and not “read” it.

Of course, this kind of guessing is one of all kinds of human flaws and limitations. It lacks the dispassionate rigor of an actual scientific experiment. Just knowing that the crop isn’t high enough tells a person nothing about what caused its short stature. Even worse, it offers no clues to fix the problem. Gut instinct is difficult to transfer from one person to another. It creates dependence on a person, rather than a process and it’s horribly subject to the constraints of a single person’s memory and intellect. Using only gut instinct is better than nothing, but even at it’s best it is imprecise and prone to error. Stock outs sometimes and markdowns others is the result.

Of course, some of these problems can be solved by using past trends and performance to predict future results.

This approach is a little more precise and predictive if the system varies the same way it has done in the past. We’re no longer relying on the feelings of one individual and emotions are checked somewhat by stubborn little numbers. But it’s still less than ideal.

The professionals that spoke on climate research at a talk I attended recently amazingly faced the same problems that we faced in trying to predict future sales and performance for retailers. They started, as we did, using statistics.  Statistics and trends are useful in a somewhat stable or controlled environment. In statistical terms its changes can be depicted by a bell shaped curve or some other known distribution.   When climate change was affected by increasing CO2 the statistics based on the past could no longer predict the future.  Retail , also, is a constantly changing environment. When the recession hit, trends based on past performance were completely invalid.

The solution the climatologists brought to bear to help understand our dynamically changing environment was to make mathematical models of how the system worked. Over the years the model for climate change was modified to include surface temperatures, then atmospheric makeup including CO2, methane, and other gasses. Moisture content, then ocean temperatures were added. Then solar radiation coming in and out was added and so on. As each new variable was added to the model, a more accurate prediction was possible.  The true test was to back test to see if the model predicted what happened in the past. The final test is to see how accurately it predicts what happens in our actual, uncertain future.

We went through similar trials and tribulations to develop our Winning@Retail™ software. It contains both analysis of past performance using statistics and mathematical models  that account for the effects of the economy, local buying habits, inventory levels and much more to get an accurate prediction of future sales.  With each new variable added to the model the predictions improved.  Several independent tests have measured our ability to predict sales at 94% or better.

Just as knowing the future of climate change can help us prepare for the coming challenges, knowing future sales allows us to identify the right inventory levels and predict cash flow in the business.  If we don’t like the outcome, we can use the models to chart a new course based on a solid forecast of coming trends. Rather than just seeing a bad crop coming several months ahead of the harvest, we can consider how to nourish a business so that it continues to be fruitful and productive. The use of predictive models is the best approach to inventory planning.  POS systems and many spreadsheet approaches use statistics to project the past into the future.  Their susceptibility to sudden shocks and changes causes waste, errors and inefficiency, often when they are most painful.  The better your data and analysis, the better the predictions and the better the results will be.

By Cathy Wagner, Retail Maven

1.  Be sure to make everyone’s schedule clear to eliminate any confusion.  Make sure to schedule yourself on the floor.

2.  Check your packaging, and operating inventory levels now.  You don’t want to run out of bags or toilet paper!

3.  Make it fun!  Everyone is stressed.  Remind your employees that personal problems are to stay at home and while they are at work they are expected to work.  It is important to incorporate fun into work now.  Here is one thought – the first one to make a sale for the day gets a $10 bill.  The next employee that has a bigger sale gets to take the $10 – and he gets to keep it until someone makes a bigger sale….and so on until the day ends and whoever has it gets to bring it home!  Get pizza for lunch one day – make it a red and green pepper pizza.  Put some thought into coming up with 5 different ideas – ask me for help!   Remember that YOU set the tone for the day.

4.  Have the daily and monthly goal posted BIG!  And you want everyone to know what the item/class/vendor of the day is.

Be ready to coach your employees on how to achieve these goals.

Questions are the secret to communication – especially when it comes to making sales. Most people would rather hear themselves talk rather than someone else. Ambrose Bierce once observed that “an egotist is more interested in himself than he is in me!”

The art of asking questions rather than delivering a monologue will help with all your negotiations and that essentially impacts your sales and customer satisfaction. For instance, instead of pointing out the quality of the stitching of an item or the workmanship of a garment, try asking, “Have you ever had a seam that pulled apart?” Listen to the customer’s story and get him/her involved in the importance of the quality of the garment. The open-ended question that gets customers talking will make them more comfortable and turn them into buyers. When you are chatting, you are selling. As Gitomer says, “Everyone wants to buy but no one wants to be sold.”

When you call to say you have a new jacket in the store, don’t tell – ask them if their wardrobe could be spruced up with a new jacket. As with any technique, don’t overdo it. See how effective it is!

An old Dilbert cartoon shows the head of PR telling Dogbert, the head of marketing, that marketing’s claim that the business’s product can turn water into gasoline in addition to re-animating the dead cannot be justified. Dogbert’s response is, “Are you asking me to do a lousy job of marketing just so your job is easier?”

As retailers struggle to attract new customers and drive more traffic, there is a strong temptation to make the store seem bigger than life. Marketing does need to push the envelope without, of course, stepping over the line into improbability.

This article is about how the marketing program can establish goals and direction for the store. It certainly can’t empower a business to raise the dead, but if the marketing image is impressive while remaining plausible, the challenge for the company is to reach that higher level.

If the marketing is not pushing you to be better than you are, get a new marketing approach! If the organization is not striving to be all that marketing promises, drastic management changes are needed!

How often have you gathered the staff to read your own advertisements and review your own marketing? How often have the members of your staff discussed how they can actually be the store in that impressive marketing piece? Get your people engaged so they believe, enhance and make the marketing message a reality. Everyone needs to “own” the image that your business portrays in your marketing. If everyone is part of its creation, each person believes the quality of the company and the importance of his/her job to better the shopping experience.

How can you tell if your marketing program is a success? The personnel improve the quality that defines the company while the ultimate indication is the increased repeat business!

I saw a short clip on U-Tube that had real meaning for retailers.  There was a typical stairway next to an escalator.  When they painted the stairs to simulate a piano and had piano music to match the steps that people hit, 66% more people chose to take the stairs over the escalator.  They chose a little bit of fun, a touch of curiosity and a modicum of excitement over the ease of an escalator.

Is your store like an escalator waiting for people to choose the easy route? Or is your store like the stairway painted like a piano that offers a new exciting experience for anyone that is willing to try it out? Is your store different or just like any other stairway?

Ask your customers 2 days after they visit what they remembered about the store.  I bet most of the people remember the piano stairs while they don’t remember any other stairs or escalator they have taken!  What is memorable about your store and the shopping experience? That will bring customers back. That is what customers will tell others about.

Challenge your staff to be memorable! Challenge your marketing to be different! Challenge your buyers to be exciting!

Too often retailers look at  their sales figures to judge their progress.  We all tend to try and focus on the positive but often, the best way to boost the positive is to lessen the negative.  For example, a hitter in baseball may boost his batting average by reducing the number of times he strikes out. In that same way your sales will go up if fewer  shoppers leave your store without a bag of merchandise.

I am reminded of the story of a sales women in an upscale boutique in Chicago. When a shopper would come in the store dressed in “substandard” attire, they would label them an AWOT(A Waste of Time) and work hard to avoid waiting on the shopper.  One day a level 10 AWOT came in the store and this women was “stuck” with the assignment.  She decided to see what she could do to sell the woman despite the low odds.  It was her personal challenge.  Making a long story short, the woman bought over $15,000 worth of merchandise.  Lesson learned there but the question is, how much business are you letting walk out of the store?

 It seems obvious yet so many retailers lose sale after sale because they don’t do some simple things well:

o   Expect top notch performance with every shopper from every sales person

o   Set standards and positive examples of top notch performance

o   Motivate sales staff to get sales

If your average sale is $50 and you walk 2 customers a day that could have been sold if the sales person handed them off, showed them more items or maybe didn’t prejudge them as an AWOT.  Let’s say you are open 300 days a year so your sales could have been $30000 greater.  If your MMU is 50% that would have been $15,000 more cash in your pocket last year.   If you walk more business OR your average sale is higher, your lost sales are higher too.

The most basic principle in Winning@Business™ is that if you can’t measure it you can’t improve it.  Using the right measurement is the first step. Measuring sales does not always indicate that you are losing fewer sales. That is why CONVERSION FACTOR  is so very important.  Conversion is the number of sales compared to the number of shoppers that enter the store.  Every time you make a sale it boosts your sales figure AND your conversion. On the other hand, every time you lose a sale it does nothing to your sales figure while it lowers your conversion.

When you start measuring conversion and giving bonuses or commissions on conversion, you will begin to strike out less often.   When that happens, watch sales go up.

I was flying home from delivering a seminar in Orlando with Co-Managing Director Marc Weiss and affiliate Neal Esserman (Jacksonville, FL) and I was watching an episode of “The Office” when I heard a line that struck me as really funny. The characters were actually offering a coupon to receive “outstanding service” on the next purchase. After I got done laughing, the proposition stuck in my head and got me thinking.

Additional – outstanding – service is a no or low cost value added benefit that businesses can afford to offer in these tight economic times. Across the board, added benefits may not only be cost prohibitive, but also the select group of benefactors may not feel as special if everyone received the same treatment and did not have to qualify somehow.

After flying over a million miles on American Airlines, I was awarded “Gold” status for life. Because of my loyalty to this airlines, they offered me the status that allows me to board early, not pay for luggage and permission to check in at the first class line. Besides the obvious benefits of boarding early, saving money and time, I also feel special and the privileges strengthen my bond to American Airlines – all at a low cost to the airlines.

The first step in developing such a program is to decide how someone qualifies. It can be as subjective as choosing those movers and shakers who frequent your store. It may be based on volume purchases, points for each visit, points for referrals or visits to your website. Make sure you are able to measure your criteria and let customers know that you are taking measurements of such data. Many people respond to being able to amass points.

The next step is to decide what outstanding services you plan to offer to your best and most loyal customers when they qualify. As they receive such things as free alterations, free deliveries, closet reviews, after-hours shopping, access to a password protected link to an exclusive portion of your website, their loyalty to your business will grow and they will choose to patronize your store over others. Get your staff – and maybe even your best customers – to brainstorm to come up with more ideas of outstanding services your business can provide.

These days retail store owners have to think outside the box to keep their customers coming back. Slashing prices is not always the answer. Maybe that free coupon for “outstanding service” wasn’t all that funny after all!