Every company today is about service. We are no longer a product oriented economy but rather a service economy. Most people believe that means we don’t manufacture goods but just provide services. That interpretation is a cop out! The real meaning is that, regardless of what you provide customers, service has become an important part and in many instances, the most important part.Whether you are a retailer selling dresses or a manufacturer selling pumps, customer retention is critical to success. The truth is that most businesses do not sell a unique product. A woman can buy the same dress from many places. Your success in gaining and keeping customers depends on an intimate understanding of the reasons why customers buy from you. Once you understand that, you then implement definite procedures to be sure customers are treated to those very reasons every time. On paper, it sounds simple. In reality, we often anguish over our ineffectiveness at accomplishing that goal. One problem is that different customers buy for different reasons.

Most companies have never asked customers why they come back for repeat business. More importantly, you may want to query customers who did not come back as to their reasons! Their issues will often be very unexpected. They can include everything from the location, the parking, the selection offered, prices, negative employee interaction, policies, store hours or poor follow-up. You are likely to hear reasons that are a complete surprise to you. The problems may not have been obvious or observed by you and you may even have witnessed the opposite. That means there could be an inconsistency in the target market you are serving or your understanding of their motivations.

Training your staff is often times a large part of the solution to implementing the changes effectively. Regardless of what you discover, finding out and developing a strategy to improve is important to your success.

If there is one word that I hear over and over again since the “great recession” started, it is VALUE. Value was always important but not nearly as much as when trying to convince frugal, crafty shoppers to invest in your product.  I do not use the word “invest” lightly here since value implies a return expected on that investment. As a retailer, you are responsible for establishing the value proposition as part of your brand image. Very possibly your brand image has revolved around what is new in fashion.  Ask yourself, “Is that still working for me now?”

For those of you who answered that question with a resounding yes, STOP. No need to read further.  Find a reliable host or blogging account and begin your own blog to share your wisdom.  Please include a link to this blog as well!  For those of you whose answer was somewhat shy of shouting out YES, read on.

We have had many recessions before this one and there have been some lessons learned in those. This blog will serve the purpose to make you think in some different ways and consider some new approaches for your business.  None of these are proven to work every time, in every case or in isolation.  Finding the right mix for your store is your challenge. Just keep in mind that if what you are doing now is NOT working, you must search for alternatives that will work.

One observation is that people are still searching to fill their dreams but their dreams become more realistic and practical. Instead of a new dress, they might buy a new sash to change the look. Instead of a new pair of shoes for work and one for the party afterwards, they might look for a pair that can fill both purposes. Fashions tend to change at a slower pace during a recession which means that clients may be able to wear an item for a longer length of time and that means that quality construction is more important. Even if that quality costs a little more, the value is there. Value might come from being closer and more convenient which saves time, gas, wear and tear in addition to hassle.  Value might come from promotions where a purchase ALSO buys admission to an event. (Remember, people have stepped their entertainment down a notch so an added event becomes value added!)  Certainly markdowns add to the value but at great expense to the retailer and also the brand image for upscale retailers. Some, like Louis Vuitton, have determined that their value comes by refusing to cut price thus protecting the exclusivity to only those people who feel they have not been tainted by the great recession. The point here is that every retailer should be re-evaluating his or her business to determine how to offer more value, promote that value proposition and establish that value proposition into the brand image.

Being from Cleveland, I always pay attention to Allstate commercials. The reason is that they star Dennis Haysbert who also played Pedro Cerrano in “Major League”, the classic fiction movie about the Cleveland Indians winning the World Series in my lifetime. (For non-Clevelanders, he also played president Palmer on “24”.)  One recent commercial reminds viewers that Allstate has been in business for 78 years and has seen no less than 12 recessions. The observation is that “after the fears subside, a funny thing happens: People start enjoying the small things in life. It’s back to basics and the basics are good.”  This whole recession is, in great part, about getting back to basics. Your job as a retailer is to define how you fit into the basic lifestyle of every prospective customer and your target audience.

                By M. L. “Rick” Natelson, Chairman and CEO of Natelsons, Inc., a leading consultant for apparel stores in extreme situations. Rick is an affiliate of Management One. His email address is: mlnate at natelsonsInc dot com.

                Promotional sales events are essential retail tools used by every retailer to convert inventory into cash. Some stores utilize sales events only during seasonal clearance times; others tend to run sales more frequently throughout the year. Some sales events, however, fall outside the normal course of business and generate extra revenues over and above the norm. How and when these opportunities arise is best described as the process of monetizing goodwill.

                The intangible asset of goodwill is typically defined as what a willing buyer would pay for a business in excess of its book value. By definition, its monetary worth is subjective. The seller sets a high value on it; the prospective buyer discounts it entirely. But the seller is in a better position to judge. He or she earned it, after all, during the life of the business.

                Even without a willing buyer, a store owner can tap into the value of its goodwill, under a variety of circumstances, by conducting an extraordinary promotional event.  All things being equal, customers will prefer to buy at their store of choice. Unless the customer’s need arises, however, there is no sense of urgency. Initiative on the part of management is required to recognize the opportunity, define it and send that message to the community of prospects.

Changes in the major components of the business — whether an owner is retiring, a lease expiring, a store is moving to a new location or there is a shortage of cash to pay creditors — create unique cash raising possibilities by motivating present and potential customers with a distinct sales pitch yielding unusual benefits.

                The size and quality of the store customer list enhances the value of goodwill because it provides the most efficient access to an audience that already has a favorable bias toward the store.  If the message is compelling, the customer will plan a visit as soon as possible.  He or she may phone a friend before or after the visit.  Ideally a buzz will filter through the community with a ripple effect beyond the core customer population.

                The message conveyed must be credible in both substance and tone. Honesty is a virtue; whatever the scenario, the stated facts must ring true. A personal telephone call, a First Class letter in a sealed envelope, an email message to an inbox all have the potential to convey sincerity and urgency from a familiar source. These media have the advantage of exclusivity and intimacy. Not everyone receives the information and someone cares enough to tell this particular person.

                The storehouse of goodwill, of course, can be depleted inadvertently. Whenever a customer is disappointed – something about the offering was either overplayed or otherwise appeared less than expected – store credibility and likewise goodwill will have been damaged. If the merchandise on hand, for example, is not up to standard, expectations will have been dashed and goodwill dissipated. The most damaging of all disappointments is the event that turns out to be a sham.

                Appraising the goodwill of the store is necessary for an accurate forecast of the sales potential of the event. From the forecast flows the budget for merchandise, advertising and other expenses. From the initial concept and themed message flow the window and banner signs, the point-of-sale signs, the newspaper publicity and the more strident media advertising.

                The amount of cash realized from these out-of-the-ordinary promotional sales events is directly related to accumulated store goodwill. The concept of the event is the occasion for realizing value out of the store’s goodwill; and the resulting sales, insofar as they generate cash in excess of normal, constitute the monetization of goodwill.

Our Winning@Marketing team has been operating for 4 months now and working with these marketing experts has given me some real insights into many changes occurring all around us. I remember 45 years ago as a kid in my dad’s men’s store, most marketing was word of mouth and a weekly ad in the local paper. The strategy was to open a store, have merchandise available, put an ad in the local paper and wait on customers when they came in the shop. The world has turned upside down since then. Let’s look at a few of the changes that have affected or soon will affect your business future.

Advertising – THEN: Advertising used to be lofty claims and expensive fluff – jingles, sound bites or tag lines. NOW: Today information speaks to individuals. Successful businesses have a presence on the web. They engage in more cost effective marketing targeted to buyer personas and customized for their benefit. Blogs, article marketing, SEO, SEM and e-mail campaigns are replacing or at least augmenting traditional media advertising.

Promotion/Message Delivery – THEN: Retailers broadcasted their message by either advertisements in the newspaper or on radio or TV. Potential customers would see it, some of them would react and come into the store. NOW: With customers searching for everything on the internet, the broadcast has changed. It’s now the customers who broadcast what they want by searching the web, and it’s up to the retailers to “be there” when they are searching.

Wait on customers – THEN: People had limited choices and you knew your market and the competition. You got to know customers and you did not need a great effort to get them to come in; they came in anyway. Competition increased and businesses turned to direct mail and phone calls. NOW: Marketing is more about getting to know your customers than ever before. Getting to know them means what they do, what they like and who they really are. When they like you, they like your merchandise and like the buying process, they are loyal. People still buy from people who they like!

Hype – THEN: Marketing was about creating an external perception that was nirvana. “Drink our beer and the girls will flock to you!” “We offer the best service at the best price!” People have either become a lot smarter or are receiving a lot more choices. These ads don’t work. NOW: Reality matters. Teamwork and excellence are fundamental to your reputation and growing a business. Leadership needs to inspire staff and give direction. It’s all about what happens at the EAI (Employee Action Interface). When your marketing is about the truth, it creates buzz, word of mouth, loyalty and passion. The truth needs to be about creating partners of your customers and providing support as well as product.

Markdowns – THEN: Inventory that didn’t sell went on sale. What still remained was stored for next year. After three years if it didn’t sell, it went to the sidewalk sale. The bottom of the funnel was a charitable donation. NOW: Rising prices, expenses, competition and the internet have all put pressure on cash flow. Cash flow relies on not only buying the right goods but also the right amount. Measures and control of margins, maintained markup and sell through are critical. Budgeting, classification structure, inventory management and merchandise planning are fundamental to success today. Information, analysis and the right actions are no longer hallmarks of the best retailers, they are hallmarks of the survivors.

There are many other changes happening with the economy getting tougher every week. Winners will be the ones who move the market from people who shop with you to people who are passionate about your store. Winning@Business™ gets your team focused and effective, Winning@Retail™ increases cash flow and profits and Winning@Marketing™ drives new prospects to your door. Call Management One® to find out which processes work best for your business.

The Business of People
By Evan Wise

Howard Behar, executive of Starbucks, says, “We are not in the coffee business serving people, but rather in the people business serving coffee!” This is a lesson for every small business owner, especially retailers. You too are in the people business.

Behar doesn’t say they are in the customer business but rather the people business. That is because success revolves around many more people than just customers. In order to deliver dresses, shoes or suits, many people are involved. Those people must be dedicated, trained, motivated and empowered to do their job effectively so the customer can be not only satisfied, but delighted! That includes sales, marketing, buyers and others within the organization.

Take at look at where most of your business efforts and focus fall. Is it on buying inventory or effective merchandising? Do you spend a lot of time on marketing? How much time is spent on finances and looking at cash flow? Are you selling on the floor, opening and closing the store and working on receiving goods? Compare the time spent on all those activities to the time you spend on training, communicating and growing your employees. Employees are your most important asset. Employees make your store unique compared to the competition. Too often I hear retailers lament that the internet is cutting into their sales. That means the staff is not specialized enough to compete effectively. If you, as the owner or key manager in the business, are not spending at least half your time and a good part of your budget on improving and nurturing employees rather than nursing them, competitors and the internet can pose a threat.

Winning@Business™ is about growing people in order to grow your business. Dedicated employees create loyal customers. When your staff is trained to think like an owner; when they own their job instead of renting it from nine to five; they will be more productive and effective at creating buzz (word of mouth) and keeping customers coming back for more.

A management process that is coordinated and implemented properly can change a culture and a business. There are reasons that some businesses do well while others fizzle. Often it can be traced back to people and how well they work together to accomplish goals that are meaningful to the success and longevity of the business.
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Hopefully all the stress and worry has not taken all the fun out of your business. One of the more challenging aspects of retail is that there are always payables. It is also a great motivator to drive business. This creates constant pressure to generate revenue and thus the stress to excel.

When looking at how our business performs; we look at product, people, presentation and marketing. One thing I rarely hear is “Are we having Fun Yet?” When I walk in to a store I get a feel for the atmosphere. Is it too quiet? is the music upbeat, soft, too loud, etc. I also get a feel for the energy in the store. If that energy is positive, it can be contagious.
That can translate into dollars as customers become more willing to spend time and shop.

That energy also translates into how sales associates perform. A positive attitude goes a long way to influencing potential clients into getting involved with your product. People buy from people they like, and when you are up and happy you put yourself in a position to win. When you are negative, dour or depressed your performance level is going to diminish.

One of the morning talk shows recently had a psychologist on and she said that research showed that the average person has 60,000 individual thoughts per day and that in a high percentage of people, 80% of those thoughts are negative. That was a staggering statistic. It seems like the deck is stacked against us from the beginning. However replacing a positive thought when you feel a negative thought appear can be the beginning of making a difference.

We have a choice to be positive. When a situation occurs, like a return, we can smile and recognize this is an opportunity or we can be depressed and make the customer, those around you and your self miserable. The opportunity is that the return is still traffic in the store. Take it back with a smile and maybe you will resell something else or make a customer for life. A retailer in Texas recently shared this example. A person brought in a shirt that she had purchased at another store. The retailer did not carry that brand but had a similar product. It was not even a customer that had ever shopped with him in the past. He took the return and made her into a customer, FOR LIFE! After that return this customer has become a client and has spent over $18,000. Imagine the goodwill he generated and how many potential positive stories from that customer were repeated to her friends. We all know the best advertising in the world is word of mouth.

Here are some ideas to injecting some fun into your business:

• Start each day by setting the tone of the day. Huddle with your staff and share success stories. Start the day with positive self talk. We are going to have a great day.
• At the huddle, challenge each other. Have a little contest, the first person to sell xxx, gets an extra half hour lunch break, or a candy bar, or something fun.
  Play games, Get the customers involved.
• Break up displays and redo them, share ideas, create some excitement in the front of the store.
• Before the store opens crank up the loud speakers with music that gets you moving. Music can be a great motivator.
• If you have XM or Sirrus or some comedy CD’s play them while you get the store ready to open, and start laughing.
• Brainstorm your own list of fun things to do.
• Hire people who like to be with people and who like to have fun. Let go of the downers because they bring everyone to their level and lower everyone’s expectations.

I realize that retail is serious business but life is worth living and for the amount of time you spend in those 4 walls there is no law that says it can’t be fun!

Let the good times roll…………

Marc

Is there any good news out there? The Press has been pounding us for months now about the impending recession, the collapse of the real estate market, a stock market that is playing a game of yo yo everyday and the price of oil that continues to rise. Oh and the dollar continues to shrink in value.

The converse of this bad news is that the drop in the real estate market has opened the door for first time homeowners. In Missouri for example, in 2007 the state provided over 300 million dollars to help over 3,000 first time homeowners. When there is a bull market and inflated real estate values, the savings rate drops. As the market has begun to adjust and real estate values have fallen, the savings rate in the U. S. has actually started to increase from .04% of disposable income last year to .08% this year and that number is expected to rise. The drop in the dollar improves our ability to export our goods and services and tourism from outside the United States increases and they are happy shoppers. Higher oil prices are responsible for an increase in the sale of fuel- efficient cars, and that translates into an improvement in global warming and investments in new technologies.

The point is that that there are 2 sides to every issue and more importantly, if we believe the pessimism we read then we might as well put a fork in our business and call it a day.

Maybe the aspirational customer, the ones who reached beyond their station in life to buy luxury items has diminished, but there are new customers out there and good core customers that can be developed. Generate a list of clients that purchased over a specific amount for 2007 and compare to the same criteria for 2006. Who spent more, who spent less? This is a great way to begin 2008. Get to know the customers who really support your business. Now. develop a strategy and tactics for each one. Think about how they can help you grow your business in 2008.

Think outside the box. In retail that means think outside the 4 walls. That does not mean your business is going to be saved by e commerce. That is a topic for another article. However, it does mean that there is a lot more business out there if you move out of your comfort zone.

What events do you have planned for 2008? What are you doing to energize your staff? What are you doing to excite your customers and keep them involved? Do you have Game days? Fun days? In store seminars? How does your referral program work? Do you measure your marketing against the traffic it drives into your doors?

Remember the excitement you felt when you first conceived of having your own store? Remember all the reasons you wanted to be in business? Write those down in bullet points and see if you are measuring up to those early expectations. Renew your vows with yourself.

The New Year can be as great as you want to make it. However, if you read the papers and believe the doomsday pundits you will start to create your own retail demise. There are buyers and sellers. If you buy into the bad news then you lose control and allow outside influences to impact your thinking and that in turn will negatively effect your results. If you are a seller then sell yourself, your staff, your community and your customers on the opportunities that still surround you. As in Acres of Diamonds, the real gems are in your own backyard. Go dig `em out!

Copyright Management One® all rights reserved

By Marc Weiss

As we round the corner into the homestretch here are some ideas on making sure you get the most out of what, for many retailers, is the time to generate extra positive cash flow. We want to examine the 4 P™s that are the underpinnings of creating success.

People- No rocket science here. You already know you need good people to drive the business. Break your staff down into 2 groups, performers and non- performers. The performers are those individuals who for the past year are selling at or below an acceptable selling cost. A good selling cost for Men™s apparel is 8-10% for all other retail selling costs can average 6-8%. The way to determine selling cost is to divide the sales associate™s sales by their gross wages. For example: if a sales associate works 40 hours and earns $10/hour then their wage for the week is $400. If their sales are $4,000 then their selling cost is 10%. $4,000/$400=10%. Now look back over the last 9 months and calculate each associates wages and what they sold and rank your staff by their selling costs. It will be self evident how they fall. Now that you know, it is time to do something about it. Some simple steps are to match low selling cost performers with high selling cost performers and have them role play. The poorer performers need to know what is acceptable and that they need to change. Review selling fundamentals. The basics like greeting the customer, adding items and closing the sale. Ask them to key-in on specific items to sell. By focusing their selling efforts you can see instantly if the poor performers are willing to change and improve. If you do not see some improvement then it is time to let them go. If not, you are just subsidizing their poor productivity.

For the associates with low selling costs, these are the gems. You can squeeze milk from cheese but nothing from rocks. These sales people are your cheese. Come up with incentives and make them fun. These are the people who will deliver.

Here is a clue: as you look to replace the rocks do not focus on experience only, as selling is a skill that can be learned. Look for these traits- Are they competitive? Do they like people? And do they like to have fun. People with these traits are easy to motivate and are easier to train to be outstanding sales people.

Presentation- Here, consider making a checklist. What needs to be done daily and what needs to be done weekly? Let™s start with the window. I was recently talking to one of our retail clients in Tucson. Here it is the middle of summer and they are blowing out a certain style of dresses. Reorders are hard to come by in Tucson when the tourists are gone and the shops and shopping centers are quiet. But even with reduced traffic they sold the heck out of these dresses. You guessed it. They were in the window. They would not have sold as fast nor as many had they been tucked away in the store. If you have merchandise in the windows and they are not selling, guess what? It is the wrong stuff. Don’t wait until the next window change. Replace it now! Window Sell-Throughs should be part of your daily checklist.

Next, take a look at what is presented when a customer first enters your store. What message are you telling? Remember always put your best foot forward. My favorite pet peeve is when a store has a sale rack up front and you are in the middle of the season. Consider a table and stack it with colorful goods that are hot. Make it appealing. Make it something the customers can touch and feel. Again, as in the window presentation, if it doesn’t sell change it!

Product- As fall passes into holiday you have learned a great deal about what is hot and what is not. Are your holiday orders in line with what is selling? Have you targeted your ending inventories for December to be line with your plan by classification? Are you reacting to slow sellers and moving them out before having to take additional markdowns? How is the balance of inventory in your store based on sales demand? Do you have enough tees, sweaters, dresses, jackets, outerwear, shirts, jewelry, pants, sportcoats, toys, games, shoes, boots, etc. to make sales plan between now and the end of the year? Most importantly have you decided what classes need to be fed and which ones need to be starved to get you out of the season whole? Are you buying on top of what you already own? Do you have the right amount of fresh goods scheduled to land to keep your store interesting and to keep your customers coming back for more? What about resort and early spring? Have you selected the classifications you want to go after to generate volume? Lastly, what strategies do you have in place to sell your product? Have you developed a sound, cost effective marketing campaign to get your market share for the 4^th quarter?

Profit. The big P, the Big Kahuna, the Whole Enchilada. This is it, your ideal time to do your cash flow to see your cash position at the end of the year. This will help you better see the proper flow of the right inventory to drive revenue between now and year end. What strategic markdowns need to be taken now instead of drastic reductions at year-end clearance? What markdowns will create cash now to buy needed inventory to generate revenue. Take a close look at your current balance sheet and income statement. How are you tracking against your budget? What decisions can you make now on people, inventory, expenses, presentation, that can deliver the desired results?

You are piloting your business! Is your flight plan on target in terms of the four Ps? People, Product, Presentation and Profit?

Happy Retailing. Remember the little things. They all add up to make for great business

COPYRIGHT Management One®, ALL RIGHTS RESERVED 2007. AUTHOR MARC WEISS