Last month I wrote about the changing terrain of marketing success. I introduced the need to build a community around your company based on values in addition to demographics. Management One® developed the Winning@Marketing™ process to achieve that transition. Many readers felt that more explanation would be helpful.

Brands and your marketing are about establishing an image. People long ago started moving away from the old “neighborhood”. They had a need to meld into new communities and environments. Just as the internet changed how we do so many things, it is changing the socialization process too. Today many do much of their socializing online to find their niche and to socialize. Others struggle to find their niche, their identity and the image they want to portray.

What is the image of people who shop in your store? Who in your market “wants to be like them”? Do others want to be associated with them? Obviously very few owners can afford Tiger Woods or Cameron Diaz as a spokesperson for their stores to establish that image. Lots of people want to be in their circle! Other ways must be found to identify and establish the image of someone who shops with you. That is where the internet can be a terrific and potent tool.

What are the images people have of using your product? When you sell something and the customer uses it or puts it on, how does he/she feel? How is he/she supposed to feel? Does that feeling provide an attachment to your store or a community? Some stores have an image of exclusivity and of being expensive. Certain customers may have values where expensive and exclusive items and activities are important. To others, those things may be ostentatious and wasteful. Communities grow up around shared values!

A good marketing strategy that includes e-mail, the internet and well-crafted direct marketing establishes the right image with which your community will identify. That image prepares them for the right feeling when they get the goods home. It catches their interest and motivates them to shop with you.

Sometimes events or values establish a community. Dick Hite, owner of Norton Ditto, an upscale men’s store in Houston , Texas is busy raising money for a local charity. At the store the trunk shows and events are all focused on raising money for that charity. His store, which is reflected in his own values, and the community surrounding it are growing together nicely.

A retail community around your store is about mutual cognitive perceptions. Plant the right seeds and the community will grow. Your marketing needs more than fertilizer (investment) to help the growth! A solid marketing strategy to use that investment wisely is the right move and Winning@Marketing is designed to provide that direction.

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In Europe, affiliate Thierry Bayle (London) is shining as a featured speaker at the prestigious European Summer Fair. An article in “Drapers, Fashion News,Jobs, Trends” states, “…Speakers include Thierry Bayle from Management One®,who will talk about the ‘Art and Science of Buying,’ alongside Julie Warkenth from WGSN.” To register for the event visit www.summerfair.com.

The Role of the GMM

The General Merchandising Manager in a retail store plays a critical role to the key to success. The GMM must coordinate the strategy, marketing and sales for the season with the buyers in order to give the store a direction that will attract customers and build a solid reputation. It is also important that the GMM is able to communicate that information to the Management One® Winning@Retail™ affiliate.

When preparing merchandising plans for a client, we use a high tech/high touch aspect includes input and feedback from the buyers and the GMM at the store.The more the planners understand the direction the store is taking, the closer the plan will be to what is needed to make the strategy into reality!

“Nothing is more dangerous than an idea when
it’s the only one you have.”
- Philosopher Emile Chartier

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

And it usually isn’t. Special offers, dating, and incentives tied to minimums appear to be good on the front side but in reality they typically sound better than they are. Vendors make these offers, not because they are good for the retailer, but because they are good for the vendor. That in itself should be a sign of trouble!

Let’s start with invoice dating. In some industries and with some seasonal products dating can be an advantage. However you can be fooled into overbuying knowing that you do not have to pay for these goods for 6 months or more. Here, merchandise planning can make a huge difference, as you will only commit to what you can sell profitably. If you have carry over inventory that is still viable for the next season; are you deducting that inventory against your future open- to-buy? The bigger question is why do you even have carry over inventory?

Dating typically causes retailers to overbuy and then as the season unfolds they have limited or no dollars to spend on new goods. Dating can cause you to over commit to one vendor. If that vendor is not selling and another vendor is selling, you have managed to box yourself into a corner. It is always important to leave yourself open- to- buys, especially in key classifications.

Dating can create a false sense of security. You will eventually have to pay for those goods; if they do not sell it would be a shame to pay those invoices on the profits of other vendors. If you do use dating, especially on seasonal goods that arrive early, it would be prudent to set aside the cost of goods on each item as it is sold and keep it in a separate account, possibly interest bearing. Some banks have great business accounts that allow you to keep an almost zero balance in your checking account and a savings account attached. . When the invoice is due you have the money saved, with interest! Simply sweep the funds necessary to cover the invoice from savings to checking.

Incentives tied to minimums. If the minimums force you to overbuy then don’t do it! The 10 or 15% will not be enough to counter the markdowns you will take to unload an overbuy. When you go to an all you can eat buffet, you eat more than you need and then it is diet time. If you hate dieting then pass on the buffet. However in your store a diet can mean markdowns and thus loss of profit. It also creates a squeeze on cash because those markdown goods will need to be replaced by stock that you can sell at full retail. Incentives tied to minimums must fulfill your needs and not the Vendor’s.

There are other incentives where the vendor offers discounts on reorders based on an upfront commitment. This can work if the open to buy dollars for that vendor match your overall assortment plan. Otherwise take a pass.

If you decide to get involved with Vendor incentives, that does not preclude you from negotiating your own terms, conditions and discounts. Hot vendors do not need to give anything away. Merchandise that is sold with pre season incentives may mean the vendor is in a position to negotiate. Remember, as the buyer, you have great leverage. Do not be afraid to use it. Smaller retailers need to remember that they are important; as they typically are the most profitable business a vendor can write. Small retailers do not beat up vendors for price incentives and discounts like larger companies.

The best incentives you can get are the ones you negotiate on your own terms. The first rule my father taught me in negotiating was, “There are 3 prices: The line price, the incentive price, and the price you pay. Make sure the price you pay is the lowest you can get, then go back and lower it again.

Copyright Management One® 2007 Written by Marc Weiss

Sigi’s, a client of affiliate John Adams ( San Diego ), has been voted Best Boutique in La Jolla by the La Jolla Light Readers Poll. Sigi’s is a women’s boutique located in San Diego . Owner Phyllis Lanphier says, “We have been here for 40 years. What I offer as the owner is the aesthetics. John and Management One® are like the engine to keep it all going. You have to adapt in this day and age. I don’t know how other businesses can function without it.”

Further up the coast, Santa Monica’s ZJ Boarding House, Alan Roseman’s (Los Angeles) client, was the featured retailer in the latest issue of Sporting Goods Dealer magazine. ZJ Boarding House is a premier surf, skate and snowboard shop.

Congratulations to M1’s™ honored clients and to their affiliates!

Top Down Bottom Up Interactive

These are three different types of inventory planning that retail business can engage in. The first is top down planning. In this scenario decisions are made at a high level and drilled down in to the planning process. The downside to this is that planning is driven based on management’™s expectations or even the desired profits needed to show stakeholders. Hopefully it would be guided in some measure on past performance. Forced increases or planned decreases are not necessarily driven by market conditions. Decisions are made at a high level where there may be significant distance between the decision maker and the customer.

The second option for planning is bottom up or planning that is dictated by how the customer votes with his/her purchases. This planning reacts to current and past customer demand and is more reflective of current market trends. The downside to this type of planning is that it can miss opportunities that the market has not yet seen. It omits the art side of the buy enabling merchants to take necessary risks to grow their business.

The third form of planning is interactive. It is a blend of top down and bottom up planning. Bottom up planning is at the core of this but it also allows for some guidance from management to make top down decisions. Management One™ believes in a “high tech” “high touch” approach to planning that more closely resembles interactive planning.

How interactive planning works at Management One™

The High Tech ‘“ High Touch approach to Inventory Planning

• Bottom up planning is based on both short term and long term trends.
• Analysis is based on opening up opportunities. Forecasting logic reacts to current trends and drives revenue forecasts to feed opportunities and starve problems.
• Trained planners utilize national and regional trends to impact decision making.
• Affiliates and clients feedback valuable information to planners to help maximize opportunities.
• ‘What if’™ scenarios are developed for risk-taking to grow specific areas of the business.
• Proper balance of inventory is achieved through an effective classification structure
• Local events that are strong enough to influence the business are considered. For example the strength of a football schedule in a college town can have a dramatic impact on the plan.
• Turn rates for clients are based on location, type of class, assortments, cash flow considerations, volume and profit potential.
• Markdowns are considered as a healthy part of planning.
• Gross Margin and Gross margin dollars are considered as part of a holistic approach to planning. Profit potential that exists in every store is carefully protected so that classes that are essential to the maintenance of the business are not sacrificed.
• Inventory flow is based on peaking inventories at the right time and maintaining a fresh flow of inventory to ensure customer demand.
• Flow and balance are key ingredients in growing sales and generating profitable cash flow.
• Reporting that allows users to make decisions on inventory performance, cash flow planning and to develop meaningful merchandise strategies.
• Sales forecasting that is dependable and allows management the ability to budget effectively.