Specialty Retail Blog

Management One Meeting was a huge success as 27 affiliates stormed Tucson, Arizona for exciting and productive interaction

The M1 2010 meeting attendees did a great job of bringing emotion, information, innovation and passion to the planning and action plans for the next year!

I am sitting on Southwest Airlines flight #621 from Jacksonville, Florida to Vegas on my way back to Tucson. I have often read about how SWA is able to be profitable due to better efficiency, but seeing is believing.Imagine a contest where you have 100 numbered chips and 100 numbered holes. Your task is to put each chip in the hole with the matching number. Your opponent has 100 chips and 100 holes. His only restriction is there is only one chip per holes; he can put a chip in any empty hole. Who would win the contest to fill the spaces the fastest?

Other airlines assign each passenger to a particular seat while the SWA group flows into the empty spots. In addition, before the inbound plane landed, the crew was already lining the next load of passengers in an organized queue.

This is just one of many clear examples of the need for a well crafted system to create efficiency and productivity. SWA does not necessarily hire better people than other airlines but they do provide the training system to assure success.

When I go to retailers who have huge stacks of inventory in back rooms where it can’t be sold, I wonder what system change could be implemented to increase productivity. There are many systems in retail that contribute to success and consistency. Don’t believe it? The biggest retailer in history, Walmart, figured out the importance of the right system for buying, selling and distribution and then used it to crush competition.

Retail is Detail and the more organized your decision making, planning, operations, buying, marketing and selling can be, the more smoothly your business will flow. The more your systems are focused on your strategy and goals, the more successful you will be!

There is often more to learn from the mistakes of large companies than from what they do well. Those mistakes can mirror those that we all make in our own businesses. After all, the CEO of a large company and a small independent business are both human!

Ed Whitacre had an illustrious career in the telecom industry before taking over the helm of GM. He was brought to GM as part of the bailout of the company. He was joining a company at the low point of its history. When he arrived at GM, he found himself in a position where he was resented and looked at as an outsider of the auto industry. That is saying a lot in a community like Detroit where so many of the businesses are connected to and are there to support the auto industry.

Years earlier, Ford was faced with a need to replace its own CEO. Their company was historically led by family members and auto industry experts. The company leaders recognized their decline and a need to make a different move. Their choice was to open themselves to an outsider who could bring a different perspective and point of view. Alan Mulally left Boeing to manage Ford and when he arrived, he met the same skepticism and resentment that Whitacre is facing today. Today Mulally is looked at as the savior of Ford and a shining hope for the future of the U.S. auto industry. Success seems to ease doubt.

The point of all this is that there is a lot that any industry or business can learn from outsiders. We all tend to think that our knowledge and experience is unique. We all tend to view our own business as so complex and special that an outsider could not possibly contribute anything valuable to our own success. The truth is that there is always something we have overlooked or not optimized.

In this case Ford was open to outside input and leadership from another industry with another point of view. It took outside influence and force to get GM to realize that there can be a lot to gain from a fresh perspective. A know-it-all attitude never leaves room for improvement. There is always some aspect of our business that we can improve by looking at it from another perspective.

“Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure or nothing.” – Helen Keller

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.

A lot of our clients ask us about taking on consignment goods.  At first,
this seems like a dream come true – you get goods in the store that you
don’t have to pay for until they sell.  And if they don’t sell, you just
send them back.  Great, right?  Well, maybe…

There are a few definite downsides to consignment goods that retailers
should be aware of:

• Sure, you can send the goods back, but that means you are paying double freight for stuff that didn’t sell.

• What is the cost to you to have your staff (or yourself) pack up these goods?

• What about accounting?  This definitely adds time to any accounting that you do to keep your books straight (not to mention your POS system!)

• Moving goods in and out this way can confuse your customer. A retail store has no better marketing than having the right goods at the right time.

We do recommend consigment goods when you are learning about a new line that is untested, or if you are having very difficult cash flow scenarios.  Of
course, difficult cash flow scenarios typically come from either buying too much inventory in the wrong classifications, or too much inventory in
general, and that’s what solid open to buy planning prevents (OK, a not-so-subtle hint, but I do believe in that strongly, so I had to stick that in there.)

The recession isn’t over yet, so these kinds of issues must be carefully studied to ensure positive cash flow and success.

Dan Jablons
Retail Smart Guys
www.retailsmartguys.com

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?

There’s an anonymous anecdote that tells the tale of two cavemen who were shivering and trying to stay warm by the fire in their cave while outside it was uncomfortably cold, raining, thundering and lightning.

The first caveman turned to the other and said, “You know, we never had this crazy weather before they started using bows and arrows.”*

It’s humorous in its overt silliness, yet when you think about it, you can clearly see the steps the fictitious caveman took to reach his fallacious conclusion. In his simple, uncomplicated life, there had been two major changes that had occurred, one before the other. So, to him, it was obvious that the new use of weapons “caused” the changes in the weather. Aesop would say the moral of the story is when two changes occur, one is not necessarily guilty of – or possibly not even related to – the other.

There are many changes happening now in the retail world. It’s important to see the full picture to+ know what is real.

*Idea Bank McMurray Publishing 2008

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas Edison