Retail Branding

Branding Your Stores

Many smaller operators are envying the big boys name.  An established trademark can set you apart from others.  We all know the brand names.  In convenience retailing, 7-Eleven ranks as the best known brand.  It establishes a pre-conception such as McDonalds does.   You know or think you know what you are getting before you enter the box.  Brands as we know can also establish a negative connotation.  That of course is the trick.  Once you hang your shingle out with a promise to the customer, you have to fulfill that image every minute of every day.  So many times we spend the money to build the box to a certain specification to establish the brand but we lose it on the people end.  How do you convey that message to every employee?  In Good to Great, they talk of having the right people on the bus.  We can’t spend the time to motivate employees.  They have to be self motivated.  As in all things, the people factor is the hardest to achieve.  Some markets seem to be hopeless.  I have operated stores in rural or metro markets that never came around on the human factor.  Frustrating every day.  Store standards and losses from employees were horrendous and yet we could not get the right person.  What do you do then?  When you are planning to brand, what do you look at in the human resources aspect?  A balanced scorecard will help you take all aspects of the plan into consideration but do retailers do this on a regular basis?  Do you examine how you can recruit and train before you implement construction?  I remember building stores in markets and then having to relocate employees from existing facilities to achieve the standards we needed. 

Of course, the primary requirement of really establishing a brand is value added to the customer.  What is unique about your offering?  In speaking with retailers, many of them look for the “one thing”.  What one thing is setting you apart?  What is the reason a customer would enter your box instead of your competitor.  Many times, the primary catch is a credit card base related to a fuel purchase.  The premier brands, Chevron and Shell, provide an offer to the customer.  It is in their comfort zone and repeat business is not only sustained by the quality of the product but the financial service the retailer provides.  As we know, in the past years financial services have provided much of the GDP for the country.  Convenience retailers have struggled with this part of the business.  Money order programs, while complex, provide cash flow and banking services for customers without accounts.  Unfortunately, the benefit is more for the company and does little to separate you from the crowd.  So what questions do you ask yourself and your customers?  The real question behind basic marketing.  Are you first on the street?  Are you cheaper or provide superior service?  Do you offer a product mix no one else can provide?  Is there barrier to entry once you do achieve your unique offering or can competition copy it quickly so you lose your edge?  How cost effective is the development of your offering? 

My advice, talk to your employees and customers on a regular basis.  Watch your customers.  Be in the stores that you operate.  Know your business.  You might just be the next big thing. 

Retail Details Again!!

While we cannot be all things to all people, sometimes we miss details that cost us many customers due to our reluctance to be anything to somebody. 

Confusing statement?  Should be.  There are many confusing things in retail.  All the basic elements they teach us in B school.  All the theories on price, promotions, placements etc.  I think it was driven home to me last year when I was overseeing a chain of stores in Texas.  In any food driven business, cup sales are the first and foremost profit driver.  A little syrup or a little coffee and a container and we have liquid gold.  Very low waste factor, low labor cost and low cost of goods.  Magic.  But yet I watched numerous chains mess up this very simple formula.  How can you?  By not listening.  It wasn’t even a cost saving initiative.  It was just not caring about your customer.  And this turns into a bit of a rant here.  When you have lived your entire life in a market you do business in, market research should not be an extensive or expensive proposition.  Should it?  I hope not but this story proves that premise wrong.  When I first moved to the state to take on this challenge, margins were crap, food presentation and offering was erratic and attitudes were, how shall we say, laissez faire?  Nice combination for disaster.  Of course, the easy way to rectify many of those issues is with a simple food offering such as cup sales.  Fountain and coffee.  And considering our sign had a very good trademark for these categories, we should be golden.  But we made just a small mistake.  We identified the wrong menu for the fountain offering and then made a major capital investment in equipment to dispense that offering.  In the western part of Texas, ice is a very personal choice.  It happens to be, that in this part of Texas, a small pellet or crushed ice is the ice of choice.  By about 99.9% of any fountain consuming segment.  Unfortunately I discovered this after my arrival and after the purchase of the equipment.  And I was informed very firmly that small ice was the choice and why did you not know that and why did you not serve it and why did you ignore your customer and why and why and why and why.  Big trouble to say the least.  Here I am in a cash strapped organization, investing in a program that is intended to give us a very quick return on investment and improve our cash flow and I screwed it up.  I let a major purchase be completed without enough research.  Research which consisted of asking some of my friends and neighbors what their preference was.  And this was a very unanimous market research conclusion.  SMALL ICE NOW!!  This was such a strong preference that I had seen customers turn against traffic to purchase their preference.  On a regular basis, several times a day.  Imagine how I felt counting all those dollars go to the competition.  So, question or comment, what would you do?  Would you suck it up and replace all the equipment?  Would you leave it in and try to capture your customers with some other hook?  What would that hook be?  Would you discount price?  Try to capture a different age segment?  I can tell you now, suck up your mistake and do it the right way.  Even if you have to borrow at a higher cost of capital to achieve it.  By the time you re-educate the tastes of your target market, you will be dead.   Remember Coke 2? Why are we so stubborn and so reluctant to learn from history and other peoples mistakes?  Here we are in our thirties and forties acting as if we are five or six and having to do it on our own. 

Listen to your customers.  Learn your lessons from history.  Admit your mistakes early on.  And for God’s sake, get the ice right!!

Smile Factor in Retail

Many people ask me why I ended up in retail.  With all the craziness that goes with the business, sometimes I ask myself that.  Being called out in the middle of the night, personnel not showing up and when they did show up, they either stole or did not do the work.  They stole time from me instead of cash.  Same difference at the end of the day.  I was missing the money from my bank account.  So why did I stay in retail?

When I look back on all my fun times I think the things I loved the most were the smiles.  Whether or not it was the people I worked with or the customers I took care of, smiles were better than money in the long run.  Money would only last from day to day but smiles you could take home with you.  Smiles came in varying amounts:

• A small smile from a child when mom let them pick out something.
• A BIG smile from a child when they actually get to eat it.
• A smile from one of your employees when they actually get what you are trying to teach them.
• A smile from your customers when you have their order ready before they ask for it.
• A smile from your family when you make it home on time.

Every smile is precious.  They bring with them their own little ha- rah when you get them.  Sometimes there were days that it did not matter how much I was being paid.  That was it, the final day.  I was going to resign no matter what happened.  The Lucky Charms elf could have dropped down from the sky and given me the pot of gold but it would not have mattered.  And then, I get the smile fairy instead.  A smile from an employee when I helped them with a task.  A smile from a new customer when I was nice to him after a bad day and of course, the best one is when I see my children at night.  All of those helped make the world not such a bad place.  I always like the song from Mary Poppins when they sing about a spoonful of sugar helps the medicine go down.  Great advice for anyone and especially for the people you work with or take care of.

So why is this being discussed in an article on retail?  There have been many businesses started over the centuries past.  Multitudes of service, retail, manufacturing and everything else you could imagine have been the effort of sweat, blood and tears.  How many of those have crashed and burned?  I was reading about a convenience store retailer that has closed as many locations as it currently has open.  Many chains are too reluctant to pull the plug on business segments that are draining off valuable resources that are really needed in other parts of the company.  Just because they are the result of blood sweat and tears.  Or the frustration that we can’t figure out why the division is not performing.  It is the same box, the same model, the same everything we use in our other markets but this one stinks.  Maybe because we don’t have the smile factor in our business.  I can’t tell you how many times a change in personnel has changed the performance of a store.  How many times I have taken a manager from a small town and put them in a metro location only to fail miserably until I reversed the decision.  Why did they fail?  They hated the city and that showed in their work.  The smiling, pleasant manager I had suddenly is stressed and frustrated and now that has spilled into the entire store.  I lost the smile factor.  When you walk into your stores, are they happy stores?  That is one of my favorite descriptors for a store.  Very simple but to the point.  I want a store that I can take my family into and they will feel happier than before they went in.  Of course, this has to be done in the twenty second speed of service window you have to take care of your customer.  Talk about a smile!  It has to be natural and then you will have the business you are looking for.  Good sales, happy employees and happy customers.

Retail: The Name of the Game is Convenience

Another one of those great questions that happens in convenience retailing all the time.  What are we really trying to do?  Are we a fast food restaurant, gas station, novelty store or all of the above?  It is interesting how that changes with whatever ownership we deal with.  In the past few months, I have been working with a major branded gasoline retailer.  It was a throwback to the old days when I was a pump attendant with Texaco.  Waiting on cars, selling cigarettes and TBA.  (Tires, batteries and accessories for you youngsters that don’t go back that far.)  All of our business discussions centered upon cents per gallon and should we sell cigarettes on a two pack, three pack or carton strategy.  Management rejected all promptings to get involved in even basic food service such as cup categories.  Their facilities would be small boxes of 1800 square foot that was filled with old merchandise.  They relied on gasoline profit to offset all costs and were not taking advantage of the higher margins the rest of the store can generate.  Store after store was filled with junk that had been there multiple years believing they would take advantage of the higher purchase margin..  Seemed similar to mark to market accounting to me.  We hoped that when we sold it, it would still be worth what we hoped it would be when we bought it.  So what was going wrong with this model?  By the time we were able to sell it, the time value of money had increased and we also had to mark down the price and had a lower than desired revenue.  So what does work?

I guess this is the question all of us have had to ask sometime in our life.  I like to phrase it as what do you want to be when you grow up?  Our client needed to answer this and make sure they had the right answer.  Too many operators try to be all things to all people or nothing to everyone.  Our business model is not that complex or as they say, it’s not rocket science.  But there is some science! 

What need or value are we trying to supply to our market?  In this case we are talking about consumable packaged goods that our customers want and that we can provide more efficiently than our competition.  Fancy but what does it really mean?  I think many times we forget that the real name of the game, what we are really trying to do is CONVENIENCE.  It is stated plainly in the business name but why do we struggle with it so many times and forget what we are really trying to do?  Anything that saves resources, time energy or maybe most important, frustration is convenience.  We measure margins, we measure turns, we measure operating expenses and of course cash and profits.  But yet many times I have to look at other industries to obtain metrics that benchmark what I am trying to do.  Convenience, how do I save on the above mentioned items and do it more effectively than my competition?  Isn’t that the value I am trying to provide?  If I am doing something else I probably need to hang a different sign on the building.

One of the metrics I try and hammer home with every company I work with is speed of service.  I became drilled in this metric working in QSR operations and absolutely love it for any business I have worked with.  How quickly can we satisfy the need and want of our customer?  There are other metrics such as plus selling additional menu items and of course food costs and labor but my favorite is speed of service. In convenience stores we measure that from the ingress/egress of getting in the store, making the sale and getting the customer back out on the street.  In the process we want them to have the best experience possible; wowing them with the smile factor and making them feel better about their day.  We need to have good products at a decent price and a clean environment but if we can get this aspect of our business, speed of service with a smile, we will be successful.  More to come….

Suggestive Selling in Retail

Suggestive Selling

In reading a recent article about new product launches and what determined if a launch was successful or not, the point was made that suggestive selling by cashiers is still the most effective way of selling new or mature products.  This brought to mind two recent contests conducted by a local chain..  One was for the best increase in a very mature category.  The other was for a line extension in this category that was relatively new and still had not made market penetration.  The first contest was a huge success and hit every benchmark they were looking to achieve.  The next contest sputtered and died a horrible slow death and wasted many resources and did not even come close to goal.  What was different?  If suggestive selling is the key to product launches and increased incremental sales, how can we design contests that achieve their targets on a consistent basis?

In the first contest, results were set up so they could be tracked very clearly.  Twice a week, the results would be posted for all store teams to review.  This would set the tension needed for the next step, the weekly conference call.  Not only did the stores have one week to look at their numbers in comparison to the other locations, it gave them a week to build up questions, challenges, taunts or whatever other comments they wanted to bring up on the call.  As long as the comments were positive, they were encouraged.  Everyone wanted to find out    how were the results achieved and who was going to beat who next week.  By keeping the results up front for everyone to see, they were able to overcome the inertia that plagues many of these programs.  Winners with the greatest delta for the week were given bragging rights for the week but there was no monetary compensation until the end of the contest.  Even then, the rewards were minimum compared to other contests.  The only thing that kept this contest going as well as it did was the pride and drive of the store teams.  All the company did was provide the benchmarks so they could measure their results.

The next contest had much larger prizes and the increases needed were smaller than the previous contest.  And it failed miserably.  To the point that it was embarrassing when they discussed the result with their vendor partner.  What was different?   Why was there no grass roots excitement?  In the first contest, the results were discussed at least three times a week and during every store visit.  The second contest had no discussion until several weeks into the contest and then very sporadic after that.  The first contest had very clean cut goals but the second contest judging criteria was not finalized until the contest was half over. The first contest was a product everyone was very familiar with but the second contest was a relatively new product.  Instead of dropping the number of communication events they should have doubled them to overcome the inertia factor.

So why the change?  Why were they executed differently?  The same answer every time, the only variable there is in business.  People.  In one contest, the management listened and reacted quickly to reports from the field on issues with the contest.  Not only did this tune in the contest, it earned that manager credibility with the store teams.  There weren’t any battles over whose idea it was or who was in control; it was strictly what was going to give the best result.  In the second contest, the manager did not want to release any information until they were sure they were going to have good news.  The problem was, by the time they were able to see if it was good or bad news, the contest was already headed in the wrong direction. 

So where do you go from here? 

First, make sure the goals are clearly defined.  Do not assume they are because most of the time they are not.  You wont be able to tell until they are battle tested in the field.  Second, take the suggestions and execute them or explain why they are not practical.  Keep your eye on the goal but at the same time, consensus must be built.  All levels of the organization has to be in agreement so progress can be communicated clearly.  Which leads us to the next point; COMMUNICATE.  Even if you think it is enough, I guarantee it is not enough.  Be sure to keep the metrics as the basis for your agenda but allow some time for the next point.  Have some fun!  Contests are one chance where competition is encouraged and bragging right s are some of that competition.  It is amazing how many times we will see someone walk through fire to see their name at the top of a list..  This was always the best part of the job.  Being #1. 

Happy Selling…….