Everyone is in Retail

There have been many times people asked me in the past “What do you do?”  When I replied I was in retail I got a lot of funny looks.  There were a lot of people that didn’t think retail was a career.  They look at it as only a minimum wage entry position with no future.  Well, after more than 40 years in the business, (Yes I started very young.  I was five working at my Grandfather’s store.)  I can tell you that yes there is a career.  I started as a cashier and worked my way to Executive Vice President and then to another company as COO.  I can’t say that I loved all of it but there were many good times.  So why did I stay in retail?  One word and that is people.  Retail is a people business.  Whether you are dealing with your team or your customers, they are all wonderful.  One book that a huge impact on me was Service America.  It spoke of the moment of truth when you exchange money for goods at the counter and how important both people on each side of the counter are.  This is why I tell everyone they are in retail.  In business, there is no business without the overlap of resources between two organizations, people etc.  I believe it was Drucker that drew the circles and said that this overlap is your market share.  So any and all business to me comes down to how do I take care of my customer?  What is their experience with my organization?  And how many businesses never really ask this question or give it a real answer?  I have been in so many long term strategy sessions in my career my head hurts.  Do you know what most of those meetings focused on?  Products and expenses.  I cannot remember when a real budget was allocated to finding out what our customers think of us and even more important, what do the people who are not our customers think of us?  The only way to increase sales is very basic.  You increase traffic or you increase average ticket.  All strategy is based on this.  So how do you increase traffic?  By taking market share from your competition.  Ah yes.  I remember that from biz school.  Crush the competition.  Drive them out of business.  Blah, blah, blah.  My philosophy is pretty simple.  Keep your customers happy.  I always talk to my team about happy stores.  Happy stores are locations when you walk in you feel good and you walk out feeling even better.  Happy stores are clean and well merchandised of course but more than anything, the people in them are happy to be there and that rubs off on everyone.  In “Good to Great”, they speak of having the right people on the bus.  That is so true.  So, the first question you have to ask yourself is do you have the right people?  Andrew Carnegie used to speak of universal accord and how he had one man that did nothing but get rid of the bad apples in his business.  Napoleon Hill speaks of the universal mind and getting a club together of people that think like you do.  I have to admit that there have been times in my career that I have been the bad apple.  I begin to think that no one knows better than I on how to run the business.  This can be a lethal attitude if you have a boss and that boss finds out.  Even worse, eventually it spills out to your customers and team members.  So, in your business, where are the attitudes?  You must be disciplined enough to deal with this every day and not just at review time.  You must insure that all your customers are happy, ecstatic with your product.  People buy solutions.  Every salesperson knows that.  Whether you are providing a major solution such as reorganization or a simple solution like a pack of gum, you have to make someone happy.  Try it this year and maybe it will even rub off on you.  Then you can be happy too….

Special Offer

Retail Strategies & Solutions is now offering EvaluSys Business Diagnostics.  We are offering an introductory offer of a complete business analysis as well as a two hour consultation for $499.  Call Andrew Pochatko at (432) 599-3272 or email him at retail.strategies.solutions@gmail.com for more information or visit us at http://retailstrategiessolutions.blogspot.com/

Retail Change

Another one bites the dust.  Headlines this week tell the story of Borders giving up on saving any of its stores and shuttering all locations by September.  Many websites are speculating why Borders went from a market leader to loser.  The rise of the electronic book, Amazon’s increased muscle in the marketplace or a plethora of demographic changes.  The truth is that they did not plan for change.  As Heracleitus stated 2500 years ago:”Nothing endures but change.”  We know that most business leaders do not devote enough time to planning for change and even fewer create change that drives their industry or the world.  No matter what you do in today’s world, you are involved in selling and therefore you are involved in retail.  The delivering of a product or service to a customer.  So how do you avoid the Borders syndrome?  First of all, pay attention to your key metrics.  No matter what you do, you need to have sales and costs that are in line with those sales.  If either begins to get out of line, not hit your targets, you need to immediately react.  Do not wait for the elves to come in and fix the problem.  It will not happen.  Next, do not spend your time looking at the past to the point it erodes your ability to focus on the future.  Too many businesses continuously chew on past performance.  I like professional sports as an example to model.  While you may look at the game films after the big match, you spend most of the time getting ready and playing your next contest.  Now what else can you do?  Assemble trusted advisors and listen to what they have to say.  Every business needs to have a sounding board.  Whether that is a board of directors, consultants or even a good friend, listen to their advice and see if it will help you in your business plan.  It is wiser to spend some money now and adapt to and create change than to play ostrich and lose it all.  Just ask Borders…

Retail Strategies & Solutions New Partners

Retail Strategies & Services is growing to provide additional services to clients.  This past week we became affiliated with Blackmore Partners LLC to provide private equity funding to eligible businesses.  Blackmore has several hundred private equity firms interested in mid cap businesses in the retail and services channels.  Candidates need to have revenues in the $50 to $100 million range and EBITDA of at least $5 million.  Interested parties should contact us at retail.strategies.solutions@gmail.com for more information.  Also new this week is a powerful business diagnostics tool provided by EvaluSys.  This web based analytic provides a detailed look at eight aspects of your business from Executive Leadership to Sales and Marketing.  Once you have completed your analysis, Retail Strategies & Solutions provides detailed steps in a Balanced Scorecard format so your organization may track the necessary improvements to improve revenues and profits.  We are excited at both of these additions. 

We will discuss in our next blog that everyone is in retail.  Whether you are providing a product or service, you are selling to your customer and the laws of retail apply.  Look for our next post to learn how you can improve your customer’s experience and your profits.

Retail: Learning to Serve Someone

I was reading another consultant’s blog the other day and they were giving tips on how to obtain business.  Their advice was to ask questions until the client could not give you an answer and then bingo that was your way into their organization and how to start advising your client.  It got me to thinking.  So many times, we think of people in terms of objects.  Whether it is an employee that we consider a resource as in human resources, a client who is a source of billing or someone that is just a pain in the butt who we regard as a….Maybe that is better off not said.  What came to me though is in the past few months there seems to be something larger pulling at me.  Is it time to change my business plan?  Is it time to get out of the business all together?  What has been slowly ticking away in my brain really has been, how can I be of service?  The reason the questions given in the article I read seemed to strike home was because each of them were ways I could be of service to someone.  And not to a company but to a person.  Questions that an individual could be struggling with and that I may be able to help.  Granted, I may look at the situation as a bottleneck of resources or inefficient use of cash or any number of different challenges we face in business.  I remember teaching a class and telling my students that everything in retail boiled down to sales, shrink or staffing.  Nice and clean, nothing messy about it.  Everything fit into nice little compartments.  When really, we all know life is nothing like that at all.  Last week I was speaking with a client and they were using another consultant and I asked to see the notes so far.  They felt the consultant was doing a good job but something wasn’t quite adding up.  I asked how many questions they asked the consultant, what was the give and take and they replied they hadn’t asked any questions, they just read the reports.  We talked a bit and I ended up giving them a full page of questions I felt they needed to ask their consultant.  Nothing was meant to take away from the other consultant; I just wanted the client to get the most out of their experience.  So many times the relationship suffers because one of the parties does not ask the questions that they really have on their mind and may not know how to ask.  Their may be fear of hearing what they really don’t want to hear.  There could be fear that they may ask the questions incorrectly.  I guess my point is not to be afraid, just ask and keep asking until you get where you want to be.  Whether that is in a working relationship or a personal relationship.  Keep going until you get where you want to be.  In a consulting relationship with a retailer some of the questions you could ask are:

Are you getting the best turns in our store?

Is the middle of the box helping you or hurting you?

How much time does your office staff or store staff spend on each part of your store?

Are you getting the return of their efforts as well as your space to sales?

What is your ROI or IRR on store sales and on the profit centers/departments in your store?

How many SKU are driving your sales and how many are just impairing your pack out?  Are you functioning at the typical 80/20 rule or are you doing better than the norm?

What is the flow in your store?  Is it shopper friendly?

Where are your equipment, facility and personnel at in their lifecycles?

And the biggest question of all is “Do you want to change the way you are doing business?”

This last question is really the first question we need to ask and get an honest answer to.  If we can’t get past this step, we will never be able to help them, to serve them and solve the issues they may face.  Ask you questions, peel back the layers carefully and hopefully they will be able to see the benefits of your services. 

Rant and Rave!!

Sometimes a blog can turn into a bit of a rant and apparently that is what this will be.  I was just in a client’s location in Ohio and for the life of me I cannot figure out what is so difficult to grasp regarding cash flow.  We all say we understand cash flow and what is so important about it.  After all, if you don’t have cash, you can’t pay your bills.  That is what cash flow is all about right??  Oh wait a minute, maybe it is a little more complicated.  Maybe you have to pay your bills at different times during the accounting period.  Maybe your floats are a little different.  Maybe there is an extra payroll in the period.  Maybe your shrink is a little higher than forecast.  (Darn those thieves!!)  Oops, forgot about taxes and oh yes there is that increase in cost on beer this month.  Oh no, said Mr. Bill.  We are out of money.  Chapter what?  7, 11, 13??  Sounds like Vegas and if that is how you are managing your cash, that is what it is. 

The biggest bit about cash is you have two major categories that nibble away at your cash.  First is cost of goods.  No matter what, you have to keep product in the store or you have nothing to sell.  I believe that pretty much puts you out of business.  The next issue is your operating expenses.  Now you have something to sell, you just don’t have anyone to sell if for you or keep the lights on.  Labor alone can be 50% of your revenue.  Ouch.  Goodness, what is an honest man to do?  Back to my original reason for the rant.  I am walking a location with this operator and I am looking at his merchandising.  The bottom shelves of his liquor department which also handles most of his slow sellers is packed out.  Two rows all the way front to back filled with every SKU available.  And of course, my first question is why?? Well, I got a good deal if I bought full cases.  And do you sell full cases?  No.  Well that is probably why he tried to sell you full cases.  Now, whose money are you using to purchase these cases?  Well, mine of course.  Duh!!  Now we have to wonder who to duh refers to, don’t we?

And over and over again, this scenario is played out in stores all across the world.  I got a good deal, everyone is selling it, my competition is doing it, etc.  What we neglect in this scenario is what the best is for us as an operator?  Cash.  And to be more specific, cash flow.  In and out.  Cash is like blood or any other vital medium necessary to support an organism.  Cash supports an economic society just like oxygen supports our bodies.  If you do not think you need an economic society to survive, I hope you have some very large gardens planted.  As a matter of fact, I am watching a program on CNBC about end of the world scenarios.  Not too pleasant to be sure.  The same happens when cash dries up.  Just look at the credit crisis in 2006 after CDO started melting down. Ouch. For everyone in business and everyone who was trying to start a business.  Or anyone who just tries to make a purchase.  So why would someone who has been bitten by this ignore it in their business plan?  It is like someone going to Costco or Sam’s buying ten cases of toilet paper when they use one roll a month.  So, why do we doi it?  Same reasons as before.  I GOT A GOOD DEAL ON IT!!  In sales, the only time you get a good deal is when you can sell it shortly after purchasing it.  Inventory turns are the usual metric monitored to insure you are getting the best bang for your buck.  In the world today, that metric is becoming quickly outdated.  The best retailers are using much more sophisticated metrics in measuring cash flow which is what we will discuss in our next post.