Friday, April 20, 2007

One Person CAN Make a Difference

A friend of mine send the following link to me. It's a short video relating to customer service and how one person can make a difference. It's worth watching.

Service From the Heart



Wednesday, April 18, 2007

Industry Trends Worth Considering

A few newspaper articles caught my attention in the past couple of days. These articles give some interesting insights into new trends affecting retail and business.

Trend#1-Bigger is Not Better.
The first was an article that outlined Home Depot's plans to build smaller stores. The plan is to create stores approximately 26,000-45,000 square feet compared to the 105,000 square feet required for a typical store. This certainly means they have to think outside the box and significantly adjust their approach.

This could spell trouble for the small independently-owned hardware store. After all, one of their competitive advantages is their size because it takes much less time to run in and pick up a few home improvement items compared to shopping at a Goliath like Home Depot.

Watch out Home Hardware!

Trend#2-Change Your Approach to Marketing
The second article focused on Proctor & Gamble's marketing ploy of opening a retail store in downtown Toronto. Called LookFab, its primary goals is to promote a variety of new P&G products. The store is divided into three makeover station and will showcase 6 beauty and personal-care lines. Consumers can get treated to a makeover, receive a free skin analysis, get simple beauty tips, and leave with a bag of freebies. What a great way to promote new products!!

A marketing professor stated that this could be much less expensive than creating a national television ad and I have to agree. An ad can cost as much as $500,000 just to create not to mention the expense required to air that advertisement. In all, P&G would likely spend several million dollars if they took they approach. Imagine how far a million dollars could go with their current approach, especially if they opened stores in major metropolitan areas in Canada.

BTW: The store will be open for less than a month.

Trend #3-Taking Care of Business
The bigger a company gets, the press it usually receives. And not all of that coverage is positive. In the last few years, Wal-Mart has had its share of negative press, particularly due to it perceived labour practices.

According to a recent poll, 71% of shoppers said they view the company "favourably" down from the 76% in 2005. Twenty-seven percent of the people polled said their perception of Wal-Mart has become more negative in the past year. And 11% said they shop at the retailer less because of concerns about the company's practices.

I'll be the first to admit that I do not shop at Wal-Mart. However, I do respect many of their business practices such as; just-in-time inventory, ordering systems, and their ability to command (dictate) terms of doing business with them if you are a supplier.

However, in my opinion, they could have done a much better job at managing this situation if they had taken of their less-than-favourable business practices the moment they came to light.

Trend #4-Utilize Technology
In recent years Starbucks has undergone a massive expansion and found, Howard Schultz, has plans to increase this even more. One of the challenges with this anticipated growth is maintaining consistency from store to store. In fact, I have personally seen a rapid decline in the consistency of their coffee drinks. What is a latte in one store seems to be a cappuccino in another, depending on the barista.

A few years ago I was in Manhattan, where, by the way, there seems to a Starbucks on every corner. I actually heard that there were over 1000 Starbuck just in Manhattan!! Anyway, every store had an automated espresso machine and every coffee I had was perfect. Now, the Canadian seem to adopted this approach. Plus, it also seems that their baristas have undergone an intensive training because virtually every coffee drink I have had lately has been consistently made. Technology works when it is ultilized properly AND when people are taught how to use it.

Take a look at these trends and consider how they affect your business. What can you do to improve your competitive advantage?


Friday, April 13, 2007

How Comfortable Are Your Customers?

Most retailers pay a great deal of attention to the merchandising, layout, and design of their stores. However, many fail to consider the comfort level of their customers.

Somethig as simple as temperature can affect a person's decision to buy from you or how long they spend in your store. And, we know that the longer someone spends in your store, the more likely they will increase the amount the spend.

I came across this article and thought you would enjoy it.

The concepts may not be directly applicable to your type of retail store. However, with a little thought and brainstorming, I'm sure you can think of ways to use this information to improve the shopping experience for your customers.


Wednesday, April 11, 2007

The Case of the Shrinking Inventory

Loss or theft of products, commonly known as shrink, is always been a challenge in retail, regardless of what you sell. Here are a few tips that can help you reduce this loss.

First of all, it's important to recognize that there are three source of shrink: Suppliers, Customers, Employees.

Supplier Shrink
Very few ethical suppliers will intentionally short-ship products. However, some of your products may be of value to a less-than-honest driver and if you don't carefully check every delivery against the original order you could be losing money without realizing it. This can be challenging especially during a busy day. However, if your driver knows that you habitually don't check shipments for accuracy, you make it easy for him/her to "misplace" one or two items.

It is also critical to check invoices for accurate pricing. I once dealt with new supplier who "accidently" over-charged me for one particular item. Although the individual unit price was small, the cost in a year would have been significant due to the number of these items we used throughout the year.

Employee Shrink
I recently read that financial loss by employees averages $1350 compared to just $196 by shoplifters. How can you prevent your employees from stealing?

1. Track every shipment that you receive.
2. Conduct cycle counts on your high-cost items.
3. Keep your back door locked.
4. Limit the number of bags an employee can bring into your store. Conduct audits from time-to-time. This last point requires some finesse and employees MUST be told that a periodic search of their belongings is part of their employment contract.
5. Watch for an excessive number of "no-sale" transactions or refunds that do not have a receipt.
6. Read your reports. I once had an assistant manager who voided several transactions at the end of his shift then pocketed the money because he did not have enough money for rent. Fortunately, our POS system had a void report and we reviewed this report daily.

Customer Shrink
The easiest way to prevent shoplifting is to improve your customer service. Research has shown that most shoplifters will NOT steal if they know a store employee or manager is aware of their prescence in the store.

Greet your customers. Make eye contact. Check to see if they need help. Above all, approach them if you think they are behaving in a suspicious manner. If you work in a mall and are not comfortable approaching them for safety reasons, contact security and have them watch the individual's in question.

Lastly, watch the floor. Fact: most shoplifting is done within 6 feet of an employee. I have seen dozens of security video tapes that capture a customer stealing while a store employee is engaged with another customer or is engrossed in paperwork or tasks such as merchandising or talking on the telephone.

The Bottom Line
Most retailers don't understand the financial impact shrink has on their bottom line. If your profit margins are 10% then you need to generate $1000 in sales for every $100 in product that is stolen, lost, or taken from your store.