The Lion and the Gazelle!

In order to survive every day when the gazelle wakes up in the jungle he must run faster than the fastest lion. The loin on the other hand must run faster than the slowest gazelle. For a retailer to survive in the retail jungle they must first determine if they are the hunter or the prey. Are they constantly striving to stay ahead of the competition by embracing change or are they maintaining the status quo. The status quo is a benign position of acceptance and an acknowledgement of fear of change. Here are some questions and a list of things you can do to ensure you’re hunter and not the prey.

1. Have you indentified who your chief competition is?
2. If you don’t know ask your customers
3. Have you defined a set of metrics to measure your business?
4. Do your review they metrics on a monthly basis?
5. Do you continually educate your employees about your products?
6. Have your trained your employees how to effectively upsell?
7. Have your embraced Social Media as a tool to connect with your customers?
8. Reach out to your technology vendors (POS, E-commerce, CRM) and ask them how you can better utilize their technology.
9. Ask these same vendors for some “ Best practices” used by some of their other clients
10. Establish as quasi board of directors, your account, lawyer, POS vendor or a good friend in another business. Meet with them quarterly to discuss your business challenges and potential opportunities.

And remember don’t invest in any new technology until you fully understand how you will use it and have a return on invest strategy.

 

Now’s the time to review and analyze your holiday sales!

If your season was successful or not it’s time to step back and take stock. The NRF has reported that overall holiday sales were up approximately 4.9% with $682 billion in sales up from $655 billion in 2016. Were you the beneficiary of “A rising tide raises all boats” or did you proactively do some things differently this year. Now is the time to be introspective and examine the plusses and minuses of your holiday sales. Setup a meeting with your key people for a thorough debrief.

Here’s a list of topics to discuss, points to consider and a process to foster a frank discussion

1. What went right?
2. What went wrong?
3. What can you do better?
4. Prioritize- Pick the things that will yield the best return
5. Establish some measurement goals for 2018 ( key metrics)
6. Allow disagreements- openness creates candor
7. These discussions should be non- hierarchical- everybody’s opinion counts
8. Write a plan based on the results of the meeting
9. Discuss who will be responsible for implementing and changes
10. E-commerce sales were up 18% Y/Y – Are you in the game?
11. 70% of Targets online orders were picked up in store
12. Before closing the meeting make sure everyone is aligned
13. Test and verify
14. How to partner with Amazon
15. Retail in store sales are predicted to grow by 4.8% in 2018 and online by 13.2%

In closing there are two quotes that speak to the necessity for this exercise.

This quote is from Jay Samit in his book “Disrupt You!”

“The business world is littered with the fossils of the companies that failed to evolve. Disrupt or be Disrupted.”

Jack Welch former CEO of GE, “Change before you have to”

 

Gifts Cards are still relevant!

Retailers in this new digital marketing age are looking for new ways to connect and keep customers. Sometimes it’s not the newest widget that’s needed but something that’s tried and true. Gift cards fall into that category. The NRF predicts gift card spending will reach $27.6 billion dollars this year. The holiday will represent a large per-cent of the amount. So here’s why retailers need to emphasize the promotion and sale of gift cards.

1. Reduces post holiday returns
2. Give the purchaser assurance they didn’t buy the wrong gift
3. In many instances the recipient is a potential new customer
4. Gift cards are usually over redeemed by 40%
5. Extends the holiday season for retailers with post holiday sales
6. Eight to ten per-cent of the value of gift cards are never redeemed.
7. Are a perfect add on gift

Thing you can do the promote the sale of gift cards

1. Display them prominently on gift tree or at the point of sale
2. Offer a free $10 gift card for purchase over $100
3. Offer a $10 gift card for on-line purchases to be redeemed in the store
4. Offer and incentive to clerks who sell the most gift cards
5. Check the “Escheats” laws in your state that govern the selling, redemption,
6. and the rules for fees and expiration of gift cards.

More retail disruption with the merger of CVS and Aetna

The “disruption” in retail takes another interesting turn with the possible merger of CVS and Aetna. The goal for CVS is to drive those insured under Aetna health insurance to their locations for prescriptions and the walk in health clinics. This is CVS’s is response to Amazon applying to sell prescriptions on-line. I don’t want to wax nostalgic, but step back for a minute a think about how the business of traditional retail has been obliterated. You went to stores to buy consumer goods, food, clothing and sundries. Pharmacies were typically part of our health care eco-system. We had a personal relationship with our local pharmacist who dispensed advice and counsel as an extension of our physician.   For the sake of convenience what are we gaining and what are we losing? Maybe millennials feel we’re not losing anything, that the one stop shop approach is a win. The question is, are we are willing to give up privacy for convenience? To me this is just another step in the progression to have cradle to grave data aggregation of our every move. Hipaa privacy regulations have protected our medical information from marketers, but will this change with this merger?

The “Amazon” effect has been cataclysmic to retail and there’s no end in sight. The rules of retail have been obliterated and the new rules of retail and consumer engagement are being written by Amazon. The potential merger of CVS and Aetna is just another example. My advice is to retailers is to pay close attention to Amazon and specifically their recent acquisition of Whole Foods. Whole Foods will be the test laboratory for merging customer engagement across the multi- channel experience. Pay attention to how Amazon will drive traffic into Whole Foods and couple that with their online business.

The independent retailers who survive and grow will be those who to adapt quickly and pay attention to the “Amazon” effect. My suggestion is that you use Amazon and shop at Whole Foods to get firsthand knowledge on how they execute customer engagement and are merging of the in-store and online experience. Their goal is simply is to drive more traffic into the Whole Foods stores. You obviously don’t have the resources to implement everything their doing but at least you can incorporate one or two ideas from them. . The two distinct advantages you have as an independent retail is your ability to adapt quickly and the second is your closeness to customers. The independent retailer has the opportunity to get first hand feedback from customers which if used properly is a valuable asset. There will be stories about retailers who successfully navigated this “disruptive” period and survived and thrived. Here’s tw0 thing you can do immediately, partner with Amazon and offer in-store pickup of items ordered online. Be sure your one of the survivors.

Retail is under enormous pressure but is it on a death spiral? The fact is that it’s a mixed bag of data some positive some negative. Let’s take a look:

• The U.S. has 23.5 sq. feet of retail space per capita. The UK has 4.6 and Germany 2.4.
• The number of malls has increased at 4x the population rate since 1975
• 50% of the store closings announced this year are represented by five retailers: Radio Shack, Payless, Sears, Gymboree and the Limited
• Store openings are 54% in 2017 Y/Y. Thus number included grocery and convenience stores.

The reality is that it is a disruptive climate requiring retailers to be introspective and examine every aspect of their business. No sacred cows, no egos just one guiding question, “Where will my business be in five years”?

Let’s examine some steps you as an independent retailer can take to keep your business relevant.

• Ask yourself what was your vision when you first opened the business
• Has your vision changed or been updated to today’s retail climate
• What is your brand?
• What makes you stand apart from your competition?
• How would your customers define your brand? Ask them
• How do your employees define your brand?
• Respond to feedback- Criticism is much more valuable than praise
• Where will your business be in five years
• Shop your competition
• Shop your own store with a critical eye toward product assortments and displays
• Partner with Amazon

 

There is a distinct difference between failing and failure. Failing is an active process of trying new things and quickly determine if they work, if they don’t adjust and try again. Failure is total resistance to change in a market place that is dynamic. Change is difficult but obsolescence is worse.

12 things retailers can learn from the United Airlines PR disaster

We’re not happy until you’re not happy!

I heard this line used by a business analyst when discussing a new possible new slogan for United Airlines. It baffles me how supposed smart people can make such dumb mistakes. The default explanation by the CEO of United was that had to “Re-accommodate” four passengers to reposition a blight crew, they were following company policy. This was a classic case of making a bad situation worse. We can disagree about who was a fault the passenger or airline, but there is no question that United Airline had the ability to take control of the message and mitigate the damage.

Business Schools and Public Relation Firms will be using this as a primer on how not to respond to a PR crisis. So what are the takeaways that would apply to any business especially a retail business?

1. Admit your mistake and apologize – clearly and concisely with no buts
2. Recognize that in this digitally enabled age everything goes viral
3. Companies polices should be guidelines not hard and fast rules
4. Empower your people to use common sense when confronted with problem customer
5. Win the war not the battle- it’s OK to try to mollify a problem customer
6. The customer is not always right but when their wrong handle with caution
7. Learn a lesson from our current President- Be preemptive and post online how your people resolved a customer’s problem or at least tried to resolve it.
8. You can’t control what people post online but you can respond
9. Discuss the situation with your salespeople as a learning tool
10. Every interaction with a customer either enhances or diminishes your relations with them
11. The relationship you have with your customers is an at will relationship. The customer determines how long it will last and when it will end.
12. Retaining existing customers is 3 to 5 times less expensive than acquiring new customers

The 3P approach to solving difficult problems

I just read an interesting article about Robbie Bach’s 3P framework for change. His book Xbox Revisited explains the 3P process which is a game plan for reducing complex problems or processes to simple steps. His quote, “I believe that solving difficult problems requires a tremendous ability to simplify” is the benchmark of his process. His 3P’s are Purpose, Principles and Priorities. Every organization would be well served by employing these principles as the framework for a project or initiative

Purpose: What is our goal – develop a short statement of purpose or the goals of the project

Principles: How are you going to execute the process? Is there an alignment within you organization that everybody understands the guiding principles on how the process will work?

Priorities: Define no more than the top five goals which will be the sole focus in solving the problem or executing change within your organization.

The 3P’s will be the blue print I will use for all my consulting projects going forward. It will be part of a collaborative process to ensure projects stay on track and meet the stated goals. Most project fail because for a few reasons, the main ones being project creep and forgetting the original purpose of the project. Reaffirming the 3P’s in weekly updates meetings will serve as a management tool to stay the course and fulfill the project original intent. Managing projects takes discipline and strict adherence to a well thought out plan.

To learn more about the Robbie Bach and the 3P approach to solving problems click on the link below:

https://www.robbiebach.com/3p/

 

Data, retail and political!

We may have learned an interesting lesson on the use and source of data based on the election results. I’ve been a 100% proponent that in retail of the adage that” if you can’t measure it you can’t manage it”. At one point this was very straight forward primarily because access to data was limited. Now we can dive deep into data and into the components of any group we are analyzing. I watched the election results with great interest and in particular how a specific demographic group voted. They were able to dive into a demographic using multiple factors such as white suburban, college educated, millennial women with a strong religious affiliation. Additionally they benched marked that data against the performance of that subset in prior elections.

The similarity from a data perspective between political polling and retail is strong. Retail has always been about analyzing numbers to fully understand the performance of your store. Relational databases allow retailers to dive deep into sales history and come up with and almost limitless number of calculations. The basic numbers that were there standards for monitoring performance were simple: Gross margin, gross profit, turns and value of inventory to name a few. Typically retailers are focused on inventory data to manage their businesses which is a critically important asset. An efficient inventory, specifically having the right product at the right time and at the right price is essential for sustained profitability. Customer analytics is not given the same attention by retailers as inventory analytics. There’s no question that retailers recognize customers as the life blood of their business but they don’t really track and benchmark their activity. Here are a five metrics a retailer can use as key indicators to measure customer behavior. In order to make these numbers relevant they need to be benchmarked against historical numbers by month to spot trends and react to them.

1. Number of individual transactions
2. Average sale per transaction
3. Average number of items per sale
4. Average gross margin per sale
5. Retail value of inventory at the end of the month

Let me explain why this composition numbers provides a good basis for getting good insight into the performance of your retail business.

The value of the capturing the number of transactions per month is obvious, however you need to factor in the other data elements to get a complete picture. Consider that sales are up month over month but your average sale is down and the number of items per transactions is also down. If you only look at the top line number of total sales number you would be missing a trend that may be an indicator of a problem. I recommend that my clients post these numbers to a spreadsheet every month as an analytical tool. The manual process of entering these numbers into a spreadsheet is a great way to get a retailer to stay on top some subtle changes that may happening.

 

Move it or lose it!

In retail parlance moving inventory historically referred to sales or sell through, but now it taken on an additional meaning. The goals of a well run retail store is to have the right inventory at the right time and the right amount. Today we have a new dynamic called Omni channel. The consumer is now empowered to buy on-line and pick it up in store (BOPUS). I don’t agree with the naysayers who have predicted the demise of the retail store however the traditional way of doing business is imperiled.
BOPUS has other pieces to it than simply buying on-line and picking up in store. A true Omni channel strategy also allows the consumer to buy in store and have it shipped or buy in store and pick up at another store. The underpinning of all these inventory movement options is technology. We take the three basic historical rules of having the right inventory at the right time and the right quantity and add getting the inventory to the right location for customer pick up. The rules are changing quickly and survival dictates retailers change as quickly. This is another case where the savvy retailer will understand the value of technology to solve a problem. Plan accordingly before you leap into Omni-channel. Those who don’t adapt will be in serious danger of surviving.

Disrupt you!

At a recent conference I attend in Dallas the major theme was “Disruptors”. They defined disruptors as companies or processes that have a significant impact on a market by either changing the way business is done or reinventing the business, think Uber or Airbnb. Both of these companies have added a new dimension on how business is done in their respective markets and paradoxically Uber owns no cars and Airbnb owns no hotels. So now that the term “Disruptor” has become and “in” term for companies wanting to define themselves as innovative we should take a closer look the difference between disrupt, transitional or simple change.
In the retail point of sale world offering a hosted system is simply a change of where data is stored. A Saas model is transitional because you are offering a new pricing model that bills monthly for the software and all services for a long as a retailer use the software. The “Disruptor” in the point of sale market place is coming. That will be when companies not only offer their core solution as a Saas model but also a full complement of add on solutions such as Open to Buy, CRM, BI reporting and Warehouse management to name few. The disruptive aspect of this model will be when the add on software is also on a monthly subscription with cost determined by usage.
This is a quote from Jay Samit’s book Disrupt You! “Businesses whether they sell dog food or software- don’t sell products; they sell solutions”. Uber and Airbnb are both selling a service which disrupted the existing business model. Thinking ahead digital printing is looming as the next big disruptor to manufacturing but will it also be a disruptor to retail? I can envision Amazon in the near future selling certain categories of consumer products and delivery them to a digital printer. Can digital services be as disruptive to specific traditional retail segments as it was to book stores and music stores?
This may sound crazy but worth pondering!