How to Prosper in Turbulent Times
Straight-forward advice for creating a strong year.
Time flies—it’s hard to believe that we’re almost halfway into 2012. The new year is moving at full speed ahead, and so are you, right? Well, maybe not. Perhaps you’re not prospering as much as you hoped. To keep you on track for a strong year, here are a few straight-forward tactics you must keep in mind.
Merchandise, unlike fine wine, does not get better with time. This is one of the biggest, and most common, causes of problems. The scary thing is that too many of the retailers cannot tell when product was received, nor can they identify slow-sellers or those items that are dead on the shelves. This leads to decreased inventory turns, increasing cash flow problems, and soon the owner is eating out of inventory sales. From here, a downward spiral quickens.
To avoid this, you need to be disciplined. Add a code to the product labels and/or bin tickets that tells you how old the merchandise is. (We know, the computer tells you how old your stock is. Good! When did you last take those computer reports to the sales floor to find all the old stock? Last year? Never? What are you waiting for?)
Here’s the problem: You buy merchandise that you like, and you’re certain that customers will love it, too. Big mistake. Not everyone likes the same things; that’s why you have to think like a professional buyer. We’ve both been retail buyers at some point in our careers, and we both had to buy merchandise that we didn’t like—but our customers did.
The sad thing is that sometimes by the time a retailer picks up the telephone to call us, it’s almost too late. For example, a retailer called us to request an in-store consultation. Long story short, we arrived to find the store was woefully out of merchandise—all the cash was tied up in old, barely saleable junk—and there was no money available to purchase out-of-stock staples, let alone the new fashion items customers were clamoring for. And the phone was ringing off the hook with vendors calling about past invoices. Then the landlord called to inquire about past rent due on a lease agreement that was secured by a personal guarantee. No retailer wants to go through what this retailer was going through, but unfortunately, too many do each and every year. MANAGE YOUR INVENTORY!
Now, we’re going to go out on a not-so-popular limb here: Vendors, you have a responsibility here as well. Your responsibility is not only to bring great items to the store, but to create and educate an industry to strengthen and build it. How are you doing? How often do you call or e-mail your retail accounts to inform them of hot items, techniques to reduce or eliminate slow sellers, etc. If you do this, then your value as a partner will grow tremendously, and your future customers will consist of both new and old, successful retailers.
Mind your own business. Your business can easily get away from you if you aren’t diligent about store operations. You need a non-negotiable budget for every area of the store: It’s too easy to over-spend when you don’t have a budget. Stop buying unnecessary things. Do you really need a new fixture to house that product? Was the expensive display of merchandise you purchased on impulse really necessary? Do you have associates who just aren’t pulling their weight, but you’ve been dreading letting them go?
Set up a system to personally check all incoming statements and invoices. Insist on receipts and purchase orders, and pay the bills yourself if you can. At the very minimum, personally sign each check. And don’t ever mix business and personal funds if you can avoid it. Before you sign that personal guarantee, think about what it will mean to your family and personal finances if you have to close your store.
Don’t take a single customer for granted. We know, that sounds remedial. What retailer would ever do that? Lots of them, apparently, because customers in focus groups bring it up all the time: “Why do stores reward only new customers? The ads and coupons read ‘Valid for new customers only.’ What about me? I’ve been shopping in that store for years; I’d like a discount, too.” And “I’m a good customer; everyone in the store knows me; I’m here all the time. But sometimes, when I’m asking a question, a new customer will come in and the associate makes me wait while she helps the new guy. They never seem to ask a new customer to wait a moment, but they don’t hesitate to ask me.”
The closer we get to our customers, the more we think they’ll understand. The reality is there are times when loyal customers feel they’ve been taken advantage of; when this happens too often, they just go away. It costs up to five times more to attract new customers than it does to keep loyal customers happy, so make them a priority. Hold a meeting to discuss the importance of loyal customers; encourage everyone to spend quality time with them. And ask for customer feedback on how you’re doing. Or better yet, take a tip from a retailer who shops other stores—all kinds of stores—with her customers. “You wouldn’t believe what I learn during these ‘field trips’. I even pick up ideas in stores that aren’t direct competitors. And the bond I build with my customers is unbreakable—because we’ve become a team.”
So, what can you do to prosper in turbulent times? Here are a few goals we’d like you to embrace:
Reinvent. It’s been said, and we wholeheartedly agree, that every year 10 percent of your business will go away. Items stop selling, trends fizzle and fade, new product and applications replace those once sacred cows. Your job is to reinvent your business to the tune of at least 10 percent each and every year. If you did nothing to reinvent your store for five years, you could be close to being 50 percent obsolete. It might sound crazy, until you stop and think about how your store compares to what it was like waaaaay back in 2007.
Seek guidance. Develop relationships with other non-competing retailers. The best place to begin is at the conventions and conferences you attend. If your store is in California, befriend a storeowner from Florida. Agree to talk monthly to exchange ideas. You could even develop a network of partners and hold a monthly conference call to talk shop and share ideas.
Embrace Technology. Using technology to quickly get to customers has been around for a while, yet it is still underutilized by retailers. You can communicate daily via your website, social media and blogs. You can benefit big time from e-mail blasts. Texting is still for friends and family; however, it is fast becoming an acceptable way to send offers to your customers. Google “SMS marketing” to find a company near you.
Create Customer Experiences. This is the legacy your store leaves with customers, and the legacy doesn’t have to begin and end with you. The ancient Greek statesman, Pericles, said it best: “What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others.” Need we say more?
Nationally recognized retail strategists Rich Kizer and Georganne Bender of Kizer & Bender speaking in St. Charles, Illinois, talk with thousands of independent retailers each year, learning what customers want and how retailers can give it to them. You can reach them at 888-215-1839, e-mail firstname.lastname@example.org, or visit www.kizerandbender.com.