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Despite the pressures of daily business every successful business owner periodically takes quiet time to analyze the business – what’s going right what needs improvement where changes should be made. And springtime with its promise of longer days and new fashions is a perfect time to take a fresh look at whether you’re doing everything you can to maximize your business returns.
Start by making a list of the major areas in your business that you feel should be scrutinized.
I will provide a list as an example; your list may differ. Let’s use merchandising marketing human resources and technology as areas to consider. If we were to examine how each of these areas might look we might include the following:
- Merchandising – This means all buying functions including assortment planning resource structure floor presentation and the evaluation of metrics including sales turnover mark-up (both initial and maintained) and return on investment (ROI).
- Marketing – Review trunk shows pop-ups catalogs ads for productivity. Don’t forget to include an evaluation of any online business activities including social media internet selling current website effectiveness email lists print media and broadcast media if you use it.
- Human Resources – Basically this is the “people” part of the business. Review every key position to determine if any changes need to be made. Now is the time.
- Technology – Needless to say tech is changing at a very rapid pace. Is your point-of-sale system keeping up with you? Do you employ a state-of-the-art merchandise planning system? Are the company’s computer software programs up to date regarding security?
Let’s take a deeper dive into each of these four areas.
Since merchandising is the engine that powers the entire operation let’s
Start There
I think it makes sense to begin with a review of the year-end merchandising metrics.
Key Questions to Consider:
- Were sales up or down by store and classification?
- Has the initial markup (IMU%) been reviewed recently or are you pricing items the way you always have? A small increase in this area alone can make a huge difference in the bottom line if put into practice now.
- Is the maintained markup (MU%) in line with industry standards? If not what is the reason? Could there be a markdown issue?
- Was it weather-related product-related poor timing of deliveries or did you just buy too much of the wrong stuff?
Each resource needs to be evaluated at year-end as well. Determinations need to be made if the vendor’s past performance justifies more exposure on the sales floor – or does that vendor need to be decreased or eliminated completely? (Note: It’s OK to change lines once in a while to keep things fresh and interesting if they have been thoroughly vetted.) That’s not to say it is wise to throw out lines indiscriminately but a case can be made for discontinuing lines that no longer perform or have become “long in the tooth” in the customer’s eyes.
Store Presentation
- How is the selling floor presentation?
- Do the floors need to be refinished or the carpeting changed?
- How are the lighting customer fitting areas cash/wrap area?
- Does the store need painting?
- How is the outside signage?
- Are the fixtures up to date and fully functional?
- Is there an easy flow to the back room?
The list could go on but this makes a good start.
Marketing Efforts
All marketing efforts would be examined next. Were the scheduled ven-
Trunk Shows and Pop-Ups
Were trunk shows successful? If so what made them so and if not why? Did you do any pop-ups this year and were they worth the investment? Are these already in the marketing schedule for 2019?
Advertising and Marketing
Be sure to review all advertising contracts with all print and broadcast media. What does the direct mail campaign look like this year? Is the advertising message you are sending always consistent with your brand and store …? What kind of message does your website send? Is it informational only or are you actually trying to sell from it as well? If so is the shopping cart feature easy for the customer to use? Finally does the cash outlay spent on all forms of marketing generate a good return?
Staff Evaluation
You can’t operate a brick & mortar retail establishment without people so that is the next area to examine. Every person should be evaluated and formally reviewed during the first quarter. This would include key division heads such as merchandising finance and store operations. Everyone’s performance gets reviewed – merchandise managers buyers store managers all assistants marketing receiving all sales associates and even the receptionist. Perhaps this individual is the most important person on the list as the receptionist is the person who has the first interaction with customers and vendors.
Finally the review would include…
Technology
The tech world is changing almost daily. Are you keeping up with the changing world? Be honest with yourself – and don’t be afraid of the answer. If you don’t know or can’t figure it out find someone who can.
Point-of-Sale System
Does your point-of-sale system serve you as well as it should or are you simply putting up with it because you think that finding a new one is too big of a hassle or will be too expensive? Ask yourself this: How much is it costing you if you can’t get accurate data or the reporting is not helping you make better management decisions?
Staying with a bad POS system is much like staying in a bad relationship one that doesn’t work any longer but you stay with anyway. You know what to expect from it even though there is something better for you available. You continually fight to get the information you need and sometimes you simply give up. You can’t get the support you have paid for the company doesn’t listen to your needs you have outgrown it it might cost you some money or you feel a change might be disruptive in the short term. All these are potentially true – and they are all bad reasons to stay with something that isn’t serving you well.
Merchandise Planning and Open-to-Buy Module
The merchandise planning and open-to-buy module typically does not come as part of the standard POS system unless of course you have paid several thousands of dollars for the system. And even then most are lousy. Make sure that the class structure is set up correctly for the business you anticipate in the coming year.
- Does your OTB plan adjust monthly based on rate of sale?
- Are the sales plans accurate or do you have to come up with them yourself?
- How is the inventory planned?
- Are markdowns planned as part of the program?
- How often does the information update?
And finally do you have an experienced merchandising analyst on staff or an outside consultant someone who will give it to you straight and not simply tell you what he or she thinks you want to hear?
Remember your performance is only as good as the tools you have.
If you have the merchandise location right people and systems you are off to a good start. Now it’s up to you to manage well.
- Ritchie Sayner of Advanced Retail Strategies LLC is author of Retail Revelations: Strategies for Improving Sales Margins and Turnover available from Amazon. He can be reached at www.advancedretailstrategies.com.
Our ego’s impulse to protect our self-… is normal but counterproductive. It hinders our true potential from being realized – a loss to the organization and to ourselves. When leaders openly and honestly acknowledge “challenge areas” it sets the example for others. The organization opens the door to growth and development.
Committing to Work on the Personal and Professional Challenges Discovered in the Assessment Process
Studies on human potential and positive change demonstrate that self-awareness is a first step toward growth – but it’s not the last. Committing to take steps (starting with baby steps) and then taking them allows for the development of positive habits that create lasting positive change. Deliberate change intended to meet the needs of your environment creates a flexible adaptive organization – one that is poised to thrive despite the torrent of unpredictable/unwanted change that defines your business world.
Thriving in an unpredictable world is about you and your willingness to acknowledge change that you don’t like openly discuss it and consistently take the actions required to adapt and emerge stronger.
At the end of the day leaders are simply making choices that define the present and future of themselves and their organizations.
There’s nothing magical about the most effective leaders.
They’re just making more effective choices. These choices encompass how they decide to see the world their openness to challenges to their beliefs and their willingness to experiment with innovative ideas that can capture breakthrough advantages. Equally important choices include their willingness to objectively look at themselves and take actions to grow in various areas. They choose to become greater more effective versions of themselves. They know that what they demonstrate (not what they say) is what has the greatest impact on the entire organization. As a leader the question is: What choices are you going to make?
- As managing partner for Atlanta-based PeopleMax Brad Wolff specializes in workforce and personal optimization helping companies maximize the potential of their people to make more money with less stress.
- He is the author of People Problems? How to Create People Solutions for a Competitive Advantage.
- Visit www.PeopleMaximizers.com for more information.
Seven Steps
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Tools
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Business Optimization Strategies
The article emphasizes the importance of business owners periodically reviewing key areas such as merchandising marketing human resources and technology to enhance performance and maximize returns. It provides detailed guidelines on assessing merchandising metrics marketing efforts staff evaluations and technology systems to ensure they align with business goals and industry standards. Leaders are encouraged to embrace self-awareness and adaptability to thrive in an ever-changing business environment.
“Thriving in an unpredictable world is about you and your willingness to acknowledge change that you don’t like openly discuss it and consistently take the actions required to adapt and emerge stronger.”
Real-World Examples of Business Analysis
Here are some real-world examples of how businesses can apply the principles of analysis and improvement in areas such as merchandising marketing human resources and technology.
- Merchandising: A retail clothing store conducts an annual review of its sales data and discovers that winter coats have a lower turnover rate compared to other items. The store decides to reduce its inventory of coats and increase the variety of spring jackets aligning with customer preferences and improving overall sales performance.
- Marketing: A local bakery evaluates its marketing strategies and finds that social media posts about new product launches generate more customer engagement than traditional flyers. The bakery shifts its focus to digital marketing utilizing Instagram and Facebook ads to attract a younger demographic and increase foot traffic.
- Human Resources: A tech company reviews its staffing structure and identifies a need for more specialized roles to support its growing product line. By hiring experts in data analytics and user experience design the company enhances its product development capabilities and boosts innovation.
- Technology: A small bookstore upgrades its outdated point-of-sale system to a cloud-based solution that integrates inventory management and customer loyalty programs. This change improves transaction efficiency and provides valuable insights into purchasing trends aiding in better stock management.
