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6 JAN-FEB 18
Jack Welch the former GE leader was widely known for his 10% rule. He insisted that the workforce be culled by 10% every year as part of a continuous improvement process. The genius of the policy was not necessarily that you got rid of the dead weight but that it forced managers to make a decision about how to deal with under-performing personnel.
A similar discipline should be adopted for inventory performance. I work with a store that is very diligent about this process – and the results speak for themselves with better margins double-digit sales increases sales per square foot numbers that are 2.5 times the NSRA average and an improvement in inventory turnover that is double the industry average. Their mantra is simple; they aggressively manage the bottom 30% of their inventory along with vendor engagement.
Here’s How It Works
Every week the store’s buyers send vendor sales representatives reports detailing the activity (or lack thereof) of the styles being carried from their respective lines. If there isn’t acceptable sales performance within a 30-day period the store requests that the vendor take action. This action might be a swap-out for another style increased advertising allowances clinics and incentives for sales associates or – in extreme cases – a total return of the product. Obviously consideration is given to any number of circumstances that could possibly affect sales including seasonality and merchandise received with terms to name just two. The vendors are asked to
Manage the Bottom 30% of Styles
The store manages the bottom 30% of the styles purchased for that season. The store manages the remaining 70%.
Vendor Evaluation
This retailer evaluates vendors based on historical criteria that includes sales margins turn and GMROI. All vendors are reviewed in person every six months and are given a vendor report card. Vendors that meet and exceed the benchmarking numbers are rewarded with bigger orders. Vendors that fall short of expectations are dealt with in the following manner:
- The first 10% below the cutoff are contacted to see what can be done to improve performance.
- The middle 10% are put on notice. This is like retail purgatory. Things could go one of two ways: Either noticeable improvement is made or they could be the next to go. There are no surprises this way.
- The very bottom 10% is informed that the relationship has run its course and that they should move their success elsewhere. The management of the “bottom 30%” is an ongoing discipline that everyone in the company adheres to.
If there is no significant response from a particular vendor the merchandise manager or owner may need to get involved to force action. After 45 to 60 days if there is still no resolution and if sales do not pick up to a respectable level the first markdown is taken. This action will most likely land the vendor in the bottom 10% range.
Ongoing Analysis
The result of this ongoing analysis is that the store does not end up putting additional funding into lines that are not productive. Let’s say the average GMROI for a given classification is 2.7. Any line with performance less than 2.7 is identified via the POS reports. Things either improve according to the schedule outlined previously or the vendor is dropped the merchandise liquidated and the money used to reorder top sellers on lines that are performing.
Narrow the Resource Structure
This process helps the store to narrow the resource structure. If for example Vendor A is responsible for my keyword00000 in sales…
Sales and Vendor Management
If Vendor B generates only $5000 in annual revenue it might be decided to discontinue Vendor B if it is determined that more volume cannot be generated even if Vendor B is profitable. The additional dollars are then added to Vendor A.
Retail Strategy
This retailer is always on the hunt for new lines. A significant portion of open-to-buy dollars is kept available for reorders and for hot-trending styles fill-ins on basic inventory an off-price buy or a new line that needs to “tested.”
Vendor Requests
Another common request from this store is asking vendors that when possible manage the bottom 30% of the styles purchased for that season. The store manages the remaining 70%.
Business Consultants & Services
- Hobson Insurance
Property liability workers compensation pedorthic liability Medicare bonds home auto life and health insurance – excellent coverage and the lowest rates.
Hobson MT …………………………….800-296-7985
Email……………………..kristy@businessquote.com
Website ……………………www.businessquote.com - OddShoeFinder.com
Free website for buying and selling mismatched shoes.
Falls Church VA ……………………….703-505-9750
Email …………………………..kbasson@hotmail.com
Website ……………………………oddshoefinder.com - PartnerShip
NSRA members who enroll in this FREE member benefit will receive significant discounts on domestic/international shipments through FedEx® as well as discounts on less-than-truckload (LTL) freight shipments through UPS Freight® and YRC. Great service and value for all your shipping needs!
Oberlin OH ………………………………800-599-2902
Email ……………………….hcenta@partnership.com
Website ………….www.partnership.com/analysis
Retail Design and Consulting Firm
Specializing in branding store planning and design fixture fulfillment signage visual merchandising and display. From start to finish or anywhere in-between.
Mequon [Milwaukee] WI …………..800-379-1438
Email ……………………….lfalk@retailworksinc.com
Website ……………………www.retailworksinc.com
RMSA Retail Solutions
Helping retailers improve cash flow through strategic inventory management.
Riverside CA…………………………….800-727-7672
Email ……………………………………info@rmsa.com
Website ………………………………..www.rmsa.com
Retail Management Systems & Software
Celerant Technology/CAM Commerce
Effectively manage all retail channels through one complete system enhancing the capacity to serve customers with store online and mobile environments. From the POS to back office and warehouse functions.
Staten Island NY ……………………..718-351-2000
Email ………………………………sales@celerant.com
Website …………………………….www.celerant.com
………………………………www.camcommerce.com
ChainDrive/Multidev Technologies Inc.
ChainDrive is a complete end-to-end fully integrated retail management solution for today’s multi-channel retailer.
Montreal Quebec ……………………..800-820-1412
Email …………………………….info@chaindrive.com
Website …………………………www.chaindrive.com
RICS Software
RICS is a cloud-based retail management solution that enables retailers through modern reliable and integrated technology.
Indianapolis IN ……………………….800-654-3123
Email…………………………..info@ricssoftware.com
Website……………………….www.ricssoftware.com
Runit Systems
Cloud-based real-time POS and inventory management system designed for multi-store apparel footwear sports and gift merchants.
Smart Retail Systems Inc.
Real-time information solutions for shoe retailers.
Melbourne FL …………………………321-777-9007
Email ……………………….john@imagineretail.com
Website……………………..www.imagineretail.com
Soft Intelligence Inc.
CounterPoint SQL retail management software specializing in multi-store operations commercial subsidy billing “Shoe Mobiles” integrated email marketing ecommerce and more.
Roswell GA …………………………770-343-8777 x1
Email ……………………sales@softintelligence.com
Website …………………………..softintelligence.com
FOOTWEAR MANUFACTURERS
4EurSole (Bronze Sponsor)
Division of Rocky Brands designed for women who are dynamic performance-driven and always on the go. 4EurSole offers all day comfort durability and slip resistance with great styling and versatility.
Nelsonville OH …………………………740-753-9100
Email ……………………..liz.horn@rockybrands.com
Website …………………………..www.4eursole.com
abeo (Bronze Sponsor)
Biomechanically Engineered Footwear for Comfort and Style.
Westlake Village CA ………………….805-899-0099
Email ……………………..samk@abeofootwear.com
Website ……………………www.abeofootwear.com
Aetrex Worldwide Inc. (Silver Sponsor)
Comfort and wellness footwear and orthotics emphasizing performance quality and fashion. Renowned for iStep the leading digital foot scanning technology.
Teaneck NJ………………………………800-526-2739
Email ………………………………….info@aetrex.com
Website ………………………………www.aetrex.com
ara Shoes Inc. (Bronze Sponsor)
Women’s shoe fashion that fits and is comfortable.
Ogdensburg NY ……………………….877-272-7463
Email: a.agati@ara-shoes.net
Website: www.ara-shoes.net
Aravon (Gold Sponsor)
Division of The Rockport Group – Built in several sizes and widths Aravon offers a sophisticated selection of women’s shoes that are rich with style laced with luxuries and full of comfort.
Newton MA: 800-843-2668
Email: Karen.Pitts@rockport.com
Website: www.cobbhillshoes.com/aravon
Arcopedico (Bronze Sponsor)
Division of Simco Imported Shoes – Comfort brand hand made in Portugal.
Sparks NV: 775-322-0492
Email: dan@simcoimportedshoes.com
Website: www.arcopedicousa.com
Birkenstock (Bronze Sponsor)
Novato CA: 800-867-2475
Email: info@birkenstockusa.com
Website: www.birkenstockusa.com
Børn (Bronze Sponsor)
Division of H.H. Brown – Handcrafted footwear for men women and children with fine leathers artisan details and hand-sewn comfort.
Greenwich CT: 203-661-2424
Email: marrak@hhbrown.com
Website: www.bornshoes.com
Bos. & Co. Footwear
Family owned and operated since 1976; distributors of Bos & Co Waterproof Boots Fly London Groundhog and Softinos in both Canada and the United States.
Burlington Ontario: 905-335-9951
Email: bosandco@bosandco.com
Website: www.bosandco.com
Products & Services
Attention sponsors and vendor affiliates: To update your listing please email ads@nsra.org. When talking with reps of NSRA sponsors and vendor affiliates tell them you saw their company listing in Shoe Retailing Today. Sponsor Companies in gray. This guide features products and services provided by:
NSRA Sponsors and Vendor Affiliates
Use this guide to find products and/or services available from companies supporting independent footwear retailers through NSRA. (Descriptions have been furnished by the member company.)
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Props
Adding props to a photo can not only increase its creative appeal but also help tell a story with or about your subject and show consumers how your product can fit into their lives. For example can you adorn a pair of shoes with fabric? Scattered buttons? Leaves? Shoelaces?
For messier props such as glitter or even a brush stroke of shoe polish consider shooting on a disposable backdrop for easy clean-up. Try to make your props look natural. In “real” life objects around the subject of a photo probably wouldn’t form a perfect pattern so your props probably shouldn’t be in “perfect” order either. Try gently tossing them onto the surface you’re shooting on to see how they fall at random. Then do any necessary rearranging to get the best possible shot.
Think of your props as garnishes – they should add a little something special to your main subject not take away from it.
Stock Photos
As a rule of thumb it is always best to use original content and photos because doing so will ensure that your brand and products remain fresh and engaging. However there will probably be times when you need to show something specific in a photo that you are…
Unable to Set Up and Shoot Yourself?
When this happens look for a stock photo that suits your needs. Websites like search.creativecommons.org and thestocks.im compile thousands of searchable photos that you can use in a pinch often at no cost. Be sure to check the photo’s attribution requirements to see whether you need to give any credit when using it and in what context you can share it. Also keep the size of the photo in mind so that the resolution doesn’t deteriorate if you have to enlarge it.
Sharing Great Visual Content
Sharing great visual content will help your brand stand out amidst the clutter of the social media landscape. Stunning photos don’t always happen overnight but with a little practice you can generate visual content that will have customers stopping to notice and engage with your brand online. If you need additional inspiration check out the #photostyling hashtag on Instagram — you might get a great idea for how to compose your next shot!
About Allie Jeka
Allie Jeka is a social media manager and marketing assistant at Retailworks Inc. an award-winning national branding design and consulting firm specializing in retail corporate and hospitality spaces. Visit www.retailworksinc.com for more information.
Inventory Management
They “locker stock” inventory. Basically this requires the vendor to warehouse the back-up inventory being reordered weekly instead of the store having to hold it. This practice alone reduces inventory and increases turnover.
In years past some retailers (and vendors) might have considered this type of approach too aggressive. In today’s retail environment managing vendor assortment is essential. Brand loyalty must be a win-win. Gone are the days when retailers should be expected to buy unconditionally a line that is under-performing simply because they always have. Retailers cannot afford to carry a line for a handful of customers who in some cases don’t buy until the line goes on sale anyway.
Store Profitability
If a store is not profitable with a particular line the sooner the problem is dealt with the better. The resource profits when the store profits – which is the point isn’t it?
Ritchie Sayner is vice president of business development at RMSA Retail Solutions and author of Retail Revelations: Strategies for Improving Sales Margins and Turnover available from Amazon. He can be reached at rsayner@rmsa.com. To follow him on Facebook go to www.facebook.com/RitchieSayner.
Aftershocks
The section on “aftershocks” may be of most importance for a reader who is considering selling. Assuming that the sale goes well then what happens to the various stakeholders? Pellegrin’s experience selling comes through and he does a thorough job helping the reader foresee issues and opportunities to address.
Jonathan’s Rules
The final chapter includes “Jonathan’s Rules” the points he feels are most important to the selling strategy:
- Creating a strong selling team
- Managing your banker
- Establishing criteria for the buyer
- Having alternatives
- Conducting due diligence
- Tailoring your story to fit with buyer’s needs
- Negotiating tips and having an unbiased coach
That gives Pellegrin’s book a fitting ending. If there is one thing we know that family business owners love it’s talking to others who understand them and will tell them when they are right – and perhaps more important when they are wrong.
Carol Wittmeyer Ed.D. is a faculty member with Chicago’s Loyola University Family Business Center a founding faculty member of NSRA’s NextGen initiative and an associate professor of management at St. Bonaventure University.
Book Review
Continued from page 5
Sayner
Continued from page 601
Shipping and elevated e-commerce alliances. Social media is used extensively for marketing activities to help generate demand from the end customer. “We are lucky to be in a college town and have access to a talent pool who understands.
New Media
“We have grown our team and we leverage their strengths and capabilities to make sure that we are meeting our end consumers where they are shopping and getting fashion inspiration. I never underestimate the power of creativity.”
Valentine emphasizes that “we are a family-run business that has been in existence for over 100 years. We treat each other and our customers like family. We like to capitalize on our warm Southern hospitality and this extends from how we sell our shoes to how we provide back-end customer support.”
Giving Back
After losing his brother Richard to ALS or amyotrophic lateral sclerosis in 1997 Billy Carrington launched Dimmi a line of shoes with one purpose – funding medical care and research. ALS is also known as Lou Gehrig’s disease a progressive neurodegenerative illness that affects nerve cells in the brain and spinal cord. Consolidated donates 100% of Dimmi profits to medical causes. The company also works to generate manufacturing solutions with sustainable methods and materials.
Rather than passing the baton to a fourth generation Consolidated became an ESOP (Employee Stock Ownership Plan) company in 1998. Eventually Consolidated Shoes will become 100-percent owned by its employees.
Valentine believes it’s important for the footwear industry to continue to invest in new talent and she often encourages colleagues to do so. “The future of our industry is dependent upon people passing down their knowledge and experience to the next generation” she says firmly adding “I would also encourage those interested in working in a dynamic field to consider the footwear industry. I have never met nicer people than here. Footwear people don’t take themselves too seriously and have a lot of fun. They really know how to have a good time.”
Consolidated Shoe Company
continued from page 31
Made “for the road less traveled:” Off The Beaten Track shoes.
Consolidated now offering 10 brands including:
- Axxiom
- OTBT
- Poetic Licence
- Madeline
- Madeline Girl
- Naked Feet
- Bacio 61
- Irregular Choice
- Nicole
- Dimmi
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Summary
The article discusses a strategic approach to inventory management and vendor relationships drawing parallels to Jack Welch’s 10% rule used at GE. A store effectively manages its inventory by focusing on the bottom 30% of styles engaging vendors for better performance and making data-driven decisions to enhance sales and profitability.
“Their mantra is simple; they aggressively manage the bottom 30% of their inventory along with vendor engagement.”
Real-World Examples of Inventory and Vendor Management
The article discusses strategic inventory management and vendor evaluation practices. Below are some real-world examples of how these strategies are applied in various industries.
- A major electronics retailer employs a similar strategy to manage its inventory. They regularly assess the performance of each product category and work closely with suppliers to ensure that underperforming items are either improved or replaced. This approach has led to increased sales and higher inventory turnover rates.
- A fashion retailer uses a vendor scorecard system to evaluate suppliers based on sales performance delivery times and product quality. Vendors that consistently meet or exceed expectations receive larger orders while those that do not are given feedback and a chance to improve before contracts are reconsidered.
- In the food industry a supermarket chain manages its bottom 30% of products by regularly reviewing sales data and customer feedback. Products that do not meet sales targets are either promoted more aggressively discounted or replaced with new items that align better with consumer preferences.
