22 MAY-JUN 18
Editor’s Note:
This is the second of two articles. Part 1 appeared in the March-April 2018 issue of SRT.
Given the many bankruptcies and store closures the retail industry encountered in the past year retailers across the country are somewhat frazzled. But there is good news: Retail jobs are not vanishing they are gaining. New stores are opening and existing stores are expanding. In the previous issue of SRT we looked at four “Secrets of Retail Success.” Following are five more.
Secret #5. Empower Your Sales Staff.
Studies have shown that even after researching online comparing prices and reading reviews 40% of customers remain open to persuasion once they enter the store. A well-trained empowered sales force determines your level of sales. Without them your store cannot maximize its true upside potential.
Take the Apple Store which enjoys the highest sales per square foot in the history of the retail business. Employees are taught to solve customer problems not sell goods. The logic behind The Container Store is that it’s smarter to offer $40000 to one super employee than pay $20000 each to two so-so employees. Last year the average salary for this retailer was $44000. That’s salary; they don’t pay commission. They put every new associate through 187 hours of training. They are obsessed with teaching employees how to sell and amaze customers. For the Container Store at least the secret to great retail is the ability to motivate the staff. It seems to be working for them as they rarely have sales or offer special deals.
Every year the Ritz Carlton empowers every employee from maids up with up to $5000 to comp guests. The only questions asked of the employee at a payout are: What happened? How can we make sure it doesn’t happen again?
Reward good behavior among employees and listen to them. Introduce a suggestion box and have regular store meetings.
Secret #6. Emphasize Visual Merchandising.
There is an old retail adage that describes the need for visual merchandising perfectly:
“Goods well displayed are half sold.” Think of the best ads you have seen on television or in store windows. The most effective ones are clean and simple with a clear message. Duluth Trading Company ads make a good example.
Decompression Zone
When customers enter the store be sure to pay attention to the first few feet of product they see. This is referred to as the “decompression zone” – the space where customers get the “vibe” or feel of the store. From this zone 90% of customers will turn right. Your best and newest items should be represented here.
In-Store Displays
When it comes to in-store displays remember that the eye moves up toward the rear of the store. Therefore avoid large displays in the front of the store that visually block the customer’s view of the entire store. Vary the height of display tables. Most stores I visit have 4-way clothing displays t-stands and waterfall displays that are set too high. Unless you run a “big & tall” operation be sensitive to the height of the average (woman) customer.
Reduce Clutter
Reduce clutter at all costs. Nothing shuts down senses and promotes shopper anxiety faster than a messy unorganized shopping experience. This also applies to display windows. Avoid the temptation of trying to say too much at one time. Less is more. You don’t have to show everything you sell in the front window.
Fitting Rooms
Finally don’t neglect the fitting rooms.
Ritchie Sayner
Secrets for Retail Success Part 2
Without a well-trained and empowered sales staff a store cannot maximize its sales potential.
Published in the May/June 2018 issue of Shoe Retailing Today Copyright © 2018 National Shoe Retailers Association Tucson AZ www.nsra.org. All rights reserved.
They are the only public place where you can take off all of your clothes and try on someone else’s.
Most have bad mirrors resembling something you might find at a circus inadequate lighting and poor ventilation. Make yours superior.
Secret #7. Manage Your Inventory.
Inventory is the very heart of the retail store. The best retailers know that to keep customers coming back in and buying they must have a constant flow of new merchandise. No one comes in your store to see what came in last year. They come in to see what’s new! If two turns annually are the goal in a given classification then a six-month supply on average is what you will need to achieve it. If you want to turn 3 times annually you should have very little older than 4 months in stock 4X turn = 90 days and so on.
The methodology by which retailers control their buying – and hence manage inventory – is known as open-to-buy. This mathematical formula serves a multitude of essential services for the retailer. It provides for sales and inventory target goals and guidance for how much to buy; it establishes benchmarks for evaluating progress; and it can be used at any level desired. A good sales and inventory forecasting tool is essential to maximize success in a retail operation. A failure to plan oftentimes leads to a plan to fail.
Secret #8. Control Your Markdowns.
Today’s retailers know that relying too heavily on deep discounts to move excess inventory not only hurts margins but can actually train the customer to wait for a sale. Hence the way we frame a sale or price our goods is very important. “SAVE” makes customers see how much they saved versus how much they spent. “Percent off” sales are way overdone irritating to the customer and dangerous.
Challenges for the Retailer
First you are asking the customer to do the math and many are math-challenged. Second customers over time develop an immunity to the percentages. It takes a higher and higher “percent off” to get them to move – 20% barely moves the needle in today’s world unless it is used on an item rarely discounted. A $25 coupon is more incentive than a 25% off coupon even though they represent the exact same discount on a my keyword00 item.
Study on Email Offers
A recent online study tested the effectiveness of various email offers. “$50 off” a specific purchase was seen as a good incentive that would still maintain sufficient margin. Using the same parameters “15% off” was selected as being of equivalent value to the “$50 off” incentive. The “$50 off” coupon had a whopping 72% higher conversion rate and generated 170% more revenue.
Causes of Excessive Markdowns
While poor buying – including selecting styles incorrect sizes and price points duplications and buying minimum quantities that are too large to absorb – can be a root cause for excessive markdowns the Number 1 cause is still overbuying. Ninety percent of profitable sales come from inventory that is less than ten weeks old. Knowing that progressive retailers identify slow sellers in season and react accordingly. Understanding the markdown truths – especially the fact that what you paid has absolutely nothing whatsoever to do with the amount of the markdown – is key to controlling markdowns.
Secret #9: Don’t be Afraid to Say NO!
The people you hire in the early days of your retail career are not always the ones you might hire later. The right skill sets and attitude for the stage your company is currently in should be a determining factor. Sometimes that means saying “no” to a would-be employee who fits all your other criteria. If a certain line doesn’t move you – or
More importantly your customers – don’t waste their time or yours writing token orders just because someone showed you the line. “Showing a line” is their job. It isn’t personal it’s business. One of the main reasons I encounter for retailers getting overstocked and overbought is they buy from too many vendors.
Finally you need people in your organization with the smarts and confidence to respectfully say “no” to you.
Surround yourself with people in your company – including outside advisors – who have the integrity to stand up for what they believe even if it differs from what you think. Adopting all Nine Secrets of Retail Success will help you stay focused and profitable this year and beyond.
Ritchie Sayner
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.
References
- “The Store Meeting” SRT July/August 2015.
- “The Power of New!” SRT July/August 2008.
- “Open to Buy” SRT May/June 2009.
- “The Truth about Markdowns” SRT Jan/Feb 2011.
Nine Secrets for Retail Success
- Simple Is Best.
- Expand Your Categories.
- Build Customer Loyalty.
- Provide Legendary Customer Service.
- Empower Your Sales Staff.
- Emphasize Visual Merchandising.
- Manage Your Inventory.
- Control Your Markdowns.
- Don’t Be Afraid to Say “No.”
Summary of Retail Success Strategies
The article discusses strategies for thriving in the retail industry despite economic challenges. Key strategies include empowering sales staff emphasizing visual merchandising managing inventory effectively and controlling markdowns. Retailers are encouraged to adopt these practices to remain focused and profitable.
“Adopting all Nine Secrets of Retail Success will help you stay focused and profitable this year and beyond.”
Real-World Examples of Retail Success Strategies
The following examples illustrate how various retailers have successfully implemented the strategies discussed in the article to enhance their operations and customer experience.
- Apple Store: Apple empowers its sales staff by training them to focus on solving customer problems rather than just selling products. This approach has contributed to Apple achieving the highest sales per square foot in retail history.
- The Container Store: By investing heavily in employee training and offering competitive salaries without commissions The Container Store motivates its staff to provide exceptional customer service leading to strong sales performance without frequent sales or discounts.
- Ritz Carlton: Empowering employees with the authority to spend up to $5000 to resolve guest issues enhances customer satisfaction and loyalty demonstrating the importance of employee empowerment in service industries.
