ARE YOU THRIVING . . .
OR JUST BARELY SURVIVING?
To be a thriving retailer requires discipline:
1. The discipline to search for, hire and properly train your sales staff.
2. The discipline to continuously search for and use new methods for communicating with your customer.
3. The discipline to develop and follow a budget.
4. The discipline to have an Open-To-Buy and use it to help you control your buying and your inventory levels.
Your sales staff are critical to the success of your store. These are the ones your customers see and have a relationship with. They are the face of your store. Too many times retailers hire just anyone who comes in the door instead of making sure the person they hire is ‘right’ for the position and for the store’s character. Once you have hired someone, you must take the time to train them properly since they are your representative on the selling floor. What they say and do and how they act reflects directly on the store, and you.
You depend on your sales staff to generate the store’s sales. They need to be motivated to keep increasing sales. I have seen that the stores using some type of incentive plan will usually have the best sales results. People like to be rewarded for a job well done and using an incentive plan that rewards your sales staff monetarily is an excellent way to do that.
Communicating with your customers
It is important to have an on-going relationship with your customers. This can be done by direct mail, email, phone or even Facebook (if your customers use that). It is important to know the best way to reach your customers. Ask them! You may find the answer surprising.
The budget is your roadmap for reaching your store’s goals. (You do have goals for your store, don’t you?) There are many ways to achieve a specific goal. As the owner it is your responsibility to choose the path for your store and then to see that everyone in the company is on the same path.
At it’s simplest, the budget uses the same format as your Income Statement. You plan your sales, the cost of goods sold and all your expenses. If the bottom line is showing a loss, you go back and revise as needed until your budget is showing your desired profit. Once you have that number, it is your job to make sure that everything happens according to the budget. If you have planned a 5% sales increase, how are you going to make that happen? (Good sales staff, appropriate merchandise and advertising all come into play.) If you have planned an increase in Gross Margin, how will that happen? (Making sure you have money available when special buys become available is critical – which is where an Open-To-Buy comes into play.)
The cost of owning inventory is a retail store’s largest expense. As such, it deserves a lot of attention. Too much inventory will result in stale merchandise, high markdowns, poor cash flow and low profit. Too little inventory will result in lost customers (when they can’t find what they want at your store). Somewhere between “too much” and “too little” is the right amount of inventory needed to generate sales. That is the purpose of the Open-To-Buy. By using and following an Open-To-Buy to control your buying you will find that you are able to make your sales goal on lower inventory levels while still keeping an adequate selection on hand. As one of my clients told me recently, “My inventory is 20% lower than last year, and I do not miss it”.
Some people say they do not want to be kept from buying due to an Open-To-Buy. That is the wrong way to look at it. The Open-To-Buy helps to keep you focused at market. When you do not have any controls on your buying it is too easy to buy this, then see something else you think is great and buy it, then see something else that is great and buy it, and so on. This is the way stores become over-inventoried with too much merchandise stuffed into their stores. On the other hand, if you go to market with a certain dollar limit for Shoes, for example, you will be much more particular about how you spend those dollars. You will look at all the options first, then weigh the pros and cons of each before making your decision. The result will be a better selection of merchandise in your store instead of a store full of merchandise that your customers may or may not like.
Do you have the discipline needed to make your store a thriving success? If you don’t, you need to find a way to get it, or find someone outside your company who can help you stay on track. That is one of the roles I fill for my clients. However you do it, just make sure it gets done without delay. Your store’s survival depends on it.