All posts by admin

How To Succeed In Retail Business

When last have you heard of trusted employees who betrayed their employers trust? Here are three of the more common instances.

(One) A former Marks & Spencer department Section Manager based at the Trafford Centre, received an eight month suspended sentence and 240 hours of community service for stealing 6,700 from the stores POS terminals between July and August 2009.

(Two) In September 2009 a Tesco checkout assistant in line for promotion as the face of Tesco, turned out to be an illegal immigrant.
A major high street retailer in Manchester contacted police in connection with a warehouse worker who was suspected of stealing DVDs. A subsequent Police search of the employees residence exposed what was described as another warehouse full of goods. This was a trusted employee with over four years continuous service.

So what do these cases have in common? They highlight the fact that these retailers had failed to establish or follow standard operating procedures.
In this article I will attempt to outline the main factors that are responsible for the demise of a majority of retail organizations. I will also offer a number of best practice strategies that can be utilised by any organization.
Our research has identified four root causes of the demise of any retail venture,
The lack of robust policies
Employee error
Fraud
Policies compliance.
The creation of good policies and ensuring their compliance is vital for the success of all retail businesses, and especially large national & international retail brands. The flip side of this is that when there are strong operational standards and best practices built in success comes that little bit closer. However, having a good policy on its own does not automatically guarantee success. What is required? A simple answer is nothing short of robust checks and balances that are aimed at ensuring compliance.
There are numerous factors responsible for the success of a retail organization. Here are the three I have singled out as most relevant:
(a) Smart buying
(b) Strong sales
(c) Shrinkage reduction.

However, the implementation of these strategies is sometimes dependent on external circumstance. For example, smart buying is dependent on suppliers, the availability of merchandise, the supply chain, currency exchange and to an extent the mood of the Chinese leadership. Like smart buying, strong sales/turnover depends on the economy, fashion trends and so on. Shrinkage is the only factor that is within the control of the retailer.

Every retailer in the UK loses on average 2.5% of their turnover to shrinkage, which is a considerable amount in an industry particularly when margins are sliding.

Shrinkage occurrence can take many forms: shoplifting being the most prominent. However, internal activities in retail organizations, themselves cause more shrinkage than shoplifting. Cashier theft or error, accounts for 32% of retail shrinkage, general employees 24%, receiving 10%, errors and damage 13% while shoplifting accounts for only 21%.

I recently asked a number of retail employees if they have received shrinkage awareness training. The response that I received from all of them was shrinkage, “what is shrinkage?” Given the importance of shrinkage to the success or failure of any retail organization, one would expect it to be a buzzword in retail circles.

For the benefit of those and others like them, shrinkage is simply the difference between the value of goods received and the amount received for those same goods at the point of sale. Now the question of how does merchandise lose value from the time of delivery to the time of sale is at the heart of the success or failure of many retail organizations; it all boils down to good operational standards and best practices.

The employment of an illegal immigrant would have cost Tesco 5,000. Marks and Spencer nearly lost 7,000 though it managed to recover a bulk of it from the offender, it will take time to recover the legal fees and the damage the incident caused to its reputation, considering the fact that this individual had already been cautioned for dishonesty by another retail employer will not help.

Poor adherence to recruitment and selection procedures allowed this individual to gain employment. Had accurate reference checks been carried out, a trail might have taken them back to the previous employer. What retail jargon views as unnecessary expenditure is in truth and in fact, a factor in what is considered shrinkage. I should also note here that the other big retailer might not recover a single penny from the warehouse employee. So then it behooves each retailer to ask the question”what will an additional 2.5% of profit do for my organisations balance sheet”?

To succeed, in addition to smart buying and increasing sales retailers must focus on shrinkage management and reduction. This is a truly controllable cost. Robust policies & measurable operational standards will also ensure success.

So, how DO you close a retail store? That seems to be a common question among retailers these days with the economy in a tailspin, but the more important question is this: “How do you close a retail store PROFITABLY?”

And that is a question that doesn’t seem to get one good answer. Well, for most independent retailers, if the economy has really beaten you down and you haven’t been able to establish any sort of marketing plan to accommodate for the economy, then closing your business is definitely the best answer to your woes.

With the question being simple in context, the answer is somewhat complex, but this is an area of consulting I’ve been doing for quite a while now, so I’ll lay it on the line with you.

First, do your research. I’ve never been one to candy coat anything for anyone. I tell it like it is.& So, go to Google, Yahoo, or your search engine of choice and search on any term(s) you can think of pertaining to this topic. There you will find plenty of companies and consultants that provide this service. This is where the fun begins.

Just like any other service provider you would seek out, you’re not going to hire the first one you contact regardless of what they say or how good they seem, which is why I always tell people that contact our offices, “Call all the other guys first, THEN get back with me”. This may seem pompous to some and maybe even stupid to others, but the reason I do this is because I know that, A.) I won’t work with everyone, and B.) No one else in the market place offers what we do. There, I said it.

So, back to the question at hand: How to close a retail store. It all centers around a solid marketing system. Well, unless you are wanting to close your business because of old age, retirement, divorce, death in the family, or any other reason NOT related to poor sales and slumping economy, then you may not know exactly what a solid marketing system means, otherwise, you probably would not be wanting to know how to close a retail store in the first place. Make sense?

Any and all successful businesses revolve around one simple, yet complex, principle: solid marketing systems or what I like to call the Retail Marketing Triangle: Marketing, Merchandising, and Salesmanship, all of which play a very important role in a solid marketing system for retailers.

Here are some questions you need to ask yourself to get started:

1. What kind of relationship do I have with my existing customers?

2. Do I have the contact information of all my existing customers?

3. Have I been staying in touch with my existing customers with direct mail, email, and phone calls?

4. Is my inventory good? Is my store full? If so, of what?

5. Have my sales been declining? If so, why?

6. Am I always actively seeking new customers?

There are literally dozens of other prevalent questions, but these are some of the main ones that help you determine where to start. By the way, closing a business is NOT something you want to do yourself UNLESS you have a system to follow. I’ve written a book about it, but I’ll provide a link for that at the end of the article. The book I wrote tells basically how we set up for and manage a successful retail liquidation Sale, beginning to end, and most times get a 90%-140% return on inventory cost for our clients. Does that happen every time? No.

Anyway, the reason you must ask yourself all these questions is that the answers will play an important role in how successful your Sale is. For example: if you have no customer database, then what we do is strategically build a database saturated for your close proximity area based upon who your ideal customer would be. Then we send out a very unique, custom sales letter about your store and your Sale, which is presented in an oversized invitation format. The key here is the copy of the sales letter. Writing copy is no easy task, but there are many books available on it should you be so inclined to write your own. The point: while this method will bring LOTS of people into your store to launch your Sale, if done properly, it will ALWAYS be better if you have an established list of regular customers to market to.

Next, your inventory. So many people contact me about doing a Sale for them, they send me pictures of their store, and the shelves and counters are half empty, and what they do have available is either old, outdated, or undesirable. I used to think this was common sense, but I’ve learned never to be surprised by things like this. Listen, if you want to close your business, if you want to do it profitably, then make sure you have a healthy, full inventory you’ll make a whole lot more money. Oh, and be sure to hire a professional. Oh, and when you hire a professional, be sure to ask them details about their marketing systems. You’ll be surprised at the different things you’ll hear. Let me just put it this way: there’s a lot of candy coating going on out there.

Now, you will have to make regular price reductions throughout the Sale, but you’ve got to be smart about it. Don’t start too high (most people not in the know start too high including many professionals), but also be sure to not mark down too soon. That could cost you money.

There’s so much more to tell, but I’ll leave it at this: If you’re going to be closing a retail store, then your Store Closing Sale must be well planned. If you already have a website, then be sure the company you use to help you actually builds or integrates a lead generation page or site for you to help you quickly establish a hyper-targeted list of customers that you can market to for free during your Sale, and secondly, make sure you have someone to help you that is truly qualified with a mind for CURRENT marketing methods.

You can’t afford not to. Learn more about how to close a business here.