30 Apr How to Turn Retail Failure Into Success: Prescription – Part Two
There are six steps for success in retail. These are the same steps successful retailers use time and time again to remain at the top of the retail ladder. Those retailers who have failed, or are struggling, are the ones who have not mastered the retail success hexagram.
The steps are as follows:
1. Effective sales and marketing strategies.
2. Excellent customer services.
3. Great employees.
4. Quality merchandise.
5. Attractive yet secure store design & visual merchandise display.
6. Trained Employees.
Effective Sales and Marketing Strategies: Retail success formula 101: Know thy customer.
Marketing 101 is identifying your target market.
Marketing is about branding. What is branding?
Branding is the story of your retail store, your customer experience and the image you want to be associated with.
• Body Shop: ethics.
• Harrods: class and elegance.
• Holland & Barrett: health.
La Senza, WH Smith, HMV … ah what was the question again?
Excellent Customer Service: Retail success formula 102: Redesign service provision.
I know a sportswear retailer that advertises on billboards all over the UK. Heaven knows how much they are spending on those advertisements in prime locations all over the country. Yet when customers frequent their stores, there is always fewer store associates to serve them. Furthermore, the store associates on duty lack any knowledge about the merchandise in the store.
When you enter Harrods you think you are in communist China, with their store associates visible in every corner of the store. People go to retail stores because they want to interact with other human beings. When they enter the fitting rooms to try on clothes they want to know that there will be another human being there to tell them how beautiful they look on them. They want to know that when they need help they can speak to somebody.
Great Employees: Retail success formula 103: Recruit great people.
I relayed the story of my Tesco Manager friend who knows the profit margin of every product in his store. I listed a large multi-billion dollar retail organization. As I plowed through their books I noticed that they had a profit margin of about 10% and a shrinkage level of 0.8% or something around that figure.
I thought to myself: this company has pretty impressive figures; better than the best retailers in the world. However, as I investigated further, I came to realize that not a single individual within the entire organization knew how to calculate their shrinkage percentage which rendered their profit figures inaccurate.
When a retail middle manager is incapable of calculating figures as essential as profit margin and shrinkage level, that organization is in serious trouble. No business can succeed without great people, the industry needs to recognize this simple fact and get to work on recruiting the right people for their organizations.
Quality Merchandise: Retail success formula 104: Stock good quality products.
It goes without saying that having quality merchandise is fundamental in retail. People buy emotionally and justify their decision logically. A piece of lingerie that is attractive and pleasing to the eyes brings women with the confidence that it would look good on them. When you have lingerie that is not very attractive you are already out of business.
Attractive Yet Secure Store Design & Visual Merchandise Display: Retail success formula 105: retailing is showbiz.
Most retailers forget that retailing is about sales and marketing. The most effective marketing strategy a retailer has at his disposal is a well-designed store and attractive merchandise displays. When there are two or three hundred stores in a shopping center, the difference between someone deciding to enter or pass by a retail store can rest on the storefront design.
When customers are in the store there needs to be reasons for them to stay longer in the store because the longer they are in the store the higher the chances are of them purchasing. The three main aspects of a store that keep customers engaged for longer are:
1. A store design that enables good customer flow.
2. An attractive and good lighting system.
3. Overall atmosphere of the store.
Apple stores are always packed as customers just love hanging out in their stores. The Early Learning Center is a children's toy store. I have been to a few of them and noticed there is no space for the children to sample toys and play with them. You can not have a toy store that is compact; you lose the potential for sale.
Trained Employees: Retail success formula 106: Business is not common sense.
To leave a store in the hands of an untrained person and hope that they will use common sense to manage it well is not a particularly smart move. Simply because everyone can kick a football does not mean that everyone can play football. Business is a skill and like any skill, it must be learnt. Selling is a skill it can not be learnt by osmosis. There is nothing like a natural born salesman. The best salesmen have some form of training in addition to their talents.
The retail industry is at a crossroads. A lot of changes are going to be forced upon the industry in the next few years. The industry can either master those changes or be a victim of them. We can reinvent our industry, or we can decide to go the way of the manufacturing and automotive industries.
I have given the retail industry cement and a bucket they can choose to build a stepping stone or a stumbling block. It is my hope that we make the right choice. One thing I can absolutely guarantee is those retailers that choose to implement my recommendations, will be celebrating at the end of 2012 and those that do not will heal the fat lady sing for their organization.