Most of life, and for that matter retail life, is habitual. We tend to do the same things we did yesterday, the day before, and everyday for the last month and the last season. In retail, habits good or bad make your store what it is. The key is controlling them. If you recognize what behaviors need to be changed, then even a small effort can create big changes. Below are five bad habits you need to stop right now, and replace with better habits:
1) Stop blaming the economy or competition.
How is it that some retailers are thriving and growing in this down economy? How is it that some retailers thrive and grow in the face of fierce competition? Simply stated, they don’t let the economy or competition dictate how they operate their businesses. In tough economic times, these retailers pay attention to what made them successful in the first place. They leverage their strengths and eliminate their weaknesses, and most importantly they take steps to enhance and improve their relationships with their customers. Service is a huge opening for the independent retailer. The big boys are understaffed, underpaid and lacking knowledge, and they are constantly losing touch. Successful retailers understand that the economy and competition are out of their control. What is in their control is the ability and desire to make their store the best that it can be.
2) Quit ignoring the obvious.
If there are fewer customers coming through your doors today than there were last year, reevaluate your advertising and marketing. If the average sales transaction is decreasing, reevaluate your sales training techniques. What incentive plans have you put into place recently to reward your sales force? If profits are down, reevaluate your merchandise management approach and expense control. Significant change in the marketplace, the economy, the competitive environment, consumer buying habits, or anything else that negatively impacts your business requires a thorough reevaluation of the factors that affect and shape these changes. This reevaluation process is an important part of keeping every business vital and successful. Retailers go out of business because too often they didn’t adjust their strategy when things first started to change. Be objective, be realistic and tackle problems head on. Quit ignoring obvious problems.
3) Stop thinking of marketing and promotions as an expense.
Marketing and promotions are a necessary investment in your business, regardless of the economy or other outside influences. Be pro-active. Drive the business. Doing nothing will get you exactly that in return: nothing. And it doesn’t always have to be price. In store events, fashion shows, trunk shows, and giveaways, there is an endless list of activities to keep your store relevant in the future. YouTube, MySpace, Facebook and even text messaging are clever ways of using technology to reach out to new and existing customers. A simple idea that too many retailers ignore are customer reward programs that encourage customers to come back and shop again. Successful retailers know that marketing, promotions and event planning are a critical and important part of keeping their store in front of their customers.
4) Stop coming to trade shows unprepared.
For most independent retailers, going to a trade show is the single most stressful event of the season. Be prepared. Remember the difference between buying versus shopping. Buying is the process we use to select products for our customers, while shopping is what we do when we buy for ourselves. Knowing the difference is critical for success in retail. You are your customers’ eyes, and you should have a clear vision of what is important to your customers as you prepare to shop the show. Don’t decide too quickly, as there is a tendency to buy the first things that we see and then later see even better items and buy them too! Walk the entire show before you start placing orders. This leads us to our next bad habit.
5) Stop overbuying.
Stop purchasing more inventory than your traffic can bear. The key for independent retailers to weather these turbulent times, and staying liquid until business opens back up, is to adhere to basic retail fundamentals; the most basic of which is to buy only what you can sell profitably. In this environment, it’s near impossible to simply sell your way out of over-bought and over-stocked situations. Today, top line revenue stubbornly doesn’t want to turn up. Many stores report that the weakness they’ve experienced has been primarily in traffic counts, and to a lesser extent in units per transaction. Simple sale efforts on their part, while incrementally driving more traffic into the stores, have had only a minor impact on units per transaction; it significantly reduced sales per transaction, and most significantly cut the legs out from under gross margin. Their customers, not primarily motivated by price, didn’t buy more; they just paid less for what they did buy.
The key is to keep inventory levels in line with realistic sales forecasts. Excess inventories in a weak sales environment back up VERY quickly, which creates enormous markdown pressure that is far beyond any markdown pressure you might feel from the competition. For those independent retailers whose customers are not motivated primarily by price (which surveys indicate are most of them), who find themselves in an over-stocked condition, it often takes exceptional discounts to begin to move the unit inventory necessary to bring stocks into line. And those markdowns destroy gross margins.
Keep learning, and keep challenging yourself and your associates. Even in difficult economic times, the best retailers take bold steps to distance themselves from the competition. They continue to identify and take advantage of the opportunities that are always there, even in a competitive environment and a tough economy. Retail may be the toughest profession out there, but there’s always room for those who get it right.
Ritchie Sayner is VP of Business Development for RMSA Retail Solutions.