We all wonder why some retail shops do well and some don’t do so well and then we all try and put our analysis or the reasons for failure, and so here I am doing the same I have in the last few years put down a consolidated checklist for you all on the learning that we’ve had. The fundamental levers that affect any retail business are:
· Customer Entry
· Customer Conversion
· Customer Cash memo size
· Customer Entry
· Customer Conversion
· Customer Cash memo size
If any of the above increase... your business increases and any of them decrease... the business necessarily decreases. Simple tools that you should institute as checks in your business, so, that you are able to evaluate any immediate problems in your business.
First and foremost it is important that you have sufficient customer entry into your retail store, and then it is equally important that you are able to convert this customer entry into a buying customer and finally at what bill value have the customers bought. Well, easier said then done so let’s examine what really is the root cause for any of the above levers not performing.
First and foremost it is important that you have sufficient customer entry into your retail store, and then it is equally important that you are able to convert this customer entry into a buying customer and finally at what bill value have the customers bought. Well, easier said then done so let’s examine what really is the root cause for any of the above levers not performing.
· Location of store, Visibility of the store
· Creation of customer awareness about the retail brand
· Creation of loyalties with customer to the retail brand
· Lack of focus - positioning of retail brand
· Lack of focus - differentiation of retail brand
· Store look and feel
· Store circulation
· Store lighting
· Store music and smells
· Store signage
· Merchandise Mix focus to match positioning and differentiation of retail brand
· Merchandise category adjacencies
· Merchandise that fulfills needs/wants and value every time
· Merchandise availability
· Visual merchandising in the store
· Trained customer service personnel at the store
· Friendly customer service
· Even more friendlier standard sound customer service policy
· Efficient cashiering services
· Facilities like Parking, ATM’s, food courts, play areas, alterations, customization, home delivery and after sales service etc.
You will notice that all the above functions affect the three levers mentioned earlier. So how do we administer all the above for a single small store…Well then I must tell you of a little secret that we all know, heard or read whenever its in relation to retail…Retail is Detail…of little things that constitutes a lot, and it is very important in this part of the supply chain as this is the last link that interfaces directly with the end consumer.
So will the above ensure success to my retail business, and “No” I say coz’ that will ensure every thing to give a fillip that you need to achieve the top line in your retail business and so let’s get to discuss the bottom line or the productivity index of your business? My learning’s of the retail business in the last many years, and I have narrowed it down to three areas that you should monitor to ensure a healthy bottom line:
· Gross margin return on Investments(GMROI)
· Gross margin return on floor space(GMROF)
· Gross margin return on labour(GMROL)
Each of the above indices will measure productivity to check the bottom line and returns in your business and also help you keep a health check of your business.
So how does one ensure that you keep a healthy bottom line working... for this I am listing you parameters that constitute to better the GMROI, GMROF and GMROL indices:
· Ensure that you know what kind of market size your concept would yield and what would you achieve as your targeted sales, a blue print or a business plan for your retail business
· Plan the right size (Sq footage)of the retail store based on concept and range width planning
· Ensure that you rent your property at realistic rates + any additional charges and what is the ratio of Chargeable rent to carpet rent.
· Plan your store design in sync with your Brand positioning and that your store design incorporates all the functionality required by your products and customers and also keeps aesthetics in mind, and not the other way around
· Plot your Product Range width plan in a balanced and tight manner
· Ensure that the average gross margins that you make are adequate to start of with and better as the business grows
· Price your products correctly not too little not too high but just right so the customer can see and feel value
· Keep a tight control on Labor costs, my version to this cost head is ensure that you pay best as per industry standards to keep them motivated ,train them thru “training the trainer” process to keep a tight control on training costs, and thru correct HR practices ensure a growth plan for your employees
· Look at proper CRM(customer relationship management) and DTH(direct to home) tools to manage marketing costs
· Install correct IT systems to give you feedback on the business and support the logistics of your business
· Partner with your vendors to ensure smooth business growth, pay them on time, sit with them to plan and develop future business and also review current business, cut unnecessary costs in the supply chain, look at development of your vendors and products
· Plan a review and feedback mechanism from customers and competition to keep a track on your business
· Exercise a right budgetary control month on month
Now you are sure to say, so is retailing complicated, It seems like you have to have the strengths of all the gods Brahma, Vishnu and Mahesh combined to try and achieve all that is listed above and “No” I say again as it is not so complicated but it does require an organized approach and a passion for detail……the result will be a lot of Happy customers and a whole load of tinkling of your cash registers.
· Creation of customer awareness about the retail brand
· Creation of loyalties with customer to the retail brand
· Lack of focus - positioning of retail brand
· Lack of focus - differentiation of retail brand
· Store look and feel
· Store circulation
· Store lighting
· Store music and smells
· Store signage
· Merchandise Mix focus to match positioning and differentiation of retail brand
· Merchandise category adjacencies
· Merchandise that fulfills needs/wants and value every time
· Merchandise availability
· Visual merchandising in the store
· Trained customer service personnel at the store
· Friendly customer service
· Even more friendlier standard sound customer service policy
· Efficient cashiering services
· Facilities like Parking, ATM’s, food courts, play areas, alterations, customization, home delivery and after sales service etc.
You will notice that all the above functions affect the three levers mentioned earlier. So how do we administer all the above for a single small store…Well then I must tell you of a little secret that we all know, heard or read whenever its in relation to retail…Retail is Detail…of little things that constitutes a lot, and it is very important in this part of the supply chain as this is the last link that interfaces directly with the end consumer.
So will the above ensure success to my retail business, and “No” I say coz’ that will ensure every thing to give a fillip that you need to achieve the top line in your retail business and so let’s get to discuss the bottom line or the productivity index of your business? My learning’s of the retail business in the last many years, and I have narrowed it down to three areas that you should monitor to ensure a healthy bottom line:
· Gross margin return on Investments(GMROI)
· Gross margin return on floor space(GMROF)
· Gross margin return on labour(GMROL)
Each of the above indices will measure productivity to check the bottom line and returns in your business and also help you keep a health check of your business.
So how does one ensure that you keep a healthy bottom line working... for this I am listing you parameters that constitute to better the GMROI, GMROF and GMROL indices:
· Ensure that you know what kind of market size your concept would yield and what would you achieve as your targeted sales, a blue print or a business plan for your retail business
· Plan the right size (Sq footage)of the retail store based on concept and range width planning
· Ensure that you rent your property at realistic rates + any additional charges and what is the ratio of Chargeable rent to carpet rent.
· Plan your store design in sync with your Brand positioning and that your store design incorporates all the functionality required by your products and customers and also keeps aesthetics in mind, and not the other way around
· Plot your Product Range width plan in a balanced and tight manner
· Ensure that the average gross margins that you make are adequate to start of with and better as the business grows
· Price your products correctly not too little not too high but just right so the customer can see and feel value
· Keep a tight control on Labor costs, my version to this cost head is ensure that you pay best as per industry standards to keep them motivated ,train them thru “training the trainer” process to keep a tight control on training costs, and thru correct HR practices ensure a growth plan for your employees
· Look at proper CRM(customer relationship management) and DTH(direct to home) tools to manage marketing costs
· Install correct IT systems to give you feedback on the business and support the logistics of your business
· Partner with your vendors to ensure smooth business growth, pay them on time, sit with them to plan and develop future business and also review current business, cut unnecessary costs in the supply chain, look at development of your vendors and products
· Plan a review and feedback mechanism from customers and competition to keep a track on your business
· Exercise a right budgetary control month on month
Now you are sure to say, so is retailing complicated, It seems like you have to have the strengths of all the gods Brahma, Vishnu and Mahesh combined to try and achieve all that is listed above and “No” I say again as it is not so complicated but it does require an organized approach and a passion for detail……the result will be a lot of Happy customers and a whole load of tinkling of your cash registers.
So the mantra to do it in an organized manner is Plan, Organize, Execute, Review & monitor and so on, you could also do a SWOT to evaluate your strengths and build on them with more focus, and analyze your weakness and look if you could outsource them and add value for your business from experts, to look at opportunities and gaps to position your brand , and finally to look at threats as a guideline to monitor your business…creating a Unique Selling Proposition for your Retail Brand…All what I have said has been said before and read before but I am saying it with another perspective and bringing to you my experience.
