Posts Tagged ‘Leadership’

2 Reasons Why Store Managers Don’t Hear Their Customers

Monday, May 11th, 2015

listeningFor the store associate or manager who interacts with customers all day long, the idea of having to listen to their customers seems redundant. After all, listening to customers is what they do for their entire shift. But actively engaging with customers and distilling all of the voices into major themes is difficult. Honestly, most store associates “cannot see the forest for the trees” when it comes to listening to customers.

There are two reasons that store employees are too biased to be good listeners to their customers:

Recency: As humans, we are programmed to remember only the most recent things while the past becomes hazy. It is called the recency effect and it means that people tend to recall the most recent information about something above all else. When asked what customers think, we are most likely to only remember the customers of the past week and not remember past interactions well.

Reinforcement: Another human trait is to remember facts well that reinforce our own beliefs and discount facts that contradict our beliefs. Called the confirmation bias, it causes us to listen and recall information that supports our pre-existing attitudes and beliefs while selectively forgetting the uncomfortable information that challenges us. For example, if a store associate believes that the reason sales are down is because the prices in the store are too high, they are likely to retain all of the comments from customers complaining about the prices and not recall comments about trouble finding parking.

For those reasons, store managers need to put tools into place that can actively inquire about customer experiences and objectively report the findings.

Next Post: Net Promoter – the Most Common Retail Listening Tool

How to Manage Obsolete Inventory

Friday, February 28th, 2014

question-markFor most retailers, poor buying decisions lead to poor cash flow. Obsolete inventory ties up cash. It requires close monitoring to maintain the appropriate level of stock. Spend time to review aging inventory and make adjustments to prices to sell slow-moving products and free up the cash to purchase more attractive merchandise. When possible automate reporting so that store and shelf inventory older than 60 or 90 days are flagged in your reports so that you can take abatement steps.

For all merchants, taking unplanned markdowns is difficult.  Build a small expense budget each month called “unplanned markdowns.”  Then, when stagnant inventory seizes your cash flow, use a planned markdown strategy on the most troubled products to induce customer sales. The markdown can be offset by the “unplanned markdown” expense line and not have as devastating effect on operations because the markdowns were already built into the budget.  Consider setting aside a specific percent of sales each month that is reasonable to cover unplanned markdowns. Begin with 1-2% and adjust as you gain more insight into this troubling issue. Over time you may need to set a fluctuating percentage as inventory from back to school, end of year and holidays may need to be aggressively marked down. Tracking and managing an unplanned markdown budget should also start to reveal patterns about your buying habits and your customer’s purchasing habits. Typical patterns to look for include  a local affinity for particular colors (Be smart about purchasing items in the local school colors in paper and other supplies.)

Savvy merchants create a markdown plan for stagnant inventory.  Product that is non-seasonal and simply is not selling may go on a 25%/50%/75% markdown plan where the price changes automatically every 30 days until all of the product is eliminated in 90 days.  Seasonal products typically need a more aggressive markdown plan that may be a 50%/75% markdown completed within 45 days.   Selecting a specific back end cap or other store location for the marked down goods also creates a good merchandising practice.  First, it removes poor sellers from the most valuable sales locations in the store. Second, it creates a destination for your bargain-minded shoppers who will regularly shop the discount areas. These bargain hunters can actually accelerate the cash flow and give your store a reputation for having great prices.

5 Things Smart Retailers Do to Manage Accounts Payable

Tuesday, February 25th, 2014

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  1. .While it may be good for your credit history, it is a bad cash flow practice to pay every bill when it arrives. Set your timing to pay bills as they come due.
  2. If available, use online banking bill payment schedules to manage payables to the exact due date.
  3. Ask for discounts from vendors for early payment and ask for longer payable terms when taking on new products or lines from current vendors.
  4. After a history of consistent payment, ask for longer payables terms.
  5. When you are willing to pay in cash, always ask for a cash discount.

6 Things to do to Coach a Store Team

Friday, February 21st, 2014

Screen Shot 2014-01-31 at 4.44.20 PMA coach watches the store and gives feedback to employees at least once a shift – if not more often.   A coach in a store will recognize when an employee is struggling and make adjustments.  A coach analyzes interactions with customers to see if employees need more product knowledge or a more (or less) aggressive sales technique.  A coach provides feedback, encouragement and advice to the team to improve job performance. A coach sees his (or her) role as improving the team that delivers a great customer experience – not delivering the customer experience himself.

To transition from manager to coach, there are some fundamentals to practice.

1)   Be in a position to notice – and take the time to coach.  Make time in your schedule to watch the team as they complete their work and interact with customers. Accept that part of your role is to observe, analyze and thoughtfully advise your team.  Do not jump in and do it for them – that’s what a Team Captain does.

2)   Provide timely feedback. Give feedback the same day an observation occurs.  It should never come later unless there is real research you need to do. Feedback is most effective when it is occurs immediately after the event.

3)   Be specific. People cannot make the necessary adjustments with generalities.  For example, an employee who hears “make more effective suggestions for customers” will struggle to improve while one who hears “when making a suggestion for a product, take it from the shelf and place it in the customer’s hands” will know what to do differently next time.

4)   Be consistent. First make sure your standards are uniform and predictable. Then make sure every manager is in alignment so that employees understand the standards.

5)   Be Fair. There is a difference between “treat everyone the same” and “treat everyone fairly.”  It is the definition of an inspiring leader.  Leaders draw the best out of individual players by challenging each one to reach their personal best.  That cannot be done by treating everyone the same.

6)   Follow up. Consistently evaluate the team and recognize when they are creating new habits or slipping into old ones. It is a good way to set a tone of accountability.

Coaches & Managers – Stores need both to Succeed

Tuesday, February 18th, 2014

Draymond GreenThere is a reason winning sport teams have Coaches, Managers and Team Captains.  They have different roles.  Coaches strategize, plan, make calls within the game and encourage their teams.  Coaches hold the highly-paid talent accountable and set high expectations.  Team managers ensure that the logistics of clean uniforms, travel, and equipment is always smooth.  They oversee practices and scrimmages. Team Captains lead the team by doing. They are role models and peers within the team. Think about your store and your role as a leader within the store. Which role do you play?

Typically, great store employees (team players) rise to become supervisors or key holders. Truthfully, they have proven themselves to be good role models and play the role of Team Captain.  They know how to execute the tasks that need to be done to run a store well.  They are trusted and necessary to any successful retail enterprise.  But they usually are not prepared to manage a store on their own successfully.

Shops are usually run by a single Store Manager.   Perhaps that describes you.  With that role, comes new responsibility for ordering inventory, managing vendors, setting prices, hiring and training new employees.  Delegating tasks is critical to prevent bottlenecks from slowing down momentum.  But for many (if not, most) managers this is as far as their management talent extends.  They are capable of running day-to-day operations and balancing all of the crises that comprise running a store. Most stores operate with such a manager or management team for years.

One way to recognize if a store leader is behaving as a manager is to listen to the interaction with other employees.  If it is primarily assigning tasks, inspecting completed work and redirecting resources, then the person is acting as a manager. And everyone needs to be a manager at some point in the day. But great store leaders move beyond management to coaching the team to make the entire team better.
Next in this series: how to Coach.

The Basis of Open To Buy for Retailers

Tuesday, February 11th, 2014

balance-weight-scale1Use a budget of expected expenses (use monthly averages for payroll, rent, utilities, supplies, etc.) combined with planned sales and purchases to create a monthly cash flow budget. Manage your store to that budget by making adjustments to purchases, pricing and payroll based on weekly sale rates. Give yourself visibility to early warnings about cash flow difficulties and take steps to abate them.  If you must, consider talking to your banker about unique situations where cash flow shortages are expected (especially prior to holiday or other seasonal inventory build ups.)  Ask for a line of credit – the interest on short-term loans will be cheaper than bank overdrafts and late payment penalties.

Balancing Purchases with Cost of Goods Sold (COGS) each month is critical.  The most simplistic early warning indicator for cash flow health is making sure that inventory purchased does not exceed Cost of Goods Sold for any given month.  Naturally, there are a couple specific times of year when inventories build up in anticipation of seasonal sales. But generally keeping an eye on inventory purchase levels is a smart gauge to measure cash flow. This, at its most basic level is the basis for an “Open to Buy” budget. Striking a balance between capital tied up in inventory and cash freed from that inventory in sales is critical to keeping any retail enterprise afloat.

8 Things Smart Retailers Do to Control Accounts Receivables

Tuesday, February 4th, 2014

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  1. To keep receivables as liquid as possible, encourage cash, credit and debit card transactions whenever possible.
  2. Keep business accounts on a short payables schedule and monitor accounts receivables to keep customers on schedule.
  3. Offer longer terms (60 days+) only when you are given a broad concession such as an annual contract or other significant commitment.
  4. Invoice all business customers promptly at the close of every business cycle.
  5. Make deposits the same day as cheques are received.
  6. Charge interest and penalties for late payments and offer discounts for early payment in your standard business account terms.
  7. Do not offer payment terms to customers without both a background check and a probationary period for timely payments.
  8. Aggressively collect payables every business cycle

Cash FLOW is King in Retail

Friday, January 31st, 2014
Retail Cash Flow Cycle

Retail Cash Flow Cycle

Even the best retailers can find themselves in a cash crunch. Cash flow is the single biggest issue retailers face. Profitable companies can find themselves without access to liquid cash. As a retailer, getting your hands on cash and keeping cash flow moving through your business can mean the difference between managing through tough economic times and closing up shop.  Critical retail measurements like inventory turn and profit contribution are early indicators of a healthy cash flow cycle.

The best possible cash flow situation is when there are purchase deals that are longer than sales cycles.  For example, let’s say a paper vendor offered you a payables program where a $700 purchase needed to be paid in 90 days. Your price markup takes the retail price of that wholesale purchase to $1,000.   If your stock sold in 60 days, you would have a positive situation where you sold your goods before you had to pay for them, You would gain 30 days of “float” in your cash flow where you could earn interest on the full sales price of the paper ($1,000) before paying out the wholesale price to your vendor ($700.)

Now imagine the same scenario where the 90 day purchase took 120 days to sell.  Even though the profit rates or margins is the same 42% markup rate, the first situation is far better from a cash flow point of view.

Smart retailers review their financing terms from vendors, control their inventory (stock) and rely on management reporting to maintain visibility to their cash flow.  As important as managing the outflow of cash is managing the cash coming into the organization.

No Cost/Low Cost Rewards for Employees

Wednesday, June 26th, 2013

giftcardAs a leader, you are expected to look for ways to keep people moving in a positive direction.  Great managers build morale, motivation and energy even as the team ratchets up their performance under stress.  We like to say “catch people at their best.”  Each day make an effort to find someone doing something right and make sure they know it.  As you give rewards, make sure the team connects that receiving in the reward recognizes that what they do matters.

Here are ideas for supporting people with no or little cost:

  • Talk is not only cheap – it is free.  But the right words can mean a lot. So simply telling people that you believe in them, that you support them and that you appreciate them can go a long way.  At the same time, let people know you have high expectations and keep them striving for improvement everyday.  Remember names and greet people by name when you see them.
  • Share your time.  Ask someone to lunch or coffee to listen to their ideas about how their job could be better or what they think the company needs to do next.  Really listen.  (Put down the iPhone.)
  • Have fun.  For teams that need to produce, blowing off some steam is a good way to crank up the adrenalin.  Before heading off to the sales or production floor, create a quick “Minute to Win It” challenge: Two people compete to see how many tissues they can pull out of a box, stack apples or bounce pencils on their eraser end into a cup in a minute.  With the right team dynamics, these events can breathe some fun into a stressed time.
  • If you have an onsite cafeteria, buy cards worth one free drink or a snack and hand them out to employees who are caught doing their job well.
  • Spray paint an old trophy (or make one that humorously represents your company) and make it a travelling trophy that gets passed on from winner to winner for representing great company spirit.  Ideas include pens epoxied into a pen cup and painted silver, an old telephone handset, a toy pipe wrench, a golden coffee mug or a spatula.
  • Remember families.  Buy inexpensive books at the dollar store and wrap them for employee’s children.  That can mean more than a gift for the employees themselves.  Consider writing a quick note inside the cover that says, “Your Dad (Mom) is great!  Thanks for sharing him with us.”
  • Give perks as rewards.  Let an employee start 15 minutes later than normal or give first choice in scheduling next year’s vacation.  Let the winner park in the president’s prime parking spot for a week.
  • Give movie tickets and an afternoon off to see the movie.
  • Give away car washes.
  • Give lotto tickets.
  • Say “thank you” – look them in the eye and mean it.
  • Create a contest where you do something unusual.  When the team reaches the sales goal; you will shave your head, shave your moustache, wear red fingernail polish, clean the company kitchen, unload the delivery truck, work the lunch rush, wear a sandwich board or any other unusual chore.

At the end of the day, it isn’t so much about how you celebrate success as much as genuinely appreciating the people in your workplace.  Any silly idea can become a tradition if there is sincerity behind the message and a sense of humor – even about yourself.

The Best Retail Problem

Wednesday, May 22nd, 2013

MSa_110906_345.jpg.cms copyLast week, I outlined ways to evaluate expense reductions against a retail strategy when tough cuts need to be made.

Let’s look at the other side where sales are above budget and there is the opportunity to purchase more than expected.  Again, there has to be the same judicious eye to evaluate every spending opportunity as a chance to reinforce the strategic plan for the company.  Too often, store owners are attracted to a new marketing idea: Let’s sponsor the town bike parade or invest in Google adwords or buy a billboard or take an ad in a local magazine.  But each additional investment must be evaluated against delivering the core brand message that the company believes differentiates them from the competition.  If your competitor sponsors the town carnival, that may not make sense for your shop.  If you are targeting small businesses, it may make more sense to sponsor a coffee break at a local meeting of business owners than to participate in a parade.

What is critical is to create a budget each year and the strategy that will deliver the budget.  The budget must be based in the strategy. The choice between investing in a website or investing in an employee training seminar are both great ideas. But only one makes sense if your strategy is to beat the competition by making each customer transaction an excellent experience that builds loyalty.  It is normal for most businesses to have more spending ideas than cash during each budgeting cycle.  Place the items that didn’t make the cut on a prioritized list.  Share the list with your employees and let them know that if the budget is exceeded, those items can be reinstated.  It’s a good way to develop employee engagement and make them feel their efforts tie into the overall destiny of the company.