Posts Tagged ‘Store Operations’

How Small Businesses Can Listen to Customers

Monday, May 18th, 2015

listeningThere is a wonderful quote that “the plural of anecdote is not data.” Too often retailer and other small business owners get snared into believing that a story or two that rises from the hundreds of customer encounters every day is a full and accurate reflection of customer feedback about their stores or business.

Net Promoter Scores (see our earlier post: Net Promoter – the Most Common Retail Listening Tool) prevent that but they are just the beginning to really understand the Voice of the Customer. To objectively understand how you are perceived in the marketplace, find out:

  • What do your best customers love about you?
  • What most frustrates your unsatisfied (past) customers?
  • How do your customers think about you differently than your competition?

For most managers, the only way to uncover these emotionally charged questions is to hire an objective third party to uncover the answers. Focus groups and intercept surveys are the most robust methods – but also expensive. At Delaney Consulting, we administer online surveys and other methods for uncovering honest customer feedback. Because it is human nature to overreact to negatives and under-react to positives, an outside firm like ours can help a management staff accurately gauge the appropriate responses that are required to elicit the kind of customer support everyone wants. Use caution when relying on internal communication to accurately judge customer feedback. Rarely is accurate data unearthed solely through employee feedback of “what customers are saying.”

Next Post: Using Social Media to Listen to Customers

Retail Inventory PULL Model Explained

Tuesday, March 11th, 2014

Screen Shot 2014-03-06 at 1.44.40 PMIn a Pull operating model, the stores can select which products and how much they will carry. This is typical in most co-op models (like True Value or independent grocers) or franchises like Hallmark stores. The store management selects among the breadth of products offered by the wholesaler(s) and decides what they will carry, where it will be merchandised and how much to carry.  Replenishment is at the discretion of the store through store-orders. To automate the store orders, the sales data may be transmitted to the replenishing warehouse and automated orders are created to maintain a minimum store inventory level. Vendors who call on these retailers typically devote substantial sales resources to call on stores or store groups to influence new item selection, pricing, promotions and order levels.

The benefit of a Pull operating model is that the decision about product selection, quantities and timing should be so close to the customer as to better anticipate true sales rates. Thus, a store owner in Minneapolis can postpone receiving garden supplies until May while a store owner in Dallas can have them in February. Store management can meet niche product requests and better manage the inventory in the store for the actual store conditions.

The drawbacks are that there is little financial control in place to prevent poor decisions from scuttling store performance and stores can vary wildly in their presentation to customers. Inventory bulges and shortages can crop up unpredictably across the system. Vendors can wield control through relationships that may not be in the best interest of the retailer’s financial system. Purchases can be made without reaching full volume discounts. There is more unpredictability in the financial performance of the entire system. Vendors can multiply as each store finds their own source for common goods – and power buying opportunities that come when vendors are consolidated are bypassed.

Retail Inventory PUSH Model Explained

Friday, March 7th, 2014

Screen Shot 2014-03-06 at 1.45.19 PMIn a Push operating model, products are selected by buyers, a forecast is developed for anticipated sales, products are sent to the stores to supply that forecasted demand and if the products are replenished, they are replenished from headquarters or an HQ system. The most common example of this is in fashion retailing where new lines are sent to stores in a single wave or possibly two throughout a season. In a push model, it is critical that the buyers are very capable of predicting sales trends and forecasting sales rates by store. One of the benefits of this model is that store operators do not have to be deeply trained in product attributes to select their own assortment. Typically, stores cannot determine what products they receive or how many cases they will be shipped. Store operators receive the product and merchandise it as direct by headquarters. In this model vendors are typically limited to influencing the corporate location and consumers. Vendor sales representatives would waste their time trying to influence store managers as they have no control over purchasing.

The benefits of this model are the benefits that come with centralized control. Purchases are made at volume discount levels, stores are uniformly managed and merchandised and vendors are held to standards of delivery. Financial control is more predictable as forecasted sales are managed within a corporate budget.

The drawbacks of this model are the risks involved with having an entity that is so far removed from the end customer making critical decisions. The buyers may not understand the competitive situation in the market or the regional taste of the customers. Furthermore, the forecasting model has to be tremendously accurate to eliminate out of stocks and over stocks at the store level. Store conditions for Push models can deteriorate quickly with loaded pallets on the sales floor some months and empty shelves other months. There has to be a fast response feedback loop from the stores to the central location for this model to be efficient.

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.

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

What To Consider BEFORE Posting Your Staff Schedule

Tuesday, September 17th, 2013

778alarm_clockPrior to publishing a schedule, review upcoming promotions, inventory tasks, changes to delivery schedules or other store events that could change your staffing needs.  Always make servicing customers the priority and make decisions in favor of over-serving rather than under-serving customers.  It is a poor choice to augment staff to conduct an inventory by taking away hours to merchandise and sell products during regular store hours.

Not all business hours are equal.  Make sure to schedule your strongest employees at your busiest times. A smart manager will ensure that the best sales people are on the floor when the most customers will encounter them.

Changing a schedule once it is published is sometime unavoidable – but should be an unusual occurrence.  If your schedules change regularly after they are published, make it a point to discuss it at your next store meeting. (You have one at least once a month, right?)  Get to the root cause of the changes. Are employees providing late notice of schedule conflicts? Do you have a poor system for recording time off requests? Are schedules posted late? Are other jobs interfering with your schedule? Make sure your team and you uncover the real issues behind schedule changes and make an action plan to correct them.  For those rare occurrences when the schedule must be changed after it is published, have a process for informing your team of the change.  Consider texting and other real-time notifications so that store associates are not caught unaware of schedule changes.

For many employees, “retail hours” can cause burn out.  Be aware of the toll long hours can have on employees and their families.  Look for ways to acknowledge them with surprise pizzas over the dinner hour shift, a breakfast pastry box for early shifts and (free) hand-written thank you notes when employees demonstrate praiseworthy flexibility or reliability.

Finally, have a consistent recordable method for clocking employees in and out. Employees need a consistent process for reporting their work hours and absolute confidence in accurate paychecks that reflect hours worked and paid time off.  If there is one critical item to outsource to experts, it is getting payroll done correctly for every employee every time.  Even a single hiccup can cast doubt in the most important element for engaged workers: their wallets.

Creating Fair Store Staff Schedules

Tuesday, September 10th, 2013

Smiling Retail AssociateYou Need: Flexibility.  They Need: Predictability. 

It is a balancing act to keep a store operating efficiently and employees satisfied with their work schedules.  Good practices are to:

1)   Always post hours and schedules at the same time. Whether monthly or weekly, your employees should know when you post the work schedule so they can plan accordingly.  Have schedules posted online or accessible via the web for even more convenient visibility.  You can use a private dropbox.com account, a private facebook group or a private Google calendar as free options to support your team.

2)   Have a consistent policy for accepting vacation requests and other time off.  Make time off requests public as soon as they are known so that staff members can see when multiple requests could be denied. Publish known vacations and approved time off early and consistently.

3)   Establish consequences for tardy shift starts, unexcused absences and long breaks that are consistent, fair and well known.  While unreliable transportation, ill children and sickness occur for everyone, address issues quickly and balance being understanding with the needs of the store and the remainder of the staff.

When creating a schedule, it is easy to fall into a pattern that is repeated week after week.  While it is critical to have a schedule that is not erratic, be sure to look at the schedule from the point of view of your individual employees.  Are you relying on an employee to “clopen” too often? (close the store one day and open the store the next.) Is one employee protected from working undesirable shifts causing resentment within your staff? Are you making accommodations for seasoned employees that you do not extend to new employees?  Do you have too many employees listed as “on call?” Review your choices objectively. Inspect your decisions for possible favoritism. Your acts of flexibility may be seen as partiality if you seem to show a bias for particular employees.