If you have the requisite knowledge, creativity, objectivity, time, and other resources, there is no reason why you can’t self diagnose and fix your own business.
This is not a checklist; it is structured approach to solving the retail puzzle. I personally have limited use for checklists and tend to work each case as if it is my first. If there is a specific topic or area you are interested in, just ask and if I have one, I will give it to you, or give you the pointers to assist. Alternatively search on the website and you may find a more insights on specific topics that could be useful. (No charge and you don’t have to subscribe to anything.)
I would, however, advise you that there will be more benefit for you if you work through the process and build your own checklist, rather than be given something that becomes a tick the box exercise.
I provide a conceptual framework because retail management requires a whole of business approach. It is not a matter of being good at one thing and not so good at another. Like a chain, your business is only as strong as the weakest link.
Q: Where do you start?
A: At the end.
You must assess and evaluate what the outcomes should be. The only way to do this is to collect objective evidence to analyse, identify problems, and prioritise actions. So the logical starting point is to get feedback.
I have written extensively about retail metrics. Understanding stock turns, GMROI, margins, etc are the symptoms that tell you what is sick and what is healthy in your business. The remedy after all must be targeted at the right problem. Figure out what is right for your business and find a way to measure that.
Every business has different metrics, but the most common ones are:
- Stockturn (or equivalent)
- GM% (by category)
- AveragesSale (or equivalent)
- Trading density (Sales/sqm)
(You may notice that total sales are mentioned specifically, and that is because total sales in and of itself is actually meaningless. If I told you I had a shop that turned over $1 million, then you would have no idea whether that was good, bad or indifferent.)
The next step is the strategic context assessment where you consider the environment and evaluate the trends and the forces of change in your businesses and your category:
- What is the competition doing?
- What is possible and what is fatal?
- Where are the opportunities?
- And most importantly, what do customers want?
The better your questions, the better your answers. (And contrary to popular opinion, there are stupid questions.)
Now that you have had (a) a critical evaluation and (b) a reality check you must decide what business you are in. (What is the vision for your store?) This is not an academic exercise.
Regular readers will know that I consider most business planning a waste of time, but there are elements of a business plan that you must do as a business owner and formulating a clear and compelling vision is the first thing that is committed to the blank canvas of your future success. You must have a clear vision of what success looks like in order to be excited about it and in also to engage your stakeholders in that vision.
Your vision is now refined. It is time to formulate your retail proposition.
- What is your story?
- What is your offer?
- What experience do you want your customer to have? (Evaluate exactly each and every touch point and a desired outcome and describe the ideal state.)
This may seem either unnecessary to do formally or it may seem obvious, but the vast majority of people start with the status quo and attempt to figure out a way forward. Instead, start at the end and figure out a way backward.
In essence, you are now describing your business model.
Only now are you ready to conduct a thorough resource assessment. The key resources are:
Stock and space combine to tell the story; that is it articulates the retail vision or communicates the proposition.
- Your vision dictates what products you must carry, and your key metrics determine how much you must carry.
- Your proposition will dictate the best configuration of your store and your analysis determines how much space must proportionately be allocated to each category.
This step focuses on how customers find their way to the store and the instore experience. These processes transform your inputs into the outputs you identified earlier. This is how we capture customers and convert passers by into browsers.
The processes to be reviewed comprise the ‘funnel’ of retail. How do you attract, interact, and convert passersby into browsers and browsers into buyers?
- Selling and service
- Housekeeping etc
The final step, which is not on the framework, is what you must do as an owner/manager to systematise the decisions you have taken and ensure that (a) they are implemented, and (b) are constantly monitored.
You will know it is being done (or not) if you have the feedback systems in place (see Step 1) to monitor how the outputs are tracking. Literally and figuratively you go back to square one.
- Managing a successful retail business is an iterative process. It never stops. When you stop tweaking, you start failing.
- The elements I described above constitute the key issues you must resolve in your retail business. This post is long, but it is rich in content so it may worth printing or bookmarking to refer back to it. Space constraints mean that, for example, I can only refer superficially to buying or marketing as a critical process to be addressed (step 6) when either of those may represent huge challenges with many issues.
- It is no coincidence that in the last seven years all (but one) struggling retailers I have worked with lacked the basic systems to monitor their business. This is no coincidence. Having a good system is the beginning and the end, and having no system is the beginning of the end. (POS vendors can use that in their advertising!)
- Every retailer that I worked with but failed anyway, failed because they waited too long before they started to fix the business. More often than not they had run out of money, ideas, and motivation to make any changes. And when you don’t change, nothing changes. No surprise there. Start today.
Hope that helps. Have fun.
Ganador: Solutions for the retail supply chain (landlords, brands, franchisors etc) to engage their stakeholders (retailers, communities, consumers etc) effectively.
PS: For the retail nerds: If you look carefully you will see elements of systems thinking, chaos theory and the traditional retail mix framework contained in the approach outlined above.