Also, it was clear that the lighting had been adjusted properly to suit the displays, something I always pick up on, and more often than not I notice it’s not quite right.  I know that once the display is completed, the merchandisers and staff are often in a hurry to clear up and getting out the ladder to adjust the lighting is often forgotten.  But, it’s actually one of the most critical steps in creating a good display, and can make the difference between a good display and a stunning display.

Now, I know that many retailers of the size we deal with most commonly, don’t have dedicated staff to create displays, and everything has to be done by a relatively small store team, but as usual with retail, detail counts, and window displays are one of the areas that this applies to more than anywhere else.  I feel it’s something that a lot of stores, both large and small, let slip sometimes, but it really can make the difference between a customer coming in through the door or just walking on by…so go on…take a look at yours right now, and try to give it a critical appraisal.

One of the things we can perhaps do to help you on this, is to include a critique of the window and or internal displays in mystery shop reports.  Give us a call if you’d like to have a chat about this or any matters retail:  Jim Campbell: 0749 223 123

Not a lot more to say about this one really; but I’ll make one comment that may tell a story about this particular branch:  Usually, I walk into one of this retailer’s branches and get on with my shopping without my retailers side being alerted by annoyances, which is a very good sign, believe me.  On this occasion, it wasn’t just the half finished merchandising or the upside down sineage that annoyed me and spoiled the rest of the visit; there were holes on the shelves all over the store, and the place felt as if it was on a skeleton staff.  Poor show this time; I wonder what my next visit will be like.  In truth though, there are a number of branches of this retailer I can use locally, so probably I’ll just choose one of the others.  It’s a psychological thing maybe, but I wonder if other customers will feel the same?

I have written many times in the past about about the importance of creating the right impression for your customers at all times.  As a rule, customers hate it when merchandising is being done while they are trying to shop; but there are times when there is just no other option than to get things done during opening hours.  You just have to try to do it in a way that causes minimum customer inconvenience. Bunnings, for example, have a very bad habit of blocking an entire aisle off during opening hours when they are doing a move, and it seems every time this happens when I’m there, it’s always the aisle I need something from, so I go away very frustrated those days.  This is a pity, because I rarely see anything else about Bunnings operations that annoy me.

Happy retailing folks.

Jim

So, what are the most important statistics for a retail business?  The most obvious one is sales volume, and this needs to be measured against the same period in the previous year or years.  It’s always useful as a year progresses to be able to follow a graph and identify the business trend for each week, month or quarter.  Depending on your business sector, you will come to know the highs and the lows, which is essential for planning. You would not want to, for example, recruit new staff and have them start during your busiest times as the training requirement would simply absorb the time and energy of the existing staff and negatively impact sales and customer service at a time when you shouldn’t have man hours to spare.  If you have your finger on the pulse, you will probably be able to identify periods in which you have underperformed. Let’s assume, for example you are a newsagent, and you had insufficient stationery stock during the back to school period, you can note this on your graph and be prepared next year, revising your sales targets to what you believe could be achieved if your stock level was at critical-mass.

Two other statistics are commonly in use by retailers, and those are UPT or Units-Per-Transaction, and ATV or Average-Transaction-Value.  Essentially, UPT is the Number of units (SKU’s) sold during a set period divided by the number of customers in that same period.  e.g. 650 units sold on a day that saw 223 customer transactions would give a UPT statistic of 2.91.  That is to say that the average customer bought 2.91 items.  That would be disastrous if you were a grocery store, but excellent if you were a jeweller.  ATV on the other hand is the total sales for a period divided by the number of customers in that same period.  So, a day with sales of $4325 and 87 transactions would give and ATV statistic of $49.71.  i.e., the average customer spent $49.71.

Now, why are UPT and ATV of interest?  Well, actually, they are really very important indeed, and help identify your staff training needs and your marketing initiatives.  Let’s take a Photo retailer as an example.  He looks at his UPT statistic for a particular day and finds that it’s 1.5.  Now, let’s see how that works.  That means that his average customer left the store with 1.5 items in their shopping bag.  That same day there were 112 transactions through the till, so some bought 2 items, some bought 3 items, and a whole lot bought only one item, and it averages out to 1.5.  That’s not a good UPT figure, and it would have me looking through the sales receipts for the day.  This is how it should work; the customer comes in looking for a camera, and the well trained sales associate sells him a suitable model.  But how is that customer going to record his pictures since he didn’t also buy a memory card?  So, the well trained and efficient sales assistant sells him a memory card too.  He also sells him a case for the camera, a filter to protect the lens and a spare battery pack.  That’s five items, so the UPT for that particular sale is 5.  Then another customer comes in and gets the less well trained sales associate, who sells him the camera, and the customer himself asks for a memory card and that’s where the sales process ends with the less well trained guy…so the UPT for that sale is 2.  Between the two sales the UPT is 3.5.  Now, let’s not be too hard on salesman 2, because some customers just want what they want and can’t be sold extra’s, but imagine if you have a salesman who typically has an average UPT of 4 and another who typically has an average of 2?  Well, you need to look closer at what’s going on.  Unless of course, you don’t bother with the statistics, and I’d say you are ignoring a valuable tool. In the same way, you can look at the ATV, and you will generally find some staff typically generate larger sales than others.  Now, the fact is that these local figures, even broken down into individual salesmen should be looked at by the local manager; the sales director gets the figures for all the stores.  This enables him to get a general overview, and identify a weak store that needs to be looked at, or a particularly strong store that can be looked at and perhaps share best practice around the whole business.

The most important thing I must emphasise though, is that unusual blips in statistics don’t always indicate a problem or particular success, they need to be investigated, which is all part of the diligent management of a business.

And the link to marketing?  Well, while advertising executives may choose to argue otherwise, most marketing initiatives are targeted at either getting those customers who come through your doors to spend more, i.e. increase your ATV, or to drive footfall into your store, which will increase your sales.  In all cases however, you have to have your team trained to maximise the ATV and UPT, for otherwise your business is under-performing.

If you’d like more information on statistics and their analysis, or how to set up a statistics system for your business, contact us via our website.

If you would like to have a chat about your graphic design and pos requirements, don’t hesitate to call us on 0749 223123, or email, graphics@excelretail.com.au.

Overall, it doesn’t seem to have been too bad a year in terms of achieving sales budgets, some a little down, some a little up.  The big issue seems to be about squeezed margins in order to achieve those sales.  I speak for the small to medium retailers that are our core business here.  The big boys can, to an extent, pressure the suppliers to maintain their margins. Our clients don’t have that luxury, and often have to shop around to find the stock they want to fit their business model, and sometimes have to pay a premium price to get it.

I predict that this will continue to be the situation in coming months and years, and it will become even more difficult to source stock at the right price.  Consequently, small retailers need to think smart, be ready and in a position to snap up deals when they present themselves, and not be afraid to walk away from products that simply can’t give the return you need.  It all comes down to the old adage “turnover is vanity, profit is sanity”.  Never has a phrase been more applicable than this one at the current time.

Buying groups are hugely popular in Australia, because it is the easiest way to obtain stock from the large manufacturers at sensible prices.  Unfortunately, this takes away some of the control of your business, and, to an extent, gives rise to a “generic” product offering across some markets.

The other big thing that is happening is the rise in internet sales, which Australia has been relatively slow to catch on to, compared to other major economies. I believe 2012 and onwards will see this rise exponentially. You are probably all familiar with the ongoing issues of people buying from overseas, at significantly lower prices than are generally available in Australia, and avoiding paying GST, which is not, currently, due on items or groups of items valued at less than AU$1000.  Also, Australia has been shown to have significantly higher retail prices on a wide range of brand named goods than the USA.  Retailers quote their issues as “higher rents, higher wages” etc.  While all these things may be true, I have to resort to another phrase borrowed from an old boss of mine: “don’t make your problems mine”.  In other words, customers don’t care about why your prices are higher than they can get elsewhere.  Yes, they will usually think things through and consider that it’s better to buy locally in terms of after-sales service, local loyalty etc., but if it’s 40% of a difference, that’s just not gonna wash.

So, in conclusion, I think that moving into the future, cost control, shrinkage control and excellent buying are what is going to make the difference between retailers that succeed and those that struggle.

I can see that my local shops were getting a good turn in the few days before Christmas, and certainly those who could be bothered to open just afterwards were getting a good turn too, and I look forward to meeting some retailers who have happy things to say about the end of year performance.

I’d like to take this opportunity to wish you all, a happy and prosperous 2012..

Jim Campbell

It’s easy to sit and carefully calculate what you believe are all the costs you will encounter in setting up, such as opening stock, shop-fittings and machinery etc.  What is often forgotten though, is that your business can run short of cash in a surprisingly short time, if you don’t have an adequate cushion.  If you accept credit and debit cards for example, and are a new business, it can be quite some time before the cash actually appears in your company bank account.  Also, there are charges administered against the amount of money you accept by plastic, so you may not end up getting all the money you expected if card sales represent a high percentage of your turnover.

So while you are sitting waiting on this money to come to you, the suppliers still want paying on time, the staff wages need to be paid on time, as does the second quarter rent and the electricity etc. And suddenly…you might just need an overdraft facility at the bank far bigger than you imagined, if you imagined you would need one at all.  Then you will find yourself worrying about all these mounting issues and not giving the business itself your 110% that it really needs, especially in the early days.

So what’s the No. 1 reason?  Well, very often they are just businesses that simply couldn’t have worked, full stop. Every now and again, we see new retail businesses popping up here and there, usually with a limited stock range in a low-rent shop unit well away from the main drag.  More often than not, I take a look out of interest, and I can see from the start that it’s a business that will be lucky to last six months.

Now very often, these businesses are started up by people who have enormous enthusiasm, but who have failed to take professional knowledgeable advice, and often without having done any research into the market for their products, or any other due-dilligence exercises.  I came across an example exactly like this last year.  A friend of a friend had started a small gift and clothing business, having been offered a small shop unit near a large housing estate.  The shop was one of two small retail units in one building. Quite nice, modern and attractive units, at a reasonable rent, but on a relatively quiet road and a full kilometre and a half away from the main street.

“So, what made you open a shop”, I asked? The reply was along the lines of always having wanted a shop, believing that the product range she had in mind was just what people were looking for, and she had enough money saved for the initial six months rent on the shop, and a reasonable investment in stock, so…why not?  Well, six months later, and some days with a dozen customers and some days with no customers at all was a good reason for why not. Running the shop herself with very limited and irregular help from friends and neighbours etc., closing for lunch, and sometimes for ten minutes to pop to the bank etc., is a tough and hard way to work, and frankly, it’s no way to run a business.

The other one of these two shop units was a fairly busy hairdresser, and she had thought that their customers would have helped spread the word etc.  In truth, had she opened a nail bar or beauty parlour or some such, those two businesses could have rubbed along quite well, and may well have been successful.  Both would have been destination businesses, and for generally the same kind of customer too.  But a random selection of clothing and gift items is a business which needs a lot of people to see it, and pop in, perhaps drawn by something in the window display as they walk by.  Not a shop which is 15 metres from the side of the road and with no pedestrian passing trade at all that wasn’t bound for the hairdressers next door.

What was particularly upsetting about this particular instance is that the lady in question did indeed have boundless enthusiasm, at least initially, and she had very carefully picked a range of products that were unusual and generally different from the goods available everywhere.  Of course, being a newcomer to the trade, she had paid cash up front for her stock, as well as the rent etc.  By the time she had to admit defeat and close the doors, she was down over S30,000, and hadn’t earned a penny out of it for the whole time.

I’d like to make the point here that you can have a great business idea, oodles of enthusiasm and even enough money to get it going, but EVERYTHING has to be right if it’s to work out.  The marketing, the stock planning, the location, the staffing arrangements.  Hindsight is great, but the lack of foresight can come expensive at times.

The time has passed now, and the enthusiasm and finance for the project gone, but I know I could have helped this lady to start and build what I am very sure could have been a successful business.  And the few hours or even a couple of days of our time spent discussing the idea and looking at the business plan thoroughly would have helped avoid the mistakes, and not have cost a fortune compared with the eventual cost of the failed project.  Our first advice would have been to find the right location; as it happens I know of two locally which would have been much more ideal, and for a broadly similar rent to that which she was paying anyway.

The thing about knowledge is this: “You don’t know what you don’t know until you find it out”.  So, if you happen to have an idea for a business you want to follow through on, do discuss it with someone who can give you proper advice, often a business banking adviser can be a good start.  And a spot of business coaching is always going to help.  A few hours initially, maybe even an hour or two a week, is an investment that will pay for itself many times over.  In the past, I have found that coaching clients are sharp as a tack in some areas, but quite dull in others, and after the first couple of meetings it turns out to be the odd phone call for advice or reassurance.  Which is exactly what we do, so don’t hesitate to get in touch for a chat. Call Jim on 0749 223123

If you wish to suggest a topic, please don’t hesitate to drop us an email, or leave a comment here.

We look forward to joining you in 2012.

Jim Campbell