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Why is Retail Math Good For You?

Generally speaking, numbers make the business world go ’round.

Take it from the highly successful, Mr. Harold Geneen, who said…

“… I would argue that anyone in business, if he sets up the proper kinds of controls – controls that tell him when any segment of his company is not doing what he expected, and tell him this promptly enough and in enough detail so that he can go back behind the numbers and analyze precisely where it is that he has to take action – then he (or anyone else not mentally incompetent) could run a progressive, profitable, and growth-oriented company. That’s what a good set of numbers will do for you.”

We couldn’t agree more.

It’s truly amazing what can be accomplished when everyone knows how the numbers work; how they affect absolutely everything in the business.

Retail math (we’re not talking high finance) is involved in just about every decision that’s made from store, district and region up to the top where major decisions are made.

Some have a direct and immediate impact and some are longer term and less easy to identify.

To be sure, though, management must possess strong retail math skills and general retail math knowledge, if they are going to drive a business to succeed.

Let’s look at a story that illustrates why you need to take a holistic view of the picture that your numbers paint for you.
This is just one simple example of that, at store level, but you’ll easily see how that could affect your business overall.
You need to avoid the mistakes pointed out in this story.

You simply must know what you’re talking about…what the results really mean and what sensible actions you can take to keep on improving your business.

Read it and see what you think. Here it is…

For the motivation and well being of store management and staff, all relevant KPI’s need to be looked at relative to one another. It simply doesn’t work to single out one KPI and rush to judgment without taking the others into account.
It’s not a very smart thing to do. And here’s why.

Let’s take an example of a store that is being managed by a proven, competent and experienced person. This store is achieving sales 25% above the prior year and 100% of target.

Already you can see that this store has been planned for a 25% sales increase over the prior year – which is a healthy increase, and some would even say unreasonable.

However, the store is crushing it, so we’ll leave it at that. Excellent job!!

This store is performing better than chain average for wage cost, sales per hour and conversion. The average units per transaction are considerably higher than chain average.

The average sale ($) per transaction/customer is consistently below chain average – not by much, but below.

The District and Regional Managers for this store are very, very concerned about the ASPC (average sale per customer). They are concerned to the point that they talk about nothing else – not the fact that the target is being met, not that UPT’s are high – nothing else except ASPC.

The Store Manager knows the reason, but no one seems interested.

The reason is this: the store is located in an area that has a low income demographic. This has not always been the case but, in recent years, the more affluent customers have slowly moved away as low income apartment buildings and government subsidized housing have taken over the area.

This fact is not in dispute. Everyone is aware of this, and Head Office management readily admit that the area has undergone a significant change. Mall management has advised that this fact has made it challenging to drive more affluent customers into the mall. The mall, itself, is no longer the pleasant, welcoming, moderate to high-end establishment that it used to be.

So, based on all of this, the store has started receiving thousands of units of heavily discounted, clearance merchandise from other stores because it is recognized that many more units of low priced merchandise can be moved out of this location than any other store in the region.

It functions similar to a clearance warehouse while still maintaining it’s ‘regular retail store’ appearance, and it functions well.
This helps to keep other stores ‘clean’ with mostly regular priced goods, which drives up their ASPC and GM, which is great for the company overall.

For many of you, it’s probably quite clear, already, why the ASPC might be lower than chain average.

The customers in this area buy more units because the units are very low priced. One could make the argument that because the prices are so good, customers should buy enough units to move the average sale up to chain average.

However, that would ignore the fact that the majority of customers have much less money in their pocket to spend.
They can buy more units at low prices but the bottom line is that each of them has less money and will still spend less, in total, than their more affluent counterparts.

This is not rocket science and does not require any degree of genius to understand.

Of course, being highly competent, the management and staff still try very hard to reach the chain ASPC.
They are not letting this clearance mentality change their approach. The associates are still very much aware of the need to actively sell to their customers.

They are not asking for a pass…but they would like to be recognized for the things they are doing really well.

The Manager, the Assistant Manager and all of the Sales Associates cannot possibly feel motivated in a situation like this. No matter how well they do compared to target and last year, and no matter how hard they work to keep the other KPI’s at or above chain average, there is only one thing discussed during store visits – ASPC.

One may say that the District and Regional Managers are simply trying to challenge the management and staff to achieve bigger and better things and that they are focusing on the problem area for that reason.
And that would be fine if the problem area could be corrected by working harder, or smarter or by hiring better people, by presenting the merchandise better, by training etc. But it cannot.

And it makes no sense whatsoever for this conversation to keep taking place.

This is not motivation and it is not challenging. This is pure nonsense and the only result is frustrated and demotivated employees who will soon start missing targets and dropping below average in all of their KPI’s.

Management and staff will begin to leave, and the company will have lost a great team.
As the saying goes “do the math”.

Retail math is not taken seriously enough in this organization.

DMSRetail believes strongly in building a performance culture; in holding people accountable and in monitoring and measuring KPI’s constantly.

For every area of your business…revenue generation, expense and wage control, buying and allocation, procurement and inventory control and… well, everything…you have to know how to apply retail math to make decisions. Anything else is just guessing.

Don’t Measure? Don’t Believe It!!

If some consultant tells you that this statement is false….
“If you can’t measure, you can’t manage.”
Run, don’t walk, to the nearest exit!!

We’ll tell you why, below.

In every area of your business, you have to properly apply retail math to make good decisions….
• Sales Generation
• Expense and Wage Control
• Buying, Allocation & Inventory Control
• Loss Prevention
• Staffing and Scheduling
• Auditing, Reporting & Budgeting
• Recruiting, Hiring & Training
• Leasing, Construction & Design
• Advertising & Promotion
• Well, everything…

You should join us for this workshop NOW being offered ONLINE:

Advanced Retail Math & Analytics Workshop
now available … O N L I N E

2 Days – 4 Hours Each Day
Online, Instructor Led
Live & Interactive

Tuesday, April 7 and Wednesday, April 8, 2020
10 AM to 2 PM EDT each day

With so many working professionals forced to stay at home right now, there is no better time to take advantage of the opportunity to attend this popular workshop being presented online.

CLICK HERE TO REGISTER

If you don’t know retail math, you can’t effectively manage a retail business.

Management must possess strong retail math skills and general retail math knowledge if they are going to drive a business to succeed.

So, here’s why you should flee if someone tells you that you can manage just fine without measuring…

We came across some articles that made the false claim that measuring things has nothing to do with performance and that you can manage just fine – better, even – without measuring and monitoring.

They based their argument on the fact that good and proper customer service should not be based on how many, how much, how fast things were done.

But, that was false and we submit that the author knew that it was false.

Perhaps s/he was simply trying to come up with some new angle…something different to put out into the universe.

One example used was all about a call center performance measurement of ‘# of customers handled per hour’.

At first, one may think that might be a reasonable performance measure…but that would depend on what it means to ‘handle a customer’.

Well, it turns out that the whole idea was to get a customer off the line as quickly as possible so that the call center could handle more customers with fewer employees.

You know what that means, right? You’ve probably been a customer who has been hustled off the phone lest you take up too much of the employee’s time.

If a performance measure is in place to stop employees from working too slowly, or for being too chatty, one might say that measure has a place in the business – if it is properly monitored and the results acted upon to improve employee behavior and performance.

But, if a performance measure is in place to ensure that an employee works fast, speaks way too fast for the customer to understand and, generally tries to get the customer off the phone as quickly as possible…then, no, it’s not ok and it does not have a place in the business.

The writer made the argument that the particular performance measure was forcing employees to be abrupt and dismissive and, therefore, would create unsatisfied customers. Well, yes, we imagine it would!

The writer was correct about that part.

BUT, that only confirms the fact that the particular performance measure was producing the wrong outcome – terrible customer service.

Who might be at fault for that? Management. Who else?

This story does not prove that you should not measure performance. It does not prove that you can manage without measuring.

In fact, it is preposterous to think that removing all performance measures and to stop monitoring performance at all, would do anything other than create complete chaos and, in time, would lead to financial failure.

If you can’t measure, you can’t manage.

BUT, what you choose to measure and how you communicate that counts and has everything to do with good management.

Bad management may very well choose to measure the wrong things.

If the top level of an organization consistently chooses to measure the wrong things or to communicate inadequately, the outcomes will almost certainly be undesirable.

Measuring how fast you can get rid of your customers would be the wrong thing to do and would only be done by bad management.

Measuring the quality of the interaction, the time spent based on the customer’s issue, etc. would be reasonable. Human resources cannot be allowed to waste time…to chatter away or to move at a snail’s pace…

That is why companies employ managers.

You simply must know what you’re talking about…what the results really mean and what sensible actions you can take to
keep on improving your business.

DMSRetail believes strongly in building a performance culture; in holding people accountable.

If you don’t know retail math, you can’t effectively
manage a retail business.

2 Days – 4 Hours Each Day
Online, Instructor Led
Live & Interactive

Tues., April 7 and Wed., April 8, 2020
10 AM to 2 PM EDT each day
Advanced Retail Math & Analytics Workshop
O N L I N E

Who Should Attend?
Anyone who has a responsibility to drive sales and profits, including VP Sales, VP Merchandising, District and Regional Managers as well as Buyers, Category Managers and other appropriate Head Office Staff.

Also, Supplier/Vendor staff who deal directly with retailers will benefit greatly from this workshop as well.

Workshop Fee Includes: Presentations, Videos, Exercises, Workshop Materials – complete presentation on USB.
PLUS: 30-day unlimited Q & A via email, following the workshop.

4 Hours each day – 10 a.m. until 2:00 p.m. EDT
(Tuesday, Apr. 7 and Wednesday, Apr. 8, 2020)

A Certificate is mailed to participants following the workshop.

CLICK HERE TO REGISTER

Contact: johill at dmsretail.com
or call +1 312 239 0919
for information and/or to register.

Forget Trying to Get Loyal Customers…

If your employees find themselves defending errors and sloppy work by arguing with your customers, your chances of attracting loyal customers are slim to none.

If you don’t have a strong service culture in your organization, it’s going to be next to impossible.

In fact, some of your employees may even take pleasure in arguing with your customers and trying to prove them wrong.

At DMSRetail we think hotels are an excellent place to study if you want to see customer service in action in a variety of different scenarios.

There’s reception, where the first impression is usually formed. There’s housekeeping, maintenance, food and service in the restaurants, concierge services, room service, etc.

In our case, we interact with the catering and banquet staff as well. We’ve told you stories about the excellent experiences we’ve had in many hotels around the world.

One of our consultants recently came back from a workshop that we conducted in a hotel which is a franchise of a very large, and very well known chain of hotels – worldwide.

It’s quite new and located very conveniently to a major city in the US. It was also priced reasonably well relative to some other hotels in the area – a major plus for our guests.

The experience was memorable for all the wrong reasons.

Here’s the story:
When my colleague and I arrived at the hotel, a day prior to the workshop, we had to wait an unusually long time to check-in.

There were 3 employees behind the desk, all with their heads down looking very industrious but, apparently, not accomplishing much.

There were two guests at the desk and then one guest in front of us – not a lot of guests to deal with.

The fellow ahead of me had clearly been there for quite some time and he was becoming impatient.

I finally got the attention of one of the clerks and he confirmed that they were having computer problems.
After about 45 minutes, I was finally on my way to my room. For a tired traveler, 45 minutes is a very long time to stand at the reception desk. So, not a great first impression.
Fortunately, the elevator came quickly, my room was clean, the set up fairly efficient and internet was available. Great.
I had pre-arranged a meeting with the Banquet/Catering Manager to allow me to see the meeting room we would be using the following day.

When I went to reception, they cheerfully called to let him know I was waiting for him. He arrived and up we went to the meeting room.

When we got to the meeting room, my jaw dropped. The set up was terrible; just unacceptable. But that’s not the worst of it…no, the really bad part was that the manager didn’t want to take responsibility for fixing it.

He kept repeating “This is what you asked for.” and “I followed the instructions.”

He was wrong on both counts! I had the emails and other documents to prove it and still, he argued.

By this time, my colleague had joined us and, between the two of us, we convinced this young man – whose title was actually Director of Banquet and Catering – that he was going to fix the room even if he had to do it himself.

We generally show a lot of respect for the service people who look after us during our workshops and they usually deserve it. They are an important part of our guests’ overall experience and we are very diplomatic and adept at making hotel staff feel happy to oblige us.

I’m sorry to say, in this case, we did have to resort to some rather threatening conversation regarding his obligation to perform his part of the contractual agreement. He did finally see the light.

So, the next day we arrived to find the meeting room satisfactorily set up.

However, there were a couple of problems.

The electrical cord providing power to the projector and laptop didn’t work. They had to send someone out to buy another one, which delayed us.

And, also, we could not control the lighting from within the room; the light switches were far away from the meeting room.

They were not set up to succeed. The meeting room was not properly equipped for their main purpose…meetings.
According to the Service-Profit chain, in order to meet the requirements of Internal Service Quality, employees must be provided with the tools to do the job properly. In this case, they were clearly at a disadvantage.

Moving on… now it’s lunch time.
Our arrangement was that we would all go to the main hotel restaurant for lunch, with the understanding that our workshop attendees would order whatever they wished from the menu.

Anything they asked for was to be delivered to them. Period. It was very clear.
That should have gone very smoothly and, for the most part, it did. However, one of our participants interpreted the menu slightly differently than the server did and she had expected a certain item to come with her meal while he insisted it was not included.

We were horrified to see the server return several minutes later, waving a menu and saying, “Just so you know, you were wrong, it’s not included – I’ll get it for you, but you were wrong.”

She got the item she wanted but not until the server had made a point of trying to prove her wrong.
They broke a cardinal rule of customer service: Never argue with your customer.

In any case, it gave our workshop participants a lot of laughs over the next couple of days. (Did I mention that the workshop was about profitable Retail Operations?)

Of course, these problems, or ‘events’, were taken up with management but it became clear that there was a fundamental problem in this organization.

I don’t believe they will improve because there is no service culture in this hotel.

Some of the staff members were great and some of the interactions were very good – but, without a service culture, there can be no consistency – virtually anything can happen.

And, a lot of what is done right will be accidental or will happen ‘one time only’. Repeat business will be insignificant.

Will they have loyal customers? Probably not…never if they don’t make changes.

The end result – we’ll never go back to that hotel and we’ll certainly never recommend it to any of our colleagues.

All the Success!
DMSRetail



Juggernaut Amazon Wows! Again

Over and Over and Again and Again!
How? Good, Old Fashioned Commitment to Customer Service.

During the busy season, with so many people buying many more items from you than they normally would, it might be understandable that a few things fall through the cracks.

Maybe a customer – here and there – weren’t properly looked after and maybe things weren’t as perfect as they are meant to be.

Certainly, we don’t want those things to happen but they’re a little more palatable when volume is quadrupled and things get a little crazy.

It’s human nature to have a little more understanding for relatively minor things that go wrong at times like that.

However, the story I’m going to tell you proves that even under the most strained circumstances, Amazon wowed this customer, for sure.

Here’s the story…

Early in December, I placed an order for three items that I planned to give to people as Christmas gifts on December 25th.

As time passed, I tracked it a couple of times with the link Amazon had provided to me.

The package seemed to be following the usual path.

Eventually, though, the tracking message said ‘delivered’. The only problem was, it had not arrived.

I called the carrier and they said the package had been delivered to my front door. Hmmm…

After checking with my family members and my neighbors on each side, I determined it was probably stolen.

It wasn’t Amazon’s fault, nor mine.

Either way, it wasn’t good news because, by this time, it was late on Thursday, December 20th.

I opened a chat conversation with a very efficient and, clearly, effective Amazon Customer Service Rep.

Within a few moments, after the usual inquiries regarding order number and address verification, she asked if I would like a refund or a replacement.

________________________________________________________

The Retail Operations Management
YourTime Study Course

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I asked her if she thought it possible that I might receive a replacement before Tuesday, December 25th.

She advised me that, while it could not be guaranteed at that late date, she would make sure the package was shipped the fastest way possible, at no expense to me.

I should add that my original order had been free of shipping charges as I chose the slower method…owing to the fact that I had plenty of time.

Anyway…

I thanked her very much and crossed my fingers.

Even though she had no proof, whatsoever, that I had not received the package, she was sending another order out right away.

She wasn’t condescending. She didn’t make me feel like I was a problem.

She did not charge me for the faster shipping method.

She did not make me wait while she checked with someone to see what could be done.

This very competent person did what she had been trained to do.

So, what happened…

In the wee early hours of Friday, December 21st I got an email saying my package had been shipped and the expected delivery date was Monday, December 24th.

I was cautiously optimistic and hopeful.

On Saturday, December 22nd the package arrived on my doorstep.

Classic…under promised and over delivered.

Providing great service when you’re making a sale is easy.

Providing incredible service when the customer has a problem, a tight deadline and all kinds of anxiety over the situation…amazing.

So, what’s the take away from this?

If a retail juggernaut like Amazon is nimble enough to jump through hoops to look after a customer…just one in a bazillion, to correct something that had gone wrong through no fault of theirs, there is clearly a thread running through the organization that keeps everyone on the same page.

A very strong thread, I would say.

This quality of service simply does not happen unless the entire company is on board.

How do you keep everyone on board and on the same page?

Well, top-notch management who communicate well, and often, and who define and live the culture are the starting point.

After that, training is paramount.

Everyone in the organization must be exposed to the commitment culture.

Everyone in the organization has to not only hear but understand what the expectations are and they must believe that their contribution to the whole is extremely important…that without their participation and contribution, the organization cannot do it’s best to Wow!.

Studies show that the majority of employees cannot articulate their company’s goals – either because they do not know them or because they are not clear and have never been reinforced.

They also do not know or do not understand, how their position – and their performance in that position – affects the organization as a whole, and whether they have any impact on the achievement of the company’s goals.

You will always have some great service stories; some outstanding individuals, if you’re fortunate.

But you need consistency of understanding, approach to business and execution of whatever it takes to reach objectives by all employees in the company if you are to reach and maintain any standing in the world of retail, regardless of the grandness of your goals.

Do you have some amazing stories…good or bad?

We’d love to hear about them. Send an email to johillatdmsretail.com.

Leading by Example is a Core Principle

Leading by example is a core principle for many, but not for all!

Here’s a really old story about a Retail General Manager who liked to follow hot stories of the day…and spent a lot of time watching TV.

So, what does that have to do with leading by example?

Well, it just so happens that the General Manager we’re talking about was in charge of a chain of electronics stores.

In every store he visited across the country, he found a wall of TV’s on during open hours.

If you remember the O.J. Simpson trial, you will recall that there was non-stop coverage and it went on for the better part of a year.

For those of you who don’t remember, he was on trial for the murder of Nicole Brown Simpson and Ron Goldman.

It was the trial of the century and everyone was talking about it.

Millions were watching it play out on TV.
One of those people was the GM in this story. In every store he visited, he spent most of his time watching the coverage on TV.

Apparently, the stories that went around from store to store were hysterical. Needless to say, respect for this GM plummeted and it was difficult to take him seriously.

The Regional and National Managers he traveled with were aghast!

Imagine being the leader of several hundred employees and spending that much time watching TV while you are supposed to be working for the company…while you are supposed to be managing and developing people and motivating sales teams!

Of course, his subordinates still treated him properly and did their jobs but there is no possible way that an example like this wouldn’t have a negative impact somewhere along the line.

It’s one of those things, those intangibles that are difficult to spot and quantify, but you just know it’s not good for business.

He became a legend in the company…for all the wrong reasons.

So, if you’re ever tempted to relax or be a little too casual or comfortable while in stores…remember the O.J. Simpson trial and think better of it.

People need good examples to follow.

What Do You Think About Minimum Wage Increases?

We’re inviting you to tell us what you think about the proposed increases to minimum wage.

Please comment. Thanks.

The Manager is Drunk and the Store is Flooded!

Retail Managers have heard a lot of crazy things…

• 90% of my staff just walked out!
• Employees are stealing!
• My Assistant Manager left the country!
• A customer locked himself in the washroom!

None of the above events are unheard of. None of them are out of the realm of possibility, right?

In fact, most of them have probably happened and some poor, unsuspecting Manager has been on the receiving end of the frantic call and said

“You can’t be serious.”

But, of course, the Store Manager was serious and someone had to cope with the fallout, clean up…whatever. Yikes!!

The Multi-Unit Manager’s job is not without it’s challenges. Some of them manageable or even preventable…and some of them aren’t.

Managing remotely is one of the biggest challenges facing us because our stores are spread out and we cannot always get to them as often as we would like.

There are Multi-Unit Managers who are promoted from Store Management and there are others who come into the job some other way.

Which is best? Well, that depends on many things.

Today, let’s look at the person who was promoted after managing a store.

Chances are pretty good that the person was a really, really good Store Manager. Most companies are not in the habit of promoting people who don’t do a good job.

We promote our fabulous Store Manager…the one who always (or at least the majority of the time) does the numbers…makes the targets…has great KPI’s, can always be counted on for well thought out opinions about policies and procedures, etc.

His store always looks fantastic – the staff are well put together, professional top performers and so on and so on.

It needs to be understood that the fabulous Store Manager we’re talking about did not achieve any of the above by working 35 or even 40 hour weeks.

He just didn’t.

If you’re in retail, and we assume you are, you’re probably smiling right now because you know very well he didn’t.

Retail stores are busy places and, of course, that’s what we want.

Busy places that are open to the public for the majority of every day, have a lot of things going on…lots happening all the time.

Between selling, servicing customers, getting merchandise onto the floor, cleaning, receiving, reporting, recruiting, hiring and training and tons of other things, there’s not a lot of time to relax, reflect and correct.

There’s not a lot of time for the Manager to simply manage…to delegate and coach and follow up. There’s no time to sort through the inbox…no office door to close and ‘get some work done’.

The ‘work’ is in the store and on the floor. That’s where it happens.

Of course, the Manager is required to do some delegating and coaching because that’s just part of the job.

But the job is much too big for that to be enough.

Unless the Store Manager has the luxury of extra personnel due to, perhaps, flagship status, insanely high volume or something like that, then he is working more like 50+ hours per week.

That’s not even counting the really busy weeks in peak season or the times when new merchandise or seasonal layouts happen, etc.

The point of all of this is to make one thing perfectly clear. That is, a fabulous Store Manager does not necessarily make a fabulous Multi-Unit Manager. Of course, he might…it’s just not something we should take for granted.

In fact, that Manager may not even make a good Multi-Unit Manager.
And, here’s why…

He is not there. He’s missing because he has other places to be.

He’s managing remotely.

There is a world of difference between

1) managing a store team that is working alongside of you for 50+ hours a week, getting everything done under your watchful eye

AND

2) managing a group of store teams scattered around geographically

Multi-Unit Managers are just one of the groups who would benefit from attending a retail management workshop.


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