Thinking of Raising Wages? How About Raising Standards?

"The increases in the minimum wage will cause a ripple effect, increasing the expectations of all employees for pay increases." Or so goes a common line of thinking. 

This can prompt independent retailers to worry:
  • How much will we have to increase prices in order to pay our staff more? 
  • Where is that money going to come from? 
  • What will we have to cut in order to pay more? 
Or, is there another way to think about this? How about raising standards and expectations to better match with the wages paid?  (You know, the "You get what you pay for" model.) 

Here's how to start:
  • First, revisit your job descriptions. This is the first opportunity to raise standards. Make sure they reflect the performance you now expect from each position. 
  • Consider delegating much of the initial data-gathering and drafting of job descriptions to someone else in your organization (especially a younger someone else!) Their energy and fresh perspective could be very valuable.
  • Then, having clarified the job descriptions and performance expectations, establish an appropriate pay range for each job.
  • Finally, make sure your employees each understand the new responsibilities, and the heightened expectations, of the positions in your stores. In fact, some owners have current employees essentially apply and compete for those higher-paying jobs.
For more ideas, and a process for doing this, read "Beyond the Paycheck: Motivate Employees with Creative Compensation", in the Library for Owners at The Retail Owners Institute®

It walks you through the entire process (including finding out what matters to your employees!

For most specialty retailers, your staff IS your competitive advantage. Use your compensation plan as another strategic tool to:
  1. reduce employee turnover;
  2. save expenses of recruiting, hiring, and training of new staff;
  3. and most important, maintain customer satisfaction and loyalty.

Something for All Growth-Minded Retailers

Retail "startups" are not limited to that new little shop down the street. Instead, a simultaneous multi-store launch is a "retail startup". So too is opening additional locations in new geographic markets. Maybe a temporary "pop up shop" to test a new retail concept. Or the launch of a robust e-commerce site. Or, manufacturers that decide to launch their own chain of stores as a way to grow their brand.

RetailStartup.com, a division of The Retail Owners Institute®
In 2009, The Retail Owners Institute® launched a specialized website, called Retail Startup, to address growth and expansion issues specific to retailers. 

It includes our commentary on each of the 3 different stages of development of a retail business.


But principally, it is a clearinghouse for growth-minded retailers. Out of all the resources on the web for startup businesses (those so-called "small businesses"), we have "curated" those links to find the ones most useful to retail startups. 

  • Retail Management Resources
  • Retail Operations Resources
  • Information for Retail Growth Management
  • "Small Business" Resources
  • "Shop Local" Initiative
  • Key Retail Financial Benchmarks, 53 Retail Segments

No matter which stage of growth and expansion you're in, you'll likely find some useful resources. Check it out for yourself. Just go to RetailStartup.com.

Retailers: Is Now the Time to Sell?


It's that time of year.  Retail owners are asking themselves, 
  • "So, shall I really keep doing this? Do I want to sign more leases? Guarantee more loans?"
  • "Or, while I still have my health, is now the time to sell?"
When pressed, many owners confide, "I plan to sell the business in 5 years or so." (And yes, there are owners who have been saying that each year for the past few years. It's the rolling 5-year exit plan!)

Whether or not this year is the time for you to sell, we believe that every year is the time for owners to investigate their options. 

To help get you started, The Retail Owners Institute has developed a specialized free microsite called Sell My Store, Please!  There you'll find some tips that are practical, or thought-provoking, or maybe even inspiring. 

We encourage you to be pro-active about your own exit strategy. 

There are 3 kinds of owners out there; which one do you want to be?
  1. Owners who make things happen.
  2. Owners who watch things happen.
  3. Owners who say, "Uh...what happened?!?"

Smarter Expense Control for Retailers (and It's FREE!)

Want to get a better handle on expense control? But find that your eyes glaze over whenever you look at your P&L?

You are not alone! The typical Profit & Loss statement lists expenses in alphabetical order! Excrutiating line item detail. Ugh!

How to deal with that? And, more important, how to effectively manage, monitor and control your expenses? 

Meet The Retail Owners Institute's online SPEEDY Expense Analyzer.

The SPEEDY Expense Analyzer is perfect for every retailer's analyzing, forecasting, or "what if...?" planning. You easily enter in your line item expenses; SPEEDY automagically sorts them into 5 meaningful categories. (The ROI's technical term is "buckets".) 

See how quickly you can discover those profits that are hiding in plain sight

Sort your P&L's line-item expenses into 5 "buckets" 
Grab your P&L and go take a look. (Yes, it's free.) See what SPEEDY can reveal about your business!



Quick Insights: Which Retail Segments Are Thriving? Or Not?

The Retail Owners Institute®  is proud to be the exclusive provider of Key Ratios Benchmarks - the true "vital signs" of retail businesses - in our unique Five-Year Financial Trend Charts.

Available exclusively from The Retail Owners Institute • www.RetailOwner.com

And now, the latest results - including 2014 - are ready! All updated, and published on The ROI site.

Nowhere else can you find such easy access to this insightful management information. And The ROI makes it available for free! Just go to this page on The ROI site to choose from 53 retail segments.

On each segment's page, you will see The ROI's Five-Year Trend Charts for the 6 key benchmarks The ROI has identified as most important and meaningful for retailers to monitor:
  • Pre-Tax Profit %
  • Gross Margin %
  • Inventory Turns
  • Debt-to-Worth Ratio
  • Current Ratio
  • GMROI 
Please take a look at these latest retail financial trends. We believe they offer invaluable perspective on your own stores' performance.

Then, by all means, be sure to take advantage of The ROI's Retail Benchmarks Resource Center.  Whether you are a retail owner, an aspiring owner, a student of retailing, a store manager, a buyer, or simply(!) want better financial results, this is the place for you! 

Available online, 24/7, and FREE! Discover all of its useful and time-saving tools.  

----
The ROI's Five Year Financial Trend Charts are based on data from Risk Management Associates Annual Statement Studies. RMA gathers financial statements from banks across the country, and compiles those numbers for every business category, not just retailing, all based on the North American Industrial Classification System. 




Is it just us? 
Or does the 5-Year Trend for e-commerce profits look hauntingly similar to the Amazon packages??


Now Look Who's Reinventing the Grocery Store

No one goes into a hardware store to buy a 3/4” drill.
What they want is a 3/4” hole!

That basic Marketing 101 concept applies to grocery stores, too. Who goes to the grocery store to buy, well, groceries? What we want is DINNER! 

  • But, can you go into a grocery and find “dinner”? Or “breakfast”? Or, “great lunches”? No. Instead, there is a produce section. And then a canned goods section. And then the frozen foods section. Plus, an overwhelming assortment of choices, whether it is mustards or pickles or pasta or….
Meanwhile, consider the shoppers, who are increasingly purposeful. They have a shopping list, and they stick to it. They are spending less time (and money) in the grocery stores. And, a greater proportion of their in-store time is spent simply navigating the store (what they want is on the perimeter), or checking out. 

This is an industry that is ripe for disruption. And sure enough, that is happening. Consider how the meal-in-a-kit delivery services – e.g., Blue Apron, Plated, HelloFresh  – essentially are re-inventing the grocery store.
  • You sign up online; they deliver to your doorstep a box that contains the fresh, raw ingredients for 3 to 5 meals, all in the proper proportions (no wasted food or languishing jars of spices), along with explanatory recipes (with pictures) from their in-house chefs. 
  • You do the chopping, cutting, and cooking.
  • In 35 minutes or so, you sit down to a home-cooked meal.
  • All without the time-consuming demands of meal planning or traditional “grocery shopping”

Yes, This IS Retailing!

Alas, these new businesses do not regard themselves as retailers(!) But to us, everything they are doing is what retailers do: 
  • Selling to the ultimate consumer
  • Sourcing product from carefully-selected suppliers
  • Editing the selections - limited meal choices each week
  • Educating about new products or cooking techniques
  • Engaging the customer in an experience - in this case, home cooking
But Wait...There's More!
Very High GMROI
Plus, they do it all essentially on special-order. That is, customers sign up for next week’s meals; these services don’t carry inventory, but instead, buy only what they already have sold. 

High Growth Potential with Low Fixed Costs
And, as a web-based delivery service, they can grow their customer base at a faster rate than fixed costs. The 3 services we cited can deliver to 85%-95% of the continental U.S. (And HelloFresh also operates in Australia, Europe, and the UK.)

Remember, “value” for customers is benefits received for the burdens endured. 
In our view, these meal-kit delivery services are delivering great burden-reducing value to the customer! And, whether they realize it or not, they are reinventing the grocery store in the process.



We believe this offers, ahem, much food for thought for all retailers. 
  • What are the burdens that your shoppers must tolerate
  • How might you relieve those burdens?
  • How can you increase the value they receive from your stores?
  • And how can you do that before some “disruptive” competitor steals their hearts away??

Be Ready! New Patterns for Peak Shopping Days

You noticed it, right? That traditional lull in shoppers, between Thanksgiving Weekend and the 10th of December.  

That is just one of the predictable patterns within the Holiday shopping season. Next up: the surge this weekend, and then of course, next weekend, the last one before Christmas. That's when the shopping malls ask many stores to be open till midnight, right?

But, sure enough, especially this year, these "traditional" patterns are subject to another trend, the "digital disruption".
  • First, accept that the shoppers will certainly be busy doing their thing; it just may not be in your stores yet.
  • Instead, more folks will rely on the web for their window shopping, browsing, price comparisons, etc.
  • When they do show up in your stores, they are on a mission! Not browsing; just buying. 

This Year's Peak In-Store Shopping Days

So, when will in-store shopping peak? Not on the traditional last weekend before Christmas. Instead, watch for it to peak on Monday the 22nd and Tuesday the 23rd, and of course Wednesday, Christmas Eve. 

Why? Two main reasons:

  1. The "traditional" reason: those are the days when most men (and women who shop like men) actually do their buying.
  2. The "digital disruption" reason: the deadlines for buying online and having guaranteed delivery by Christmas will have passed. At that point, the customers will show up, and depend on stores to come through!
Those retailers who are anticipating these changes will be better able to effectively schedule their staff. You can likely schedule in anticipation of the Monday-Tuesday crunch.
  • And therefore, having "paced" yourself and your staff, you will be well positioned to deliver great customer service on those crucial, crunch time shopping days and evenings.
What better way to keep the Ho! Ho! Ho! in the Holiday Season?

Start Now to "Beautify" Year-End Financial Statements

For most of you, your fiscal year end (i.e., 12/31; 1/31; 2/28; etc) is rapidly approaching.

"So what?", you ask.

Well, whatever your year-end financial statement says about your business, you will have to "live with" for the next year or longer. And each vendor, bank, or landlord you share it with will judge your business by it. So, now is the time to dress it up! 

Is there a beauty parlor for retail businesses? Yes!

We just conducted two workshops at a huge trade show in Chicago. We taught those retail dealers how to financially beautify their businesses. (And some of these retailers are already making "dress up" plans.)

How Your Business Is Judged for the Next Year

Always remember: your debt-to-worth ratio is the #1 measurement of the financial strength (or weakness) of your business. So, how can that be improved? Here are 3 choices.

  1. Obviously, the more net profits that are added to your retained earnings from your P&L, the greater your equity/net worth will be.
  2. But, shrinking your liabilities (any and all debt) is the most impactful and controllable way to improve your year-end debt-to-worth ratio.
  3. "Controllable?" Yep. Shrink (sell off; liquidate) any assets you can (especially excess inventory) and apply that cash to paying down debt.

If you take these steps vigorously, there is a Miss or Mister America Pageant you can enter!! 

And best of all, this "financial beautification" is far more than skin deep. It makes for a much healthier business as well. 

The ApplePay "Wow!" Effect

 Consider these early experiences with ApplePay:
  • Both cashier and customer say "Wow!" as transaction completes.
  • Cashier explains "I haven't yet processed a return, but let's try it. Oh, it's done. That was easy!"  
  • The really telling sign: customer admits to feeling giddy(!) when paying.
Talk about a new "Wow! effect" in retailing. But for paying?!

Apple as "Enabler" of Online Retail Success

With the iPhone and iPad, Apple pioneered the user-friendly devices for accessing the web. In our view, Apple thus became the enabler for the success of Amazon and all online merchants.

Now, the ApplePay "Wow! effect" may make Apple the enabler for brick-n-mortar retailers as well. 

Seems only fair, doesn't it?