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More Advertising vs Better Customer Service

Today I spoke to the Marshall Area Economic Development Authority (MAEDA) about Raising the Bar on Customer Service. This is one of my favorite talks because it is filled with ideas you can use right away to start making a difference for your customers and raising the level of their delight to the point that your customers start talking about you.

Isn’t that the true goal of any business—to give your customer such an amazing experience that she can’t wait to tell someone, can’t wait to come back, can’t wait to bring her friends with her?

If that isn’t your Customer Service goal, it should be. It is the only goal that is sustainable long term.

This is me helping Kingman Museum “Raise the Bar”

I spoke to this same group last May about Making Your Ads More Effective, the presentation based on my newest book coming out (soon!) That is another of my favorite topics because it shakes to the core any mistaken beliefs you might have had about advertising, and teaches you how to get people to notice your ads, remember your ads, and act on your ads.

Advertising and Customer Service are two areas where you can stand out the most compared to your competition. But when resources are limited, which should get the majority of your focus?

The dream for any retailer is to have exclusive, high-demand product that no one else sells. You have that and all you have to do is run an ad and start printing money. Unfortunately, the Internet killed that dream for the vast majority of retail. It is highly likely that you won’t have an exclusive on your merchandise ever again, and you likely won’t have the best price in town (not that you should ever want to be the lowest price in town).

The second dream for any retailer is the falsehood perpetuated by the movie Field of Dreams.

If you build it, they won’t come.

You have to build it, talk about it (advertising), and make it spectacular (customer service).

  1. Build it
  2. Talk about it
  3. Make it spectacular

That’s the order the customers see.

But for you, the order should really be …

  1. Build it
  2. Make it spectacular
  3. Talk about it

When you think in those terms, that third element—the talking about it—could be done by you, or better yet, by your customers.

  1. Build it
  2. Make it spectacular
  3. Get your customers to talk about it

Before you spend another dime on advertising, spend the next dime on training your team.

Spend the next dime on figuring out new ways to surprise and delight your customers. The best businesses are fueled by a high level of repeat and referral customers. Repeat business comes from great customer service. Referrals come from surprisingly delightful WOW customer service. Once you have that, then you can spend some money telling the world what you built. Then they will come.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes it is the slower way to build your business, but it is also the stronger way to build it because the customers you win are much more loyal than the customers you buy. Right now you have the advantage of the larger crowds of shoppers for the holiday season to win more customers. Don’t miss this opportunity. You could also think about it in reverse. What happens if you spend a lot of money to attract large crowds before you make it spectacular? They won’t be back, but your advertising money will be down the drain. You’ll have to spend more money to attract more first-timers.

PPS Yes, I do one-on-one business coaching to help you find where you can raise the bar on your customer service. Yes, I do presentations to large groups of businesses like the wonderful crowd today. Yes, I do half-day and full-day workshops that not only talk about the broader picture, but also include in-depth ways to find and train the kind of staff that can consistently offer the experiences that people talk about to their friends. Give me a call or send me an email. Scott Fleming, the MAEDA director said, “I was sad to see your last slide. I really didn’t want this presentation to end.”

Other Uses for Market Share Knowledge

The first time I was truly introduced to the idea of calculating my market share was from Roy H. William’s second book Secret Formulas of the Wizard of Ads. It was 2003 and I was trying to learn all I could about marketing and advertising. My math was rudimentary. I didn’t adjust for local economy or youth population. Simply raw numbers. I came up with our market share at about 12%.

At first I was a little disappointed. Roy teaches that the gold standard for any business is 30% market share. That’s a big number. Despite its dominance, even Walmart only has 25% of the grocery market. The optimist in me, however, said 12% was a good starting point and now I had a goal to shoot for. I had just read an article (which 14 years later I cannot find—go figure) that said only 9% of the general public was inclined to shop at local indie stores in the first place. I was already 3 points above that number.

I never did reach 30%, but I did have some other revelations about my Market Share number.

Image result for upward trend free clipartFirst, after going back and adjusting my market size for economy and youth population, our 12% was really closer to 16%. It stayed in that neighborhood until a Walmart Supercenter opened in 2005. We dropped into the 14-15% neighborhood and stayed there until Amazon became a serious player in the toy industry around 2010-2011. We stayed around 12.5% for the next several years until we closed. Even though you can beat a big guy head-to-head, the more big guys in town, the more businesses taking a piece out of the same pie.

Second, that original 12% number got me thinking. A full eighty-eight percent of the market were NOT currently shopping with me. That’s almost 9 out of 10 people. When you look at it that way, it changes your perspective on a lot of things.

In terms of marketing and advertising I realized I didn’t need to reach the entire market to grow my business. If I could just convince 1 more person out of 20 people to shop with me I would have growth beyond my wildest dreams. I really only needed to convince about 2 more people out of 100 to shop with me to have double digit growth. If you only are trying to sway two people out of a hundred you might say something totally different than if you’re trying to sway fifty out of a hundred. With two you can say something direct and personal to a small audience that gets right to the heart of the matter. Trying to reach fifty, you say something generic and non-offensive hoping other forces will come into play to swing them to your side.

In terms of product selection I realized I didn’t have to be all things to all people. I could pick and choose the products I wanted based on my beliefs in the products and how they benefited my customers. Not only does that help with the buying decisions, it helped us stay true to our core values in terms of what we sold and why.

Speaking of Core Values, we didn’t have to be someone we were not.

Meg Cabot said it best when she said, “You’re not a hundred dollar bill. Not everyone is going to like you.” We didn’t have to be liked by everyone. Sixteen percent is a pretty low approval rating. Yet it was higher than any other single store in our market.

Knowledge is power (France is bacon). Knowing your market share might be the piece of knowledge that finally liberates the way you think about your place in the market and the risks you can now safely take with your business.

-Phil Wrzesinski
www.PhilsForum.com

PS Let me first admit that 16% is actually pretty high for an indie retailer. Many of you might do the math and find yourself in the 3-5% range, especially if you have other indie retailers fighting for the 9% that skews shop local. But before I pat myself on the back, you should know that in the early 1980’s we were at that mythical 30% gold standard and then some. Of course that was before Jackson got Walmart, Target, Toys R Us, Sam’s Club, a second Meijer, a new KMart, and a whole slew of other big chains in town (without a population growth to match), and well before Al Gore invented the Internet. We were the large store that was here first. That’s what gave us much of our edge. But even if you do find yourself in the 3-5% range, if the market is big enough, you can do a lot of business with only 3-5% of your market. Plus, when you only have to convince 1 more person out of 100 to get 33% growth, advertising becomes a whole lot more fun.

PPS It used to upset me that about half my friends were not regular shoppers at my store. My parents saw about that same percentage from their friends. Then it dawned on me … Fifty percent of my friends versus twelve percent of the general population. I was ahead of the game. I slept much better that night.

Who Killed Black Friday?

I was never big on shopping on Black Friday. I don’t think it was just because I was a retailer. Many of my staff would be up before dawn hitting all the sales before coming in for their shifts. I knew other retailers who would also hit the streets looking for early-bird deals. Since I wasn’t a bargain hunter in general, it wasn’t a big attraction to me.

I also knew a secret. I knew that the same retailers filled with door-busters that day would have similar or even better discounts the week before Christmas. Such is the nature of the season year after year.

Image result for black friday doorbustersAccording to Wikipedia, “Since 1952, [Black Friday] has been regarded as the beginning of the Christmas shopping season in the U.S.” What most people don’t know is that it wasn’t the “busiest shopping day of the year” until 2003. The Saturday before Christmas regularly held that title most years.

If the new study from Market Track LLC is right, you might see Saturday, 12/23 reclaim the title as fewer people in their surveys say they will be out shopping Black Friday this year. Is this the end of Black Friday as we have known it? And if so, who killed it?

The easy answer is eCommerce. The article linked above is already calling it “Cyber Friday”. More people reported in the survey that they would be shopping online. The online sellers are no fools. Rather than give up on Black Friday and wait until Cyber Monday, they are going after the customers’ dollars all Thanksgiving Week and especially on Friday.

The other culprit is the big retailers themselves. In a quest to win the Black Friday customers, they started opening earlier and earlier until a bunch of them decided to do sales on Thanksgiving, which led to sales on Monday, Tuesday, and Wednesday, too. You do all that and you take away the frenzy of Black Friday. The problem is most employees only have Thursday through Sunday off. Twenty-five states actually have Black Friday as a government holiday. Start offering your deals Monday through Wednesday and you lose some of your customers. They figure they might as well go online since they can’t get out of work.

Some want to blame the media. News reports of fights and people getting trampled will dampen any crowd. The reality is that those stories don’t match the experience for most people since those events are few and far between.

Last but not least, some are saying that American Express with it’s Shop Small Business Saturday campaign also had a hand in Black Friday’s demise. We certainly saw that in our last few years of business. Small Business Saturday beat Black Friday for us in 2013, 2014, and 2015.

Add it all up and you might think Black Friday is on life support. Before you pull the plug, however, think about this.

Twenty-five states still have Black Friday as a government holiday. Many corporations also give their employees that day off. That puts a lot of shoppers on the streets ready to get started on their Christmas shopping. Whether they shop online, in stores, Friday, Saturday, or Sunday doesn’t matter.

What does matter is one thing and one thing only—are you the store where they want to spend their money?

The big chains, in their race to the bottom to win the Transactional Customers, only have one tool in their tool box—the red markdown pen. You have a whole bunch of tools at your disposal to win everyone else, the Customer Experience being one of your biggest.

If you are a toy store you could have a whole bunch of toy expert stations with people ready to show off the hot, new toys and answer questions parents might have (many toy stores I know already do this earlier in November for Neighborhood Toy Store Day.)

If you are a clothing store you could have a fashion show with real fashion experts on hand to share tips and help people explore new wardrobes for everyone in their family.

If you are a shoe store you could have certified orthotic fitters on hand to do demonstrations and talk about foot health and the importance of proper support.

If you are a caterer you could partner with a local retailer and offer food to their customers creating a festive atmosphere for the shoppers that becomes a win-win-win for everyone.

There are many ways to win customers during Thanksgiving Week. You know already what the big box and online sellers are going to do. There are a whole bunch of people actually happy that Black Friday won’t be as mobbed with bargain hunters as usual. Go talk to them and show them how shopping at your store will be different, better, and tons more fun.

-Phil Wrzesinski
www.PhilsForum.com

PS It might seem weird to talk about Thanksgiving already. It is only 6 weeks from today. I want you to have enough time to plan something amazingly cool to maximize your weekend sales. If you’ve already seen your sales shift from Friday to Saturday like we did, then plan something special for Saturday to win the Relational Customers. But if you can, plan something special for Friday, too. There are a lot of people not working that day that still want to go shopping.

PPS Don’t read too much into your Friday or your Saturday numbers. Look at the week as a whole. The retail world is changing. Black Friday is no longer the sole focus of the week. But attracting customers hasn’t changed. Go find a way to capture your share of the market.

The Aha Moment (Or the Simplest Business Success Formula Ever!)

I’ve been looking at different job titles and job descriptions lately. The two that seem to grab my attention the most are the Marketing & Advertising jobs and the Managing People jobs. At first glance I figured I was drawn to those because those were two of my favorite things to do at Toy House.

Another thought hit me this morning on my drive home from dropping my son off at school.

Those two different jobs are really the same thing. Stop and think about it.

  • Awesome Customer Service is about figuring out your customer’s expectations and then exceeding them with surprise and delight.
  • Top-Level Selling is about figuring out your customer’s needs and then fulfilling them better than she expected.
  • Powerful Advertising is about figuring out your customer’s desires and then offering a solution better than she expected.
  • Amazing Events are about figuring out what your customer likes and then offering her more than she expects when she attends.
  • Incredible Managing is about figuring out what tools your team needs to be successful and then giving them better tools that take them beyond what they thought was possible.

It’s all the same thing.

  1. Figure out what she desires, needs, and expects.
  2. Give her more than she desires, needs, and expects.

That is the formula for a successful retail business. That is the formula for a successful service company. That is the formula for successful manufacturer. That is the formula for a successful advertising campaign. That is the formula for successfully managing your team. That is the formula for being successful as an employee.

The first part requires research. The first part is about studying human nature, watching market trends, thinking like a customer. The first part is about asking questions, listening, and analyzing what you hear. The first part is about testing and clarifying and testing some more. You’ll get it right some times and you’ll get it wrong some times. The better you do your research, the more often you will get it right.

The second part is about having that character trait in you that wants to help others. When you hire and train your team, look specifically for that trait and you’ll find the second part of the formula becomes second nature to your company. Your team will already want to give. You just have to show them what to give.

-Phil Wrzesinski
www.PhilsForum.com

PS An employee that figures out exactly what the boss wants and then gives the boss more than she wants will always have a meaningful job. A manager that equips her team with tools to make them better than they thought possible will always find people wanting to work for her. A marketer that can figure out the true desires of the customer base and speak to those desires will always move the needle. A salesperson who can figure out the exact problem a customer is trying to solve and then offer a solution better than she envisioned will always make more sales. A manufacturer who anticipates the needs of both the end user and the middleman and sets up a business to exceed both their expectations will find growth.

PPS I answered my own question. My Core Values include Helping Others and Education. I already have that character trait of giving (that’s why I write this blog and publish all the Free Resources). The Education side of me wants to do the research to figure out what to give.

When You’re Good to Momma

On a trip to NYC for Toy Fair a few years ago I met a family that came to the city just to go to Broadway shows. That sounded like a dream trip to me. I love musical theater. I wish Netflix had more “live Broadway” shows than they currently do. In spite of what the critics say about them, I even love movies based on Broadway shows (yes, including Evita!) One of my favorites is Chicago. There are a few songs I could watch over and over.

One is Queen Latifah singing “When You’re Good to Momma” about the Law of Reciprocity.

Last night I had my own Law of Reciprocity moment. I received an act of great generosity from someone because of the generosity this person received many decades ago from my grandfather. I will have to pay it forward as she did.

That’s how it works. You do something good for me and I feel the urge to do something good for you. If I can’t do something good for you, I pay it forward.

Bob Negen gives the example of walking through a set of doors. If two guys approach at the same time and one offers to hold the door open for the other, at the next set of doors the the other guy will hold them open for the first. It is a social contract.

Liberty Mutual did a whole commercial campaign around the idea of paying it forward (here is the full video, grab your tissue.) 

It also works in reverse. If you’re rude or disrespectful to me, I may fire back in kind. We’ve certainly seen a lot of that in the past several years.

As a business owner, however, you have one choice that works long term—Generosity.

Be generous in your offerings. Be generous in your kindness, your helpfulness, and your time. Be as generous for the customer spending $2.50 as you are for the customer spending $2,500. It pays in the long run.

Generosity helps your business in many ways.

  • First, it leads to more word-of-mouth. When your generosity is genuine, unexpected, and sincere, people talk about that to their friends.
  • Second, it leads to reciprocity. Generosity more often leads to trust, which leads to more sales. Yet even if your customers are not generous directly back to you, they may pay it forward, and that helps out everyone.
  • Third, you feel better. An eye-for-an-eye leaves the whole world blind.
  • Fourth, your customers are watching and judging you by your actions. In fact, unfair as it is, they are judging all small businesses by your actions.

The little things you do that you don’t have to do are big things in your customers’ eyes.

“You can easily judge the character of a man by how he treats those who can do nothing for him.” -James D. Miles

You have the choice of the reciprocity you wish to receive and the reciprocity you wish to foist upon the world. Generosity is the winning formula for small businesses.

Be good to Momma.

-Phil Wrzesinski
www.PhilsForum.com

PS Calling another store to see if they have something you don’t carry is generous. Carrying heavy packages out to your customer’s car is generous. Offering free valet parking in a downtown setting is generous.  Making the customer look like a hero to her family or friends is generous. Adding an unexpected gift-with-purchase is generous. Spending time to get to know the customer, talk to her kids, and be interested in her life is generous. Treating the customers “just looking” with kindness, respect, and helpfulness is generous. Ask your staff at your next meeting. I am sure they can come up with some more ideas of ways to be generous.

Where I Can Help You

I gave you my resume. Now let’s talk about you and what you might need.

If you are a Small Business Owner …

You wear many hats, some better than others. Your choices are simple.

A) Learn all the skills you need on your own.
B) Hire someone else to do the things you can’t (or don’t want to) do.
C) Hire someone to teach you those skills you might be lacking.

Image result for wearing many hatsYou might need help with your Hiring and Training. I will help you identify the positions you need on your team, help you identify the traits and skills needed to do those jobs, write up a job description, write up a killer help-wanted ad to attract the right kind of applicants, and give you the interview questions that help you identify the perfect candidates. I will help you create a new-hire training program and teach you how to stage your own training workshops on a continual basis.

You might need help with your Customer Service. I will lead you and your team through all the touch-points a customer has with your business, identifying where you are meeting their expectations and where you are missing the mark. You’ll learn simple tips and techniques that raise the bar across the board. Your staff will help develop the next level of service you offer with complete buy-in.

You might need help with your Marketing & Advertising. I will help you identify your core values and beliefs. I will help you identify and create content that attracts the right type of customers. I will help you identify the best use of your advertising budget and resources to get the most bang for the buck. I will evaluate your website, your social media presence, and your other marketing attempts to help you maximize your efforts.

If you are a Large Corporation …

You likely already have a specialist in each of the above areas. If you don’t, you might want to give me consideration. If you have someone internally you are grooming for those roles, you might need someone to come in and do one-on-one training for certain skills.

You also might need help with your general Training Programs. I can run your Team Building workshops for all levels of your corporate structure, fostering better communication, cooperation, and trust amongst your teams. I can help you roll out new initiatives through presentations and workshops that get your team to buy-in quickly and efficiently.

You might need help with Management Training. I can work with your managers teaching them better ways to identify, hire and train their teams. I can help them learn better ways to motivate and inspire their teams to greatness. I can give them tools for training and evaluating the individuals on their team to help them maximize production within their payroll budget.

If you are a Community Economic Developer …

You have read the reports that show how a strong, locally-owned businesses climate is better for the overall health of your economy.

You might need help to strengthen the presence of your local retail market by teaching retailers the foundational skills necessary to compete in today’s retail climate. The Retail Success Academy covers everything from Customer Service to Retail Math, designed specifically for mom & pop indie retailers and restaurants.

You might instead need someone to lead workshops and presentations for small businesses on individual topics such as Generating Word of Mouth Advertising or Marketing on a Shoestring Budget that gives them the competitive edge and helps keep your local economy strong.

If you are a Conference Planner …

You need to hit homeruns with your speakers and presentations and workshops.

You might be looking for a keynote speaker who can put on a presentation your attendees will be talking about for years, one filled with equal parts inspiration and realistic action steps that lead your attendees exactly where they want to go. I’ve been on the stage and in the audience. I know exactly what your attendees want.

You might be looking for an emcee to make sure all of your events and activities run smoothly and on time with a professionalism not always present among your volunteers. I know how to handle a microphone and handle a crowd.

You might be looking for a workshop leader, someone who can dig deeper into a topic to give your attendees a more comprehensive understanding of Marketing & Advertising, Hiring & Customer Service, or even Retail Math, I can take them to a level of understanding equivalent to an upper level college course.

If you are a College Professor or Dean …

You might be looking for a guest speaker to offer your students a fresh perspective from someone in the field.

You might be looking for someone to offer a relevant lesson or two not found in your current curriculum.

You might be looking for someone to teach an elective that is not currently available for your students.

I have ideas for all three of those.

You have problems you need solved. I have solutions. Let’s get together.

-Phil Wrzesinski
www.PhilsForum.com

PS Conventional Wisdom says I need to pick a niche and then be the best option in that niche. The problem is there are a lot of niches out there where I could fit. I just haven’t figured out which one you want me in the most. Then again, I’ve also never been one to just do what conventional wisdom says (which is why my seminars and workshops are so highly rated.)

I’m Looking For Work

Since closing up Toy House last December I have been writing, speaking, coaching, sailing, selling, and singing for my supper. It has been an interesting adjustment from the steady paycheck of selling toys. It has been filled with highs and lows and stimulating conversations when people ask me how I’m enjoying “retirement.” I’m a few decades away from that word. I need to work.

The past few days I have thrown my hat into the ring for some full-time job openings in southern Michigan.

Yes, I am looking for work. 

This is me. Always smiling. Always ready to help.

Here is my resume: (Please excuse my bragging—that’s what resumes are for, right?)

27 years as a Team Builder: Developed, Organized and Led Team Building Activities utilizing Low and High Ropes Courses, Wilderness & Experiential Activities, and designated tasks to promote better communication, cooperation and trust for groups ranging from adolescents to corporate America. Led and Facilitated Training Programs to teach others to be Team Builders. Wrote and published blogs and articles on Team Building.

24 years as a Purchasing Agent: Created and Managed Open-to-Buy programs for multi-million dollar retail store. Negotiated Terms with Vendors. Made Purchasing Decisions for millions of dollars of inventory. Designed Merchandising Displays including Revamping 16,000 square feet of display space. Led Workshops, Seminars and Webinars on Inventory Management, Pricing, and Financials,

22 years as a Marketing & Advertising Director: Developed and Managed Advertising Budgets between $20,000 and $120,000 annually. Made Advertising Purchases and Created Content for TV, Radio, Newsprint, Billboard, Direct Mail, Email, Facebook, In-Store Signage, Business Flyers, and Press Releases. Conceived, Organized and Hosted several public and private Marketing Events. Made Public Appearances at Networking Events, on Radio, and TV. Built websites for www.ToyHouseOnline.com and www.PhilsForum.com (among others). Led Workshops, Seminars and Webinars on Advertising, Marketing and Public Relations. Wrote book on Advertising called Most Ads Suck (But Yours Won’t).

21 years as an HR Director: Hired, Trained, Scheduled and Managed a team of 12 to 30 employees. Created an Employment Manual and Training Program. Planned, Organized and Led monthly Staff Trainings and Meetings. Led Workshops, Seminars and Webinars on Hiring & Training and Customer Service. Wrote and Published a Book on Hiring and Training called Hiring and the Potter’s Wheel: Turning Your Staff Into a Work of Art. 

27 years as a Speaker/Teacher: I have given over 100 seminars to other businesses, led over 100 training workshops for staff development, facilitated over 100 team building events, conducted over 100 presentations on shopping to customers, and taught over 100 classes for new, expectant fathers at our local hospital.

9 years as a Writer: I have written four books, dozens of magazine articles, hundreds of different advertising content, and 788 blog posts (counting this one.)

I am looking for work.

You can hire me to do Private Coaching, one-on-one, in the area you need the most help. (For a lot of people that has been hiring and training.)

You can hire me to do Presentations and Workshops. My Customer Service presentation takes a unique approach by helping you define each point of contact a customer has with your business and measures your performance at every step along the way. Like my Hiring & Training presentation, this works with any type or size of business. In fact, it was a manufacturer who paid me the highest compliment telling me I had given him the “million-dollar idea” he needed to take his business to the next level (as he flew away on his private jet.)

You can hire me to help you revamp your Marketing & Advertising. Whether temporary as a coach/consultant and/or to help you create new content, or full-time as a Manager or Director, I will bring insights and skills that will move the needle for your business.

You can hire me to Write. My specialty in writing is to teach and persuade. I’m sure you can figure out how to use that in your business.

I’m not a perfect candidate. Most people look at my resume and get hung up on the fact I have Bachelor of Science in Geological Oceanography from the University of Michigan. That was 28 years ago. I barely remember that child (but I still know more about shoreline erosion than anyone really needs to know.)

Or they want to discount the above experiences because I didn’t do it in corporate America. I can see that. Of course, I did all those jobs simultaneously (plus twelve years as CEO and CFO) for a store that in 2009 was named “One of the 25 best independent stores in America!” in the book Retail Superstars by George Whalin. That’s not corporate America, but it does speak to my ability to learn and my ability to stay organized and focused while juggling a lot of responsibilities in a fast-paced environment.

I’d be happy to discuss these and any other reservations during the interview.

I am looking for work. Do you know anyone who can use a guy like me?

-Phil Wrzesinski
www.PhilsForum.com

PS I apologize if this post sounds too much like bragging. I really do need more work. I want you to know I’m not just a blogger who thinks he knows something about business. I have walked the walk. I have made many mistakes and learned from them. I don’t have the business degree, but I did have the toughest teacher ever—real life! You get the exam first and then you get the lesson. Please share this post with anyone you know who could use a guy like me.

PPS You know my Core Values are Having Fun, Helping Others, Education and Nostalgia. My ideal job is teaching and helping others. It is what I do best and I enjoy it thoroughly. My second passion is marketing & advertising, finding new ways to drive traffic. That and Free Cell are my two favorite puzzles to solve. If the right opportunity comes along, however, I’m game for just about anything that lines up with my values.

What Are You Winning?

I admit it. I fall for click-bait headlines all the time. I saw one recently about the Columbus, OH based discount closeout chain Big Lots! that said, “Discounter Opens ‘Store of the Future’ “. Yeah, I had to see this.

The article went on to say how they had changed their signage and rearranged the furniture. They even added a huge Hello! sign by the front door and a huge Thank You! sign on the way out. My first thought was, “The 1990’s called. They want their store design back.”

Image result for big lots! hello signFortunately there was a link to a full article on their changes. Turns out the cosmetic changes are more because of the structural changes going on. Big Lots! is getting away from being a pure closeout store with different treasures all the time. They are focusing more on the categories where they perform the best.

As their CEO David Campisi said, “You can’t be all things to everyone. You have to take a position you can own and win.”

While his store design might not be all that futuristic, he is ahead of many of his peers with that last statement. (Toys R Us, I’m looking at you.)

Here is what I want you to think about today.

  • What position can you own in your industry?
  • Do you own it today?
  • Are you winning?

If you can answer the first question, you have a strategic plan. If you answered yes to the next two questions, you’re well on your way.

-Phil Wrzesinski
www.PhilsForum.com

PS If you would really like to see what a store of the future might look like, check out b8ta. I believe we will see more stores like this in the coming years.

PPS If you answered No to either of the last two questions, then ask yourself one last question. What will it take to get to Yes? Add that to your strategic plan.

Where to Spend the First Million

Reports are that Toys R Us has secured $3.1 billion in financing to get them through the holiday season. Thanksgiving is only nine weeks away. I have a plan for the first million dollars they should spend that will change the culture in their stores immediately and just in time for the critical holiday season. It will take about seven weeks to fully implement. Have David Brandon call me ASAP.

There are 866 Toys R Us and Babies R Us locations in the United States. I would fly the 866 store managers in to headquarters for a full day of training. That training would include a morning segment and an afternoon segment.

The morning segment would be all about toys and play value including:

  • The Importance of Play Value on Child Development
  • The Elements of a Great Toy
  • The Different Ways Children Play
  • Smart Toy Shopping

The afternoon segment would be all about hiring and training a staff plus how to raise the bar of customer service and would include:

  • Determining the Character Traits for the different positions on the team
  • Interviewing Techniques
  • Developing a Training program for New Hires
  • Developing a Continual Training Program for current staff
  • Raising the Bar on Customer Service

The morning would be about changing the way the company as a whole looks at the products they sell and gets them to shift their mindset away from “selling toys” to “solving problems” or “helping children develop.” As I explained previously, this is the direction they should have taken back in 1998 when Walmart surpassed them in overall toy sales. This is where they should have gone to reclaim their throne as the “king of toys.”

The afternoon would focus on raising the bar for the staff by finding better people, training them better, and creating a lasting program to continually raise the bar on their servicing of their customers. Even a big chain like Toys R Us that doesn’t offer a lot of fancy services like free gift wrapping or year-round layaway can still find new and better ways to treat customers by meeting and exceeding their expectations.

The managers would end the day equipped with new skills for hiring, training, and managing their staff while also teaching their staff and their customer base about the importance of their products and why customers should be choosing to shop at Toys R Us for all their toy needs.

Not only would Toys R Us see a profound shift in customer satisfaction this holiday season, but with better hiring of the seasonal staff, the managers would have a better pool of employees to change the culture of their stores going forward. Better hiring skills have a cumulative effect year after year.

The cost to TRU breaks down like this …

  • 866 managers flown in for training x $800 per person for flight and hotel = $692,000
  • Assorted costs for training room, lunches, and printed materials = $58,000
  • Fee for me to do 7 weeks of training (at 25 managers a day, it would take 35 days to see them all, or seven 5-day weeks) = $250,000

It would be the best million dollars they spend all year. But they better hurry. Thanksgiving is only nine weeks away.

-Phil Wrzesinski
www.PhilsForum.com

PS If you’re an independent retailer you’re hating this post. Everything I just explained that TRU should do is exactly what sets you apart from the category killer and big-box discounters you compete against. If you’re an indie retailer, though, you have secretly been scared that if the category killer in your industry ever “got it” and decided to do what I’ve outlined, it would make your job that much harder. Here’s the kicker. Do it first. Do it before they get smart.

PPS My rate may seem a little high, but that’s because I’m here to help my fellow indie retailers and small businesses succeed. If the chains want me, they’ll have to pay. You, however, can hire me to do all that for your business at fraction (very small fraction) of that cost. Get a couple of your fellow local retailers to join you and you can split it even further. Call me.

Lessons From Toys R Us

By now you have all heard about Toys R Us (TRU) filing bankruptcy. I have been personally tagged several times on Facebook linking to articles about the bankruptcy (a couple former staff members have even hinted I should reopen Toy House now.)

Here are some things you need to know.

Image result for sad face giraffeFirst, this is a Chapter 11 Bankruptcy which is a reorganization type of bankruptcy. The giraffe isn’t going away. They aren’t closing all their stores and liquidating. That’s a Chapter 7 Bankruptcy. Toys R Us is banking on being able to restructure (and relieve themselves from) their debt so that they have the operating funds to continue competing in the toy and baby retail industries.

Second, David Brandon, the former Athletic Director at my beloved University of Michigan, is not the cause of their demise. (Many UM fans who hated Brandon for his poor job hiring football coaches want to scapegoat him for this, too. It’s easy, but wrong.) They were in trouble long before he got there.

Third, this is not a happy day for the toy industry. Even though Walmart surpassed Toys R Us in toy sales in 1998, TRU still does a tremendous amount of business and sells a tremendous amount of toys. There are many vendors in position to take huge losses in this ordeal. While the big guys like Mattel and Hasbro can likely afford it, many mid-tier and smaller vendors would be gone without TRU. That doesn’t help the rest of the industry.

Toys R Us is also important for new toy launches. The big-box discounters want tried and true. Without a large store willing to take chances on new products, there won’t be as many new and innovative products from existing companies.

A lot of people have opinions why Toys R Us is where they are today. Many want to blame Amazon. Still others want to blame the economy. I’ve read articles bashing their expensive new headquarters building, their lack of leadership, and the leveraged buyout by Bain, KKR, and Vornado.

One article wanted to blame TRU for spending too much on their stores and not enough on their website. Considering that TRU reported $912 million in e-commerce and $11.54 billion in total sales, that puts their online sales at almost 8%. (For comparison, Walmart only does about 3% of their total sales online, but that is skewed by grocery.) While 8% is impressive, it doesn’t justify taking money from the part of your business that generates 92% of your revenue and giving it to the part that only generates 8%. 

My opinion is that they didn’t spend the money on their stores the right way.

The real demise for Toys R Us started in 1998. That is the year Walmart surpassed them in total toy sales by dollar (McDonald’s Happy Meal beats them both in units sold.) 

Toys R Us chose at that time to take on the beast to reclaim their crown as king. They didn’t stand a chance. Walmart had more stores, deeper pockets, a larger advertising budget, better operational efficiency, and no need to make money on a category they saw as a commodity traffic-driver.

Seth Godin said it best. “The problem with racing to the bottom is that you might win. Worse, you might finish second.” Toys R Us finished second and we all lost because of it.

Toys R Us allowed Walmart to dictate to the world that toys are commodities, not the valuable educational tools every specialty toy store owner and every educator in America knows them to be. Toys R Us allowed Walmart to dictate that price was the only reason to buy toys. Once Toys R Us decided to compete on Walmart’s terms, they were done.

Hindsight being 20/20, the best move TRU could have taken back in 1998 was to reestablish their position as the “toy leader” and put their emphasis on the value of toys as educational tools, on the value of toys for promoting growth and development, and on the importance of choosing quality toys for your children.

If toys were thought of that way today, Toys R Us would have diminished the commodity role of the big box discounters and strengthened the toy industry as a whole, while firmly establishing themselves as the clear “toy experts” instead of a warehouse full of only toys competing with warehouses full of toys, hardware, clothing, housewares, and grocery. It would have been a win-win for them and the industry as a whole. They weren’t going to beat Walmart at Walmart’s game and likely never would catch Walmart in total sales (Walmart now has over five times as many stores.) But had they played to their own competitive advantage they would still be the king perceptually and the industry would be better off for it.

That is the lesson. Play to your competitive advantage. Play on your terms, not someone else’s. 

Right now the conventional wisdom is that Toys R Us owns too much real estate. Their stores are too big and costly. They need to close them down and sell off the real estate and focus online. I wonder how different the tune would be if back in 1998 they decided to make their stores more friendly and welcoming, filled with toy demos and play areas. What if they turned their stores into educational meccas offering classes on parenting, programs for preschoolers, and events that drew traffic? (According to this article, that is a little of what they are trying to do.) Instead they turned their stores into brightly lit warehouses with minimal staff and an entrance that makes you feel like a common thief just walking through the door.

Real estate is only an asset or liability depending how you use it.

There is still a chance for Toys R Us to turn the ship around. But they need to sail into different waters. I know a little about sailing. If you know David Brandon, tell him to look me up.

-Phil Wrzesinski
www.PhilsForum.com

PS It may sound like I’m suggesting Toys R Us be more like an independent specialty toy retailer. Umm … Yes! They have a far better chance being successful in that playground than in the big-box-treat-everything-like-a-commodity-warehouse playground they’ve been playing in. They had it right in their Time Square store and oh so wrong in the 865 other locations.