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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.

Working “On” Part 5 – Evaluating Progress

We all dreaded the blue sheets. As camp counselors at Storer Camps, we had to write up an “evaluation” of every camper in our cabin. The blue sheet was the worksheet we used. It had spaces for us to mark their daily activities and a few questions where we wrote short answers about their time at camp including what they seemed to like most, their strengths, and areas where they struggled.

The blue sheet dates back several decades. I remember my mom getting them from my counselors back in the 1970’s. I remember my own trials writing them late at night by flashlight on the porch of my cabin just to get them done on time. I remember turning them in to my director for approval only to be asked to rewrite them because of penmanship or to change a word or phrase. No time off until your blue sheets were finished and approved.

I also remember reading them as a parent and appreciating the thoughtfulness and insight that went into them. It made my boys’ camp experiences more meaningful. It gave me an outsider’s perspective of my children, a valuable measure of their growth.

Evaluations can be viewed as measuring sticks. They show you progress when you compare them to previous evaluations. They are also maps because they show you where you are in relation to where you want to go.

You are already using tools to evaluate your business. Your Profit & Loss and Balance Sheet are two of those tool. Your GMROI and Turn Ratio are also tools used to evaluate your business. These are easy tools because they measure hard, fast numbers.

If your Game Plan, however, is to exploit your Competitive Advantage of having better people offering better services, you have to have a map that shows you where your staff members are in relation to where you want them to go. You have to have a tool for evaluating their progress.

Some consultants believe in commission sales as the tool to evaluate your staff. If their numbers are going up, then life is good. The problem is that commission sales don’t always work in every type of retail store, nor are they truly an accurate predictor of someone’s selling skills since luck and timing and many other factors outside of pure selling skills have an effect on the numbers.

Some believe in written evaluations—blue sheets for your staff listing their strengths and areas they need to improve. I tried those and got frustrated by them. Although they measured, they didn’t map. Plus they took a long time to process and complete. They were as discouraging as they were encouraging. On top of that, if you don’t evaluate fairly and honestly without emotion using concrete, specific examples of problems needing to be fixed, these written reports could come back to bite you in a wrongful termination lawsuit.

Written evaluations are best for documenting unacceptable behavior to protect yourself in termination cases, but they don’t work as well for motivating your staff to improve.

Here are the concrete steps I suggest for mapping a path for your staff.

  • Talk to them. Sit down every so often and just have an informal conversation.
  • Ask questions. Ask them how they are doing. Ask them what they are working on. Ask them what they have learned from the training program (that I know you have implemented.) Ask them where they see themselves in the big picture of the store. Ask them if they understand their purpose for being employed. Ask, ask, ask.
  • Give them praise. Praise them for what they have done, what they have learned, and where they are. Roy H. Williams said, “What gets measured gets managed, but what gets measured and rewarded improves.” Praise is often enough of a reward to get the improvement you seek.
  • Offer suggestions. Based on your observations of their work, coupled with their own beliefs of where they are on their journey, give them suggestions for what they can “work on next” to reach the goals you have already spelled out for your team. Give them concrete action steps such as reading certain articles or books, or watching certain videos, or working on a specific task.

Do it informally and do it often. Formal evaluations are scary and make your team afraid of you. Because of the amount of work involved, they also happen too infrequently to be of good value. Informal discussions following the format above build trust and help motivate your team. Plus they give you a much quicker read on the talent and potential of your current players so that it is easier to spot new, better talent when it comes along.

Combine these conversations with a kick-ass continual training program and you will see the progress before your very eyes.

-Phil Wrzesinski
www.PhilsForum.com

PS There are many who might disagree with this procedure. There are valid arguments for a formal evaluation process. If you are a small business with only a handful of employees, however, a formal evaluation process could be (or at least feel) overwhelming. Your true goal for evaluating your staff is to see where they are and motivate them toward the ultimate goal of being the best at serving your customers. Daniel H. Pink in his book “Drive” points to three things that intrinsically motivate your staff—Autonomy, Mastery, and Purpose. A simple measuring stick of growth compared to where you were previously is Mastery, but a map of where you are in relation to where you want to go is Mastery and Purpose.

Working “On” Part 4 – The Game Plan

When my dad retired in 2005 his biggest concern for me was what was my plan. He’s a football fan just like I am. We’ve heard coaches time and time again talk about their Game Plan for beating their opponent. We had a new opponent that had just opened in Jackson named Walmart. How was I going to beat them?

The newspaper had asked me a similar question when Walmart announced the opening of their super center in Jackson. “How will you compete with them?”

Phil Wrzesinski ringing birthday bell
Phil Wrzesinski rings the Birthday Bell at Toy House on 11-11-11

My answer to both was the pretty much the same. “We have over five times the selection of toys as Walmart and several services they don’t offer, not to mention the smartest staff in town. The better question is, How are they going to compete with us?”

Sure there was some hubris involved. You can be a little confident when you do have a plan.

Our Game Plan was simple.

  • Increase our levels of customer service.
  • Offer more in-store activities and events.
  • Create more memorable moments.
  • Set up more demonstrations and hands-on displays.
  • Write more powerful messages for our advertising and marketing.

We were going to take our competitive strengths and put them on steroids.

Even with Walmart opening that summer, in 2005 we had our largest Christmas season ever. Two years later we surpassed every record in top line sales. 2008 was looking to be another record-breaker, only falling short at the last moment. (I think the housing bubble burst had something to do with that.) 2009 was the most profitable year in the 60-year history of the store. Even when we decided to close seven years later, our share of our shrinking market was still holding steady, even with Amazon’s growth into toys.

The key to a successful Game Plan is two-fold.

First you have to get the strategic part right. I knew we couldn’t compete with Walmart on price. I also knew they couldn’t compete with me on service. If a football team has a great player no one can tackle, you keep feeding him the ball until they stop him. I was going to keep improving my customer service and in-store experience until no one could match it.

Second, you have to have concrete steps to achieve each point of your strategy. I created year-long training schedules to transform my staff, focusing on small, incremental improvements each month to reach our goals of better engagement with customers and better selling skills. As a team we evaluated our current event offerings and came up with new ideas to make sure we had something special going on every month. My buyers were instructed to look for more toy demo options from our vendors.

Believe it our not but our Birthday Bell—one of our customer’s favorite activities—didn’t come into existence until 2010 as we were trying to come up with ways to offer more memorable moments. (Nostalgia is one of our Core Values.) That bell is now at a local museum.

Here are the steps you need to take to develop your Game Plan.

  • Identify your Core Values. The most effective Game Plans must fit within and accentuate your Core Values. If they don’t, they won’t last.
  • Evaluate both yours and your competitors’ strengths and weaknesses. Be brutally honest. Figure out where you have the competitive advantage and where you don’t. Highlight and exploit where you are already better and concede (or at least don’t waste valuable resources) on the areas where you cannot win.
  • Develop concrete actions you can take to increase your competitive advantage that also fits within your Core Values.
  • Play the long game. If you already own the competitive advantage in an area of your business, growing it slowly and incrementally helps your gains stick better with your staff and customers. Every bit of growth is positive, no matter how small because everything you do builds on what you have already done.

Having a Game Plan gives you two other benefits.

First, it makes working “on” your business easy. You have the blueprint right in front of you at all times. You have your marching orders for what to do next. Your Game Plan determines the kind of people you hire and the kind of services you offer. It guides your decisions and makes those decisions easier. You even have the tools for measuring your progress.

Second, it keeps you from chasing after every new fad that comes down the pike. You and I both know how often we get bombarded by some salesperson with the “next great thing” that will transform retail. When you have a solid Game Plan you can determine much more easily if the next new fad fits for you or doesn’t. You can also see whether it will affect your competitive advantage or not.

Any coach can tell you that talent alone doesn’t win games. It takes a solid Game Plan that plays up your competitive advantage and solid execution of that Plan to seize the day. If you want to win in retail you need to schedule part of every week for working on your Game Plan.

-Phil Wrzesinski
www.PhilsForum.com

PS If you don’t have a competitive advantage, then you need a major disruption. You need to do something huge and wild and spectacular that sets you apart from your competition. Offer a brand new service no one else would ever think of doing (like Amazon did with drone delivery). Change up your product selection to get into a niche no one else is touching. Think of it as the trick play in football. No one saw it coming. Then build on the momentum it gives you.

PPS Not sure where your strengths and weaknesses lie? Check with your local business agencies. Some of them offer SWOT analysis (strengths, weaknesses, opportunities, threats) at low or no cost. Sometimes an extra set of eyes is all you need to see what you missed.

Working “On” Part 3 – Hiring a Manager

I’ve only been flown in for an interview once in my life. I went to the Catskills in New York to interview for a position running an experiential education and wilderness trip program. I was a perfect candidate for the job. Not only did I have the experience running a similar program in Michigan, this program also had a strong bike program and owned a fleet of several dozen bikes they had to maintain. I had spent my teenage years assembling and fixing bikes at Toy House. It was a perfect match!

I figured I had the inside track on this job. They flew me in so they must have thought quite highly of me. I had the perfect skill set. I also knew the other two candidates. Both were currently working in the program where I was interviewing. Both had previously worked for me. Neither had the experience in a managerial role I had.

Although I thought I interviewed well, I didn’t get the job.

Only later did I find out the guy doing the hiring had always and only promoted from within. He flew me in only because his boss demanded he interview someone outside the company. I didn’t have a chance. I never had a chance.

Hiring from within makes sense on the surface. You’re hiring a known quantity. You’re hiring someone who already knows your culture (and likely fits in). You’re hiring someone who already knows your procedures. You’re hiring someone who is already loyal to you. The risks seem low.

Laurence J. Peters published a management theory in 1969 about the promotion and hiring from within now called the Peter Principle. According to Wikipedia, the concept is “that the selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and ‘managers rise to the level of their incompetence.’ “

The risks may seem low, but the downside to the Peter Principle is that you end up with incompetent people at every level of the organization because you elevate people until they are no longer competent. Does that sound like a good plan?

You need to hire your manager the same way you hire anyone at your company. Make a list of all the traits and skills necessary for a person to be successful on the job. Then figure out what you can teach your new manager and what that person needs to bring to the table.

When you make a list for a sales associate you get different traits than your list for a store manager. A perfect salesperson is great at selling. A perfect manager is great at teaching and motivating. Yes, one person can be good at both. But if you are promoting your best salesperson to manager just because they are your best salesperson, you might have made two positions on your team worse off.

Your manager is most important hire you will make. Your manager is the person who gives you the most time to work on your business instead of in it.

Here are concrete steps you can use to find a great manager.

  • Make a list of the skills needed to be a great manager. That list better include the ability to teach, the ability to motivate, and empathy. You probably need to throw trustworthy onto that list, too, and the ability to learn.
  • Make a list of questions you can use to identify those skills in your candidates. Here are some on ability to teach and trustworthiness. Tell me about a time where you had to teach someone else a new skill. How well did it go? What would you do differently if you could go back in time? Tell me about a time when you weren’t able to keep your word. How did you rectify that situation later?
  • Talk to your current staff, especially the high performers who are great in their current role, but not necessarily skilled for the next role. Many people feel the need to want to move up the ranks. Your best salespeople might feel resentment if you pass them over. Talk to them about the importance of their current role and why you need them in that position. If it about money, give them a raise. If they are truly your best salespeople, they are worth it. If it is about power, give them responsibilities that fit with their skill set. They feel better, you feel better, and you haven’t promoted anyone to the level of incompetence.
  • Move “industry knowledge” lower down your list. Sure it helps if someone is as enthusiastic about your niche in the market as you are. But it isn’t nearly as important as the ability to learn, the ability to teach, and the ability to motivate other people. Given the choice between hiring someone who can step in and lead the team while they learn the products or someone who knows the products but is still learning how to lead, you know the smarter choice.

Your goal is to get the most competent people into every position possible. The manager role is the most important of all those positions.

-Phil Wrzesinski
www.PhilsForum.com

PS I have seen the Peter Principle in almost every place I have worked. I have even been guilty of it a few times myself. It never seems to end well. The easiest way to prevent it from happening in your business is to look at each role as being a separate position requiring separate skills, not a benefit or reward for time served or a promotion for those who do best in their current role.

PPS My son wrote a college entrance essay on “Leadership”. He identified empathy as being the most important character trait of a great leader. I couldn’t argue with his premise at all. Hopefully he still has that essay saved somewhere so that I can use it in a future post.

Retail is More Like Football

I am a Detroit Lions fan. There, I said it. That’s the first step to healing, right? I got to watch my Lions play yesterday. Owning a toy store was probably the best thing for this Detroit Lions fan. I never got too invested in their season because I knew I’d be too busy on Sundays in November and December to pay attention to the team. The let down each year wasn’t as bad because of that.

Related imageLast year’s record-setting eight come-from-behind-in-the-fourth-quarter victories was quite exciting, followed by another season-ending debacle all too familiar to die-hard Lions fans. Lots of people want to blame the coach. Others want to blame the now highest paid player in the league, quarterback Matthew Stafford. Some want to blame the organization as a whole. I’m in the latter category.

Although teamwork is important in all of the major team sports, it is at its highest in football. A great goalie in hockey or a mega-star in basketball can change the tide in those respective sports. Baseball is a team sport built almost exclusively around individual actions and talent. But football is truly about eleven guys doing their prescribed job in sync with each other. And even that isn’t enough.

Success in football only happens when the entire organization is in sync and performing at peak. Success happens when the front office brings in the right kind of talent and personality to fit the values of the coaching staff. Success happens when the scouts figure out the best schemes to combat the opponent’s tendencies that also fit with the talent available. Success happens when the coaches are able to teach the players the right schemes and the players are able to execute those schemes.

Individual talent is important, but not the only thing. The Lions had Barry Sanders, arguably the best running back in the history of the game, and still managed to miss the playoffs almost every year.

Retail is far closer to football than the other sports. To be successful you have to have a game plan that not only fits the talent on your team, but also takes into account the talent and tendencies of your competitors. To be successful you need more than just a mega-star, you need a team working together. You might have the best salesperson on the planet, but all her hard work can be undone by an unskilled cashier or dirty restroom. She might not even get to use her skills if your website fails to deliver or the person answering your phones hasn’t been trained.

You can limp through retail with a bunch of mediocre 8-8 seasons, and even earn a living doing it. For some, that is enough. For those of you reading this blog, that isn’t enough. You want to taste the champagne.

So let me ask you …

  • Are you putting in the same kind of effort a football team puts into the scouting of new talent?
  • Are you studying your competition to help you create game plans for how you will beat them?
  • Are you hiring coaches (managers) who can teach your game plan to your team?
  • Are you evaluating your game plan on a regular basis?
  • Are you evaluating your talent and their ability to execute your game plan on a regular basis?

All football teams do this. The ones that do it best win divisions, win playoff games, win Super Bowls. Your competitors are doing this. When people talk about working “on” your business instead of “in” your business, those bullet points are the place for you to start.

Huddle up. Your season is upon you.

-Phil Wrzesinski
www.PhilsForum.com

PS In the coming weeks I will give you concrete actions you can do for all five of those bullet points. In the meantime, start figuring out what you need to do to give you more time on than in. You’re going to need it (and it will definitely pay off).

Handling the Unruly and Rude

I was talking with some fellow retailers at a trade show recently and the discussion came around to the perceived higher level of rudeness and unruliness among customers. I say “perceived” because everyone felt it, but no one had actually measured to know if it truly was more than before. Our guts said “more” but it could also be that we were more sensitive to it. It could also be that those who were rude were no larger a crowd, just louder.

While there are many theories why there might be more rudeness and unruliness in the world, we felt it best to focus instead on how to diffuse the angry, rude customers when they showed their ugliness. One thing became clear in our conversation …

When you answer rudeness with rudeness you get more of the same. 

It is entirely justifiable to treat rude people the way they treated you. But it doesn’t make things better. It doesn’t even feel good to you except for a fleeting moment. More often it just escalates the situation. An eye for an eye and everyone goes blind.

At the same time, simply ignoring it doesn’t help either. When a customer treats you or your staff with extreme rudeness, you have to stand up for yourself and your team, otherwise you are condoning that behavior. How you stand up for yourself, however, can make or break the relationship you have with that customer.

Understand that rudeness often comes from ignorance, entitlement, or someone simply having a bad day and taking it out on you. Rarely is it intentional and done specifically to harm you. More often the person being rude doesn’t even recognize it.

Here is the phrase I found most helpful when confronting a rude customer …

“I’m sorry. Is there something wrong?”

This puts the burden on the customer to explain her behavior. Often this question is all it takes to turn that behavior around, especially if their rudeness comes from having a bad day.

Sometimes they do have a problem and this question gives them the space to air their complaint. Having someone listen to their complaint is another quick way to end rudeness and unruliness. Most people just want to feel that they are being heard.

Sometimes their problem is legitimate. They have a real reason to be unhappy. If that is the case, follow up with this question …

“I’m sorry. What can I do to make it right?”

Over my twenty-four years of retail I have asked that question dozens of times. Never once has a customer asked for more than what I was already willing to do to make it right. Not once. More often than not their answer was far less than I planned to do.

Notice how both of those questions address the behavior without stooping to similar behavior? Both of those questions get to the root of the rudeness, whether it comes from ignorance, entitlement, or just having a bad day. Both of those questions put the burden on the customer to justify his or her actions in a non-confrontational way.

I have asked those questions of some of my favorite and best customers. I could have just “fired” them and told them to take their rudeness elsewhere. Instead I treated them with dignity and kindness without letting them get away with their behavior. Their behavior changed and it paid off huge in the long run.

You can debate all you want on whether there is more rudeness, whether we are more sensitive to rudeness, or whether the rudeness just seems to stand out more.

Me? I’m more interested in finding tools that work to diffuse difficult situations when they arise and turn unhappy customers into evangelists for your brand. I hope you are, too.

-Phil Wrzesinski
www.PhilsForum.com

PS Those two questions work in many situations beyond retail. Try them and see what happens. I believe you will be pleasantly surprised at the results.

PPS I have only asked one person to never set foot in my store again because of rudeness, and he was a sales rep.

A Place for Everything

This week marks my last week on the water as the sailing instructor for YMCA Storer Camps. Next Monday I have to do my least favorite job—putting stuff away. I hate it. I hate cleaning up. I hate filing papers. I hate organizing and sorting. Oh, don’t get me wrong. I love it when things are well-sorted, organized, labeled and put away properly. I love it even more when somebody else does it.

Image result for ymca storer campsDon’t judge me. You have something in your business you hate to do. Maybe it is managing your social media. Maybe it is running your special events. Maybe it is your bookkeeping. Sometimes you can hire others to do it. Sometimes you have to bite the bullet and do it yourself.

I’m biting the bullet for four reasons:

  • It needs to be done.
  • It’s my job to do.
  • I know exactly how I want it done.
  • I want to make life easier for those who come after me.

I’m spelling this out to give you some ideas how to muscle through those things you don’t like to do. Yes, it takes some justifying. Yes, it takes some convincing of the mind that it will be worthwhile. Yes, I have scheduled when I’m going to do it. Yes, I have already gathered supplies I need to do it right. Monday will go smoothly and quickly and I’ll feel a whole lot better when it is done.

When you find yourself in this situation understand that you are not alone. We all have that one thing (or two) we hate to do. Whenever possible hire someone amazing who loves to do what you don’t want to do. If you have to bite the bullet and do it yourself, remind yourself why you want it done right and then schedule time to do it.

-Phil Wrzesinski
www.PhilsForum.com

PS Scheduling is the key. It is too easy to put off the things we hate to do if they aren’t on the schedule. They’ll never be a high enough priority to make it to the top of your to-do list on their own.

PPS “I want to make life easier for those who come after me.” That reason fits in with my core value of Helping Others. If you can find a reason to do what you don’t want to do that aligns with one of your core values, you’ll find the job a whole lot easier to do.

When the Boss Plays Favorites

I spent the summer of 1992 working for the Los Angeles Unified School District teaching team building and leadership skills to inner-city kids. It was one of the most meaningful and wonderful jobs I’ve ever held.

Part of it was the difference we were able to make in the lives of these kids. Part of it was the camaraderie of our team.

Dana, our fearless boss, had a style I have tried to emulate ever since. He treated everyone on the team equally. He gave everyone an equal chance to do the jobs. He gave everyone a fair shake at learning the roles we had to play. He never played favorites with any of us.

Image result for playing favoritesBelieve me when I tell you it is hard not to play favorites. As a leader, you tend to rely on one or two team members you know you can trust. You give them the better shifts. You give them the better duties. You forgive them quicker.

The problem with playing favorites, even if done unintentionally, is that it destroys morale on the team. Your staff sees it when it happens. Those that aren’t the favorites will either resent it or resign themselves to not feeling any need to improve.

Here are some ways Dana kept from playing favorites.

He made us all feel special. Dana went out of his way every day to praise everyone on the team both privately and publicly. He made sure you knew what you were doing well. He made sure everyone knew what you were doing spectacularly. That constant praise, especially in front of the group, of everyone meant that he valued us all equally.

He gave us all equal treatment in job assignments. Everyone got to lead. Everyone got the “shit detail.” Everyone got support roles. While it might be easiest to give all the solos to the best singer, Dana’s job was to turn us all into the best. He made sure we all got the chance to shine.

He was honest and honorable in his words. There was nothing he ever said to any of us that could not be repeated. He told us straight up when we screwed up (and made sure we learned from our mistakes). He only spoke in positive terms of growth and learning. He never gossiped.

If you’re playing mind games with your team; if you’re keeping secrets within and from your team; if you’re gossiping about team members to other team members, you’re creating a culture of favoritism. Take it from Dana. If you want a crack team from top to bottom, you need to keep favoritism off the table.

-Phil Wrzesinski
www.PhilsForum.com

PS If you only feel like you can do one thing, do the first one listed above. Make every single individual on your team feel special and important and noticed. Praise them constantly both publicly and privately. You will change the culture almost instantly.

PPS I am a big believer in the ideal of “best players play”. Retail isn’t little league where everyone gets a medal for participation. But it also isn’t the Major Leagues where you better be ready when you get there. Your job as manager is to teach people up and get them all to play like all-stars. When Dana gave us activities to lead, he first made sure we had the skills to lead.

The Scary Truth of Averages

“Have you ever noticed that everyone wants to be normal but no one wants to be average?” -Roy H. Williams

Did you hear the one about the statistician that drowned in a river with an average depth of three feet?

Image result for averagesIn business, everyone wants to know the averages, the average cost of rent, the average sales per square foot, the average level of inventory, etc. Averages are interesting. They can be a nice benchmark, but they can also be misleading, and sometimes downright dangerous.

Take, for example, average inventory at cost (a number you should all be tracking). If you were an average toy store doing around $500,000 a year in sales, your average inventory at cost would be around $100,000. But if you are that same toy store, your Thanksgiving to Christmas sales will likely be around $200,000, or pretty much all of your inventory if you only had the average on hand. As nice as it would be to sell to the walls, so-to-speak, you know you can’t sell it all. You also know you need some inventory in January for birthdays and post-Christmas.

Just trying to keep your store at the average will kill your holiday sales. You’ll need a lot higher inventory to start the busy season and much lower inventory the rest of the year. Rarely will you ever have the “average” amount of inventory on hand.

Another problem with that average is that $100,000 worth of toys looks a whole lot different in a 2,200 square foot store than it does in a 1,100 square foot store.

The bigger the store, the more creative you may need to be with your merchandise to keep the store looking stocked and full. The smaller the store, the more creative you may need to be with your merchandise to fit it all in. Sometimes your store space dictates your inventory levels more than just sales or industry averages.

Averages are a nice starting point, but it is worth exploring all the reasons you might deviate from the average, and be okay with those reasons.

For instance, my payroll at Toy House was a significantly higher percentage of our expenses than the average toy store. But I could afford that because my rent was significantly lower. Our sales per square foot was extremely low compared to the average, but that was because we had wide aisles to allow for shopping carts, four cash registers lines, a large gift-wrapping area, and a stage with seating/playing area—in other words, a lot of square footage not used for showing merchandise. Our average ticket, thanks to shopping carts and toy demos however, was significantly higher. Each deviation from the norm was on purpose and with a purpose.

I do many talks about the financials of independent retailers. Whenever possible I try to use an average store for that industry. But I remind everyone in attendance that these numbers are average and they should be striving to be spectacular. If all your numbers are average, you haven’t found the place to stand out and make a name for yourself.

In retail, there isn’t a prize for being normal.

-Phil Wrzesinski
www.PhilsForum.com

PS The upside to averages is that they give you a quick check of the health of your business. If you have a number way off from the averages and you don’t know why, that might be a good place to focus your time and energies on changing. The downside is that you don’t ever want to be an average store. You are destined for greater than that.

PPS Rent per square foot and sales per square foot go hand in hand. You need to be selling at least 10x more per square foot than what you pay in rent (if your profit margin is around 50%). That’s a far better benchmark than average rent or average sales per square foot for your industry. Those averages tell you nothing.

Don’t Get Stuck in Irons

As I tell my sailors every morning, we cannot control the wind, but we can control the direction of our boat and the trim of our sails. Time and time again we talk about how sailboats cannot sail directly into the wind, only at angles to the wind. When your boat is pointing directly into the wind, it is called being in “irons” because you feel shackled and cannot move forward.

Image result for sailboat in ironsYoung sailors learn quickly, however, that they have to turn the boat through irons to get from one angle to another to go upwind. To turn successfully, they have to fully commit to the turn. Make a gradual or wishy-washy turn and they risk getting stuck in a position where they cannot move forward.

In fact, one of the commands we shout during turning is, “Hard to the lee!” which means the helmsman must push the tiller hard to the leeward side of the boat to make the boat turn. We don’t say, “Easy to the lee,” or, “Gradually to the lee.” The command is “Hard!” Commit fully to the turn and do it hard and fast.

That lesson applies to your business as well. If you need to change your business—maybe change the way you are advertising, or change the way you are hiring, or change the way you are pricing, or change the way you service your customers—the best way to make that change is hard and fast. Commit fully to the change and get it done.

When sailboats turn fast, they do tip a little. Smart sailors are prepared for this and use it to their advantage to keep their boat speed up. When you make hard, fast changes, your business will tip a little. If you have prepared well for the change, you’ll be back up to speed quickly.

If you try to make a gradual change, however, you’ll get stuck halfway between the old way and the new way. You’ll give the employees and customers who hate change (no matter how necessary) more time to build up their defenses against it. You’ll be stuck in irons, unable to complete the change and move forward.

You cannot control the economy, but you can control the direction your business is facing and how you operate it. When it comes time to make a change, pick a direction and go there hard and fast.

-Phil Wrzesinski
www.PhilsForum.com

PS Change is not easy. Even in sailing I teach my kids to first commit hard to one direction and don’t change directions until necessary. We also plan our changes well in advance. Take all the time you need to plan your change so that when you start the change, you can make it hard and fast. The better you plan, the more smoothly it will happen. I spent most of 2005 and part of 2006 planning a new layout for our store. We were able to move every single product and every single shelving unit in a 30,000 sq ft store including the location of our six cash registers in just three days. In other words … Plan Slow and Change Fast. That’s how you keep a sailboat and a business humming along.

PPS Sometimes the wind changes directions and you find your boat stuck in irons without warning. The faster you notice, the easier it is to adjust your boat and get unstuck. Sometimes the economy or the industry or the traffic changes. The faster you notice, the easier it is to adjust your business and get unstuck.