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Self-Employed or Working for the Landlord?

When Toys R Us closed their Times Square store at the end of 2015—the one with the giant T-Rex and the three-story Ferris wheel—the biggest reason given was the landlords raising the rent from $12 million a year to over $52 million a year.

Image result for toys r us times squareYeah, that would be a hard expense for any retailer to cover, let alone one that was already struggling.

While the financial model is certainly different for big-box stores than it is for indie retailers, one thing that is universally true is that there is only so much profit margin you can spend on rent and expect to run a successful business.

For the typical indie toy retailer, occupancy costs (rent/mortgage and common area fees) need to be around 10-12% of gross sales for the store to be able to safely cover those costs. In fact, for a lot of businesses where keystone pricing is the norm, that number tends to hold true.

For Toys R Us, that would mean doing $100-$120 million in sales at the Times Square location. I can see that as a realistic number. But to pay $52 million, they would need to do half-a-billion in sales, over $24,000/sq ft. Even Apple couldn’t do that much in that space.

The 10-12% occupancy cost is a benchmark I use when talking to retailers about locations. Yes, you might pay a little more for a better location, but you should expect a little more in traffic and better clientele. Yes you can find locations cheaper, but you might have to pay a little more in advertising to draw traffic to your store.

But occupancy cost is only half of the equation. Here is one other number I want you to look at.

How much are you paying yourself?

Take your salary (you are paying yourself a salary, right?) and your net profit for the year. Add those two numbers together. Who made more, you or your landlord?

If you made more than your landlord (or even the same), pat yourself on the back. You are self-employed and running a smart business (as long as you’re paying yourself something, and not just reinvesting every dollar back into the business.)

If your landlord made more than you, something needs to change. You aren’t working for yourself. You’re working for him. Better for you to close shop, buy the building, and rent it to some other poor sap willing to pay you to keep their hobby afloat.

I know that sounds harsh, but it is a reality of business. If you aren’t making as much as your landlord, something needs to change. You need to sell more. You need to increase margins. You need to find a cheaper location. Something.

Or you can just accept that your business is simply a hobby and treat it as such.

I want you to make money. That’s the only reason I bring this up.

-Phil Wrzesinski
www.PhilsForum.com

PS Before you go lambasting me because your numbers don’t match, I fully understand that your industry may be completely different. If you belong to a trade organization, see if they have done any benchmark surveys to give you an accurate picture for your industry. Before you waste your breath on all the reasons why you aren’t making as much as the landlord (the only valid one being you are still in start-up phase), this isn’t about me. It is about you. I want you to be successfully self-employed. The landlords are already making too much. You should, too.

PPS I’ll put my thoughts why you should pay yourself a salary and whether it is better to own or rent in future posts.

Good Idea, Poor Execution

I need new tires for my vehicle. I’ve been through this process before. It used to be easy. I had a downtown Goodyear Tire place. I went there. Supported my fellow downtown business. They always took care of me. Knew me on a first-name basis. It was only two blocks from Toy House. No worries.

They’re closed now.

Image result for goodyear assurance tripletred all-seasonSo I did what a lot of people do these days. I went online.

Let’s face it. Tires are scary. There are so many different makes and models. Each vehicle has its own requirements. Without trust between buyer and seller, it is easy to feel afraid of being ripped off. I wanted to know more about tires before I set foot in a store. I wanted to research different models, check prices (last time I got tires there was a $250 difference between the tires I got and a couple other places offering the same tire), and be prepared.

I’ve always been a fan of Goodyear, probably because of the Goodyear store downtown, probably because there used to be a Goodyear plant in Jackson that spent a lot of money at Toy House both as a company and the individuals that worked there. I found myself on the Goodyear website comparing different models the right size and style for my vehicle.

The website was good. It had side-by-side comparisons, reviews and ratings, plus all the specs like warranty, fuel-efficiency, season, comfort, etc. I narrowed it down to a couple choices and felt a whole lot smarter.

GOOD IDEA

Then the website took it a step farther. I had the ability right then and there to purchase the tires online and have them installed locally. Before I clicked, however, I went to a few local tire place websites to compare prices. No one had the tire I wanted as an offering, but their pricing on the other Goodyear tires was similar to the Goodyear site. I felt a little more confident that I was getting a fair deal.

The good idea at Goodyear was to get the purchase right away. Don’t let me go to a local shop and have them sell me on some other brand. When I clicked on the purchase button, it then gave me a choice of shops in the area where I could get those tires installed. Even better! I knew most of them, but didn’t have a relationship with any of them, so I chose the place closest to my home.

Then the Goodyear site let me choose an appointment time. It had to be two days or more later. That made sense to me, since the shop might not have the tires in stock. I chose two days later at 10am, paid for my tires, and got my confirmation email.

I will be willing to bet this website drives a lot of traffic to these tire shops because of people like me shopping online.

POOR EXECUTION

This morning I arrived for my appointment. No tires. The delivery truck doesn’t arrive until the afternoon. Plus, even if the tires were there, the shop had already booked all their bays for the morning. The shop had only received the email from Goodyear about the shipment and appointment this morning.

The guy at the shop was quite apologetic. He said he has this problem with Goodyear all the time, even though he has called them several times trying to get minor changes to their program like scheduling out three days instead of two so that he was sure he would have the tires on time and be able schedule installers. They tell him, “Sorry, that’s the way we do it.”

Fortunately for this shop, and for me, I have a wide open schedule this afternoon. So does the shop. As soon as the tires land I’ll be back and they’ll be able to get me right in. But just imagine the person who had to work their whole schedule around this appointment.

Maybe you had to drop off the car before work and find someone to take you to work, then pick you up after. Maybe you had to get a babysitter because you didn’t want to take your two-year old to sit in the waiting room of a tire shop. Maybe you had a business meeting out of town in the afternoon and really wanted those new tires before making a two-hour drive. Maybe you were leaving on vacation and were waiting on another paycheck to afford the tires, scheduled the purchase as soon as possible, but now had to delay your entire vacation a day because of this fiasco?

Can you imagine any of those people being completely upset and irate? Can you imagine any of those people taking their frustrations out on a tire shop manager for something that was totally out of his control? Can you imagine any of those people writing bad reviews of the tire shop on Yelp?

VENDORS ARE PARTNERS

As a retailer, I understand the flow of products. If I had called this shop directly, placed the order, and made the appointment, only to find that morning that they didn’t have my tires, that would have been one thing. But these guys were at the mercy of Goodyear (and, by my guess, the mercy of Goodyear’s web guys not knowing how to add holidays into their calendar).

I applaud Goodyear for taking the steps to offer this service online. That’s what a good partner does—drives traffic into your stores.

I chide Goodyear, though, for not understanding the levels of frustration and complaint they also cause their retailers because they don’t listen and adjust the system to fit the retailers. I hope the tire shop makes their full margin on these tires, if nothing else but for the hassle of having to work around Goodyear’s “system.”

In fact, I’m going to ask if that’s the case so that next time I need tires, I can find a way to make sure my local stores get what they deserve.

If you have a vendor who is truly your partner, driving traffic into your store, thank them and support them!

If you have a vendor who is causing your customers to hate you because of things out of your control, send them this blog post. 

If you are a vendor, recognize that you can do just as much damage as good, especially when you don’t listen to your retailers.

-Phil Wrzesinski
www.PhilsForum.com

PS Just a cautionary tale for vendors … I have known several vendors over the years who have offered programs to try to drive traffic into stores, but either didn’t consult the retailers first, or ignored their suggestions. The programs always fell flat and often turned the retailers off from buying their products. Many of those vendors are now out of business.

PPS This goes for retailers, too. You are a partner with your customer. Before you start offering something you think is good for the customer, you might want to first ask your customer exactly what she wants. I’ll tell you a tale tomorrow about what I learned when I asked my customers questions.

Some Inventory Management is a Customer Service Issue, Too

My mom shops like a man. Get in, get what you need, and get out. Her lifetime of being raised in retail, her always efficient use of time, and her preference to spend her free time playing golf, playing bridge, reading books, or doing cross-stitch needlepoint all have led her to this shopping style. Oh, she’ll browse the dozens of catalogs she gets in the mail each week, but spending a day at the mall is not her idea of a great time.

Even in a book store, her favorite form of shopping, she’s a hunter more than a browser.

Last weekend, however, she took my boys on a shopping trip, hitting several stores in the Ann Arbor area. Of course, she hit those stores the way she always does, with purpose, focus, and an eye for efficiency. At one point in Macy’s, while my older son tried on some shorts, she asked my younger son to go find a cash register that was actually open. Her keen eye had not seen any employees at any registers yet, and she had to have her exit strategy mapped out.

She’s training my boys to shop like her, much in the way she trained me. When I’m in buying mode, I go in, get what I want, and get out. If I’m in a store to browse, I’m doing it to gather information for future blog posts, researching for my clients, or spending time with friends who love to shop (while I’m doing research.)

You might think from that description that my mom and I are mostly Transactional Shoppers who know what they want and are just on a hunt to get the best price. You would be wrong. Other than my bad habit of Diet Mountain Dew (I call it my “green tea”) that I’ll buy wherever it is on sale, I have my favorite stores where I’ll go first for all my needs. My mom is the same way.

If you consistently have the stuff we want, we’ll consistently shop at your store—even if someone else is selling it slightly cheaper.

The key phrase is “consistently.” If you are often out-of-stock of the items I regularly buy, I’ll stop shopping at your store, no matter how well you treat me.

Image result for empty shelvesIn a few days I’m going to give a new presentation at the American Specialty Toy Retailing Association (ASTRA) Marketplace & Academy. The title is “Profit Margin is Not Your Only Money Maker”. The premise is about how and when to sell lower-margin goods. One of those times is when you are the store people “expect” to sell that product. You don’t want to disappoint those customers and drive them away.

Not all hunters are Transactional. Some like to hunt at your store because they always know they’ll find their prey. Listening to my mom regale the tales from shopping with the boys reminded me of that important distinction.

Ask yourself …

  • What products do you sell on a regular, consistent basis, day-in-and-day-out?
  • What products do you sell at the highest turn ratio?
  • What products do people walk in asking for directly the most because they expect you’ll have it?
  • What products do you know your customers will buy online if they can’t get it at your store right now?

Those are your Must-Haves. Those are the products that keep your Relational Customers like my mom and me happy.

-Phil Wrzesinski
www.PhilsForum.com

PS Identifying the Must-Haves helps with your buying. If you need to add to the order to reach a better deal, add some Must-Haves. Identifying the Must-Haves helps with your marketing and advertising. Being out-of-stock often is one way to get bad Word-of-Mouth circulating. Identifying the Must-Haves helps with your overall customer service. The more your staff can say, “Yes we do!” the better they feel and the better the customer feels.

Convenience Versus Experience (One More Time)

Yesterday I posted a blog titled “Convenience Versus Experience.” Today in my inbox I get an email from one of the retail news outlets I subscribe. The subject line?

“Convenience vs Experience: What matters most to shoppers?”

It was a white paper on shopping habits. Yes, I had to download it.

Oracle Bronto did a survey of shoppers’ habits by age, income, children in the house, and need, to see how frequently people shop online, in stores, or both. Excluding grocery and convenience stores, the survey covered a lot of ground and revealed some interesting stats. (You can click on the link at the beginning of the paragraph to download the full results yourself. Just beware that Oracle is going to ask for all your info and try to sell you on their Bronto email software.)

One surprising stat was that Millennials were most likely of the age groups to shop often, and they shopped equally in stores and online. Bet you didn’t see that coming.

Another surprising stat was that Boomers were the group most likely to go online when they did go shopping. (They also shopped the least.)

Not surprising was that the more money you made, the more likely you would shop often.

Here is what the survey didn’t tell me …

It didn’t tell me how many times a customer went shopping in stores for Convenience versus Experience. One of the assumptions was that people shop online purely for Convenience and shop in stores purely for Experience. Unfortunately that assumption is false.

I’ll bet you know people who shop online for the experience, or at least to avoid the experience of shopping in stores. I’ll bet you also know people who shop in stores because they want the item today (convenience).

Hardware stores, for instance, were not excluded from the survey. When I go to a hardware store, it is for the convenience of getting the part I need to get the job done now (or at least within the next three trips.)

The one takeaway worthwhile is that people shop a multitude of ways by choice.

The only question you have to answer is if you are giving them enough reasons to choose you.

-Phil Wrzesinski
www.PhilsForum.com

PS Even though their original question of “Convenience vs. Experience?” is flawed, the results of the survey are quite fascinating. It might be worth coughing up your spam-folder-email-address for the download.

Reading Better, First Impressions, and Setting the Mood

One of the fun things about moving is finding your “memory boxes”. One of mine was falling apart so I had to dig through everything and transfer it all to a new box. Yeah, that took a lot longer than it should. (Remember, one of my Core Values is Nostalgia.) One item I found that brought back a flood of memories was a short story I wrote back in 1990 about a spring break trip to Colorado and Utah.

Back in 1990 my favorite author was Pat McManus, a humor writer who wrote columns for Outdoor Life, Field & Stream, and other magazines. Pat also wrote several side-splitting books about camping, hunting, fishing, and growing up in the 1930’s and 1940’s in the great outdoors. Rarely did I go camping without one of his books stashed in my backpack. It was a necessary weight.

Not surprisingly, my writing style for my short story back in 1990 was quite similar to Pat’s humor.

Back in 2005 Roy H. Williams told me that if I wanted to learn to write better, I needed to read better. In my notes from one of Roy’s workshops I had circled a book idea, Poem A Day edited by Retta Bowen, Nick Temple, Nicholas Albery, and Stephanie Wienrich.

Poetry is the language of emotions. Advertising works best when it reaches you on an emotional level. Poetry is looking at ordinary things from unique and surprising perspectives. Advertising is giving your potential customers a new way to look at your business. Poetry uses interesting word combinations to set the mood. Great advertising uses interesting word combinations to get your attention.

Back in 2010 I did a staff training using the opening lines from several great books such as …

“It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”  Jane Austen – Pride & Prejudice

“There was a boy called Eustace Clarence Scrubb, and he almost deserved it.”  C.S. Lewis – The Voyage of the Dawn Treader

“Far out in the uncharted backwaters of the unfashionable end of the Western Spiral arm of the Galaxy lies a small unregarded yellow sun. Orbiting this at a distance of roughly ninety-eight million miles is an utterly insignificant little blue-green planet whose ape-descended life forms are so amazingly primitive that they still think digital watches are a pretty neat idea.”  Douglas Adams – The Hitchhiker’s Guide to the Galaxy

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin.”  A.A. Milne – Winnie the Pooh

In that same meeting I played the opening music from Aaron Copeland’s Fanfare for Common Man, Beethoven’s Fifth Symphony, and The Who’s Baba O’Reilly.

We talked about how the opening sets the mood for everything else. We talked about the importance of first impressions. We talked about rhythm and feelings. We also talked about all the “openings” a customer has at our store.

It isn’t just the greeting that sets the mood.

We identified the following “first impression” moments:

  • Phone
  • Parking Lot
  • Front Window
  • Front Door
  • Store Atmosphere
  • Appearance of Staff
  • Greeting

Notice how many “first impressions” happen before you even say, “Hello. Thank you for coming in,”? That’s a lot of mood setting and emotion-creating before you even open your mouth.

When you read better, you write better. When you visit better stores and truly look at the moods and emotions they are trying to evoke, you’ll have better ideas for your own store.

Take that list above and go visit your favorite stores. See if you can figure out who is making the best first impressions. Then go back to your store and see if you can figure out what first impression you are giving your customers.

The better your first impression, the easier it is for your staff to make connections and build relationships necessary to compete in today’s retail climate.

-Phil Wrzesinski
www.PhilsForum.com

PS When you visit other stores, take good notes. When you attend workshops and presentations, take good notes. Then revisit your notes often. I don’t just look at those notes for a walk down memory lane. I read my notes from old workshops because there are often more nuggets in there than I could ever possibly remember. Sometimes when you get home from a presentation it isn’t the right time for one of those nuggets. But when you revisit it later, the timing may be perfect.

PPS Yes, in some ways this is a meta-post. Notice how my blogs often start with a story? Stories are powerful tools in advertising because they get your attention, speak to the heart, and are more memorable. In other words, they set the mood and make a good first impression. If you set the wrong mood, you put up obstacles to sales. If you set the right mood, you grease the skids for sales. I was lucky in that Toy House was a downtown business, but with our own parking lot. But you should have seen how I fretted about the cleanliness of that parking lot—especially in the winter.

Here is What Winning Looks Like – Sweetlees Boutique

Sometimes it is easy to talk about the mistakes retailers make and simply caution you to not make those same mistakes. I’d like to share with you a story of an experience that went right. A long-time Toy House customer, my boys’ piano teacher, and dear friend Jen sent this to me. In her words …

“Well, the basic story was this…. you know where it’s going right?

Image result for sweetlees boutique mason miI went to a small locally owned (in Mason, MI) women’s boutique, Sweetlees Boutique. (Because I will tell everyone about how amazing it was, and where to find them—160 E. Ash St, Mason, MI 48854.) The workers were so attentive offering to find you sizing, suggesting things they thought would look good on your body. They were fitting both my mom and I who couldn’t be more different in that department, and they did a fabulous job, asking questions, and pulling pieces for us to look at or try. Amazing experience. Both my mom and I purchased something. It was our first time there and we will definitely go back again.”

Let’s unpack that to see what they did so right.

“The workers were so attentive …”

How many times have you been in a retail establishment where you couldn’t even find an employee, let alone one who seemed remotely interested in helping you? The Wall Street Journal just wrote Monday about the dearth of employees in retail stores. Macy’s has cut 52,000 workers since 2008. Think about that number when you’re looking for someone the next time you visit a department store.

Think even harder about that number when you’re making out the next schedule for your store. Are you making a schedule to minimize payroll or maximize sales? If you think of your staff as your greatest expense, you’ll do the former. If you think of your staff as your greatest asset, you’ll do the latter.

“… suggesting things they thought would look good on your body.”

At one time this was the norm in a women’s clothing store. It was the expectation. Anything less and you would be writing a different review. Today it seems new and different and special.

That’s the one good thing you need to understand. The overall bar for customer service has been lowered so far that just doing the things you’re supposed to do will make you stand out in the crowd.

A properly trained and properly motivated staff can do wonders for the way your store is viewed compared to the competition. While everyone is all worried about high-tech this and omnichannel that, going old-school will win the day more often than not.

“… they did a fabulous job, asking questions, and pulling pieces for us to look at or try.”

Once again, a properly trained staff makes a huge difference. This team knew that by asking questions they could get to know the customer better. Getting to know the customer better allowed them to pull better pieces that more closely matched the customers’ needs.

Every customer that walks through your door is there to solve a problem. The problem might be as simple as killing time. It might be as complex as buying the perfect series of gifts for the hardest person on your list. You don’t know the problem until you ask. (And you won’t get the answer you need if you haven’t first made a connection.) This doesn’t come naturally to everyone. You need to train your staff by showing them how, role-playing it, and practicing it. The stores that do that best are the stores that are winning.

“Both my mom and I purchased something.”

You have a lot of hurdles to overcome to get a sale from a first-time visitor. You have to make her feel comfortable. You have to figure out the problem she is solving. You have to present her with a valid solution. You have to overcome her hesitations and objections. You have to make her want the solution more than she wants her money. All of those are actual steps in a process. One misstep and it’s a no sale.

We call it browsing because many times customers want to go into a new store just to get a feel for the place. No pressure to buy, just a scouting trip to see if they like it. Sometimes you get lucky and they fall in love with a product by accident. That isn’t selling. That’s clerking. Anyone can do that.

If your sales team is waiting for the customer to come up to you, many of them won’t and you’ll have lost out. If your sales team hasn’t made a connection, unless she falls in love with a product by accident, she won’t be back, either. That’s on you.

“… we will definitely go back again.”

That, my friends, is what winning looks like. Bravo to Sweetlees Boutique. Bravo! Thank you, Jen, for sharing that story with us all.

-Phil Wrzesinski
www.PhilsForum.com

PS In the same message, Jen told me about another retail experience that didn’t end so well. I’d rather leave on a high note and save that tale for later. If you have story of someone doing it the right way, please share. Send me an email or find me on LinkedIn.

KB-Toys Making a Comeback(?)

KB-Toys is coming back from the dead. The toy retailer that went bankrupt in 2009 is going to stage a comeback to try to pick up some of the business dropped by the closing of Toys R Us (TRU). According to one article, they will likely have a bunch of pop-ups this fall and more permanent locations by next year.

(picture from edplay magazine)

My expectation is that they won’t pick up as much of the toy industry as they think.

When TRU closed they were still doing billions of dollars in sales. They still had over 100 million customers. They actually showed a profit last year. Unfortunately it wasn’t enough to pay the massive debt they had acquired.

While a lot of uneducated pundits and many comments on several articles about Toys R Us closing want to blame Walmart and Amazon for their demise, those two companies had already taken their sizable bites out of TRU’s hide. People who wanted to shop purely on price or convenience were already going to Walmart and buying toys with their groceries. People who knew exactly what they wanted and didn’t want to leave the house to get it were already shopping on Amazon.

The customers still shopping at Toys R Us (over 100 million times, mind you) were going there for one of two things …

  • The Experience
  • The Selection

As an independent toy store owner who offered events, demos, and a fun, friendly environment for shopping, I can rightfully roll my eyes when someone mentions the “experience” of going to a Toys R Us. In fact, most of your independent toy stores will be able to offer a consistently better “experience” than going to TRU. But the customers going there weren’t comparing it to an indie toy store. They were comparing it to Walmart or Target.

You never heard a young kid pleading, “Please, take me to Walmart, puhleeeeezzzze!”

The Selection crowd was going to Toys R Us to browse the aisles. Amazon, as incredible as it is, isn’t built for browsing. Oh sure, you can search stuff on Amazon. As of last September Amazon was closing in on Google as the primary place people go to search for products. But Amazon searching is not the same as browsing. You still need a starting point.

If you want to walk aisles, touch and feel products, and get inspired, you have to go to a brick & mortar store to do that. Outside of a handful of my friends in the independent, specialty toy industry, no one had a larger selection of toys to browse than TRU. Customers went there because it was a better selection and an easier browse than the cramped, too narrow, too tall, too messy aisles of a typical Walmart or Target store.

When KB-Toys opens their pop-ups this fall they won’t have either The Experience or The Selection to truly catch the ball dropped by TRU. Sure, they will make sales. The pop-up model has been proven to be effective to an extent. Whether it will be enough to jump back into the toy market full fledged, however, time will tell. My guess is it won’t be enough and KB will become a perennial pop-up along the lines of Halloween USA. (At least that is what I would advise them to do if they were to ask me.)

The lesson here for specialty retailers like you is to recognize the different types of customers and why they shop at the different competitors you face.

Walmart is all about price and convenience. The cheaper the better. Amazon is for when you know (roughly) what you want, and you don’t want to go out to get it. Your category killers (JoAnn’s, Michael’s Toys R Us, Cabela’s, Barnes & Noble, PetSmart, et al) are more about Experience and Selection. Of the three, the one who most closely shares your customers is the category killer. Your growth is dependent on how many of those customers you can peel away. You already know you can beat them on Experience. Tomorrow we’ll talk about how you can beat them on Selection, too.

-Phil Wrzesinski
www.PhilsForum.com

PS The toy industry, with the closing of Toys R Us, offers a lot of opportunity for different stores to pick up the slack. There will be a lot of disenfranchised customers. Most everyone in the channel from the big box stores to Amazon to the indie stores stand to gain from their disappearance. The biggest winners will be those who have the most compelling message to the former TRU customers. Knowing why they were still choosing TRU over Walmart and Amazon gives you the heads up on what to say to get them to notice you.

Indie Retailers Best Poised for New Retail Model

A few years ago I went to lunch with a fellow toy store owner. I had wanted to see his store, so we made plans for me to visit and then go get lunch. Since we were in his town, I left it up to him to pick a place for lunch. What he said next I still cannot believe.

“Well, my favorite lunch place is out because I went there yesterday. A couple of our city council members stopped by and took me to lunch to ask me if there was more they could be doing for my business.”

Jaw meet floor.

That kind of respect for a local independent business is a rare bird in the world of government. Instead we see communities falling all over themselves to throw money at Amazon, not realizing that even if they don’t get an Amazon HQ or DC, they are still “giving money” to Amazon as local tax revenues are lost while local independent businesses struggle to survive.

For most indie retailers, even the government is slanted against us. You pretty much have to be a chain store or opening a mega-store for government to throw you any kind of bone.

In spite of all that, local independent retailers are starting to see a surge.

In a recent article discussing the problems plaguing Walmart, the author said, “Selling products to strangers doesn’t cut it anymore. To succeed in retail today you need to start with the customer, not the product.”

The article went on to talk about how several eCommerce sites are expanding into brick & mortar to better serve the customers.

Do you know who is best-suited to take advantage of this it’s-about-the-customers-more-than-the-products era of retail? You guessed it! Local independent retailers.

Believe it or not, it hasn’t been about the products for indie retailers for over a decade. It used to be that if you invented a new product you had to pitch that product to existing vendors or go into manufacturing yourself and pitch it to a handful of indie retailers to get started. Then, after the product gained traction and had sales history, bigger vendors might take interest. Once the bigger vendors got their hands on it, the product could make its way to the masses.

That model is gone. Now if you have an idea, you crowdfund it and launch it online until the big guys swoop in and buy you out.

Local indie retailers have had to build relationships with customers and offer them curated selections of great items they’ve likely never seen before to succeed. Fortunately, that model works. According to the article, that’s the new model of retail. According to me, that’s also the old model of retail.

Fostering relationships with your customers and building loyalty through something other than a frequent purchase discount never goes out of style. 

The simplest way to do that is:

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

I call that the Simplest Business Success Formula Ever. This is what the companies in that article are doing.

This is how you compete in today’s retail environment. You can’t control what product fads will be hot. You can’t control what vendors will stab you in the back (pro tip: every year at least one vendor goes back on his word about a product or product line he promised to keep exclusive to the indie channel.) You can’t control what products you will actually get shipped. On top of that, you can’t control what happens to the local, state or national economy. Nor can you control Mother Nature.

But you can control the experience someone has in your store. You can control the type of people you hire and the training they receive to be able to figure out those expectations and exceed them regularly. Do that and you’ll control your destiny as well.

-Phil Wrzesinski
www.PhilsForum.com

PS Your local government would do well to understand the formula, too. If they would create an environment where the needs and expectations of indie retailers were met (and exceeded), they would see tax revenues begin to rise. Indie retailers typically have more staff and a higher payroll per sale than the chains. Indie retailers typically use less land and less local services (police/fire etc.) than the big chains. They also create character, draw outside traffic, and give local communities their charm. Yet, in the last twenty-five years, that opening story is the only time I have heard firsthand about a government trying to exceed the expectations of their most profitable “customers”.

Earning Trust One Holiday at a Time

I walked into a large chain furniture store. There was a line of salespeople waiting to pounce on anyone walking through the door. It reminded me of the scene in L.A. Story where Steve Martin’s character was waiting in line to use an ATM while another line of muggers waited to mug everyone after they got their money. It was almost that comical.

I wasn’t there to buy anything, just to gather information. (I’m the guy. Of course I don’t get to make final purchasing decisions on furniture. If they had been trained on personas, they might have suspected that in the first place.)

The sales lady was pleasant and helpful, finding all the information I needed. She was also trying all the closing techniques you read in all those books on sales. She definitely was trained in the Always Be Closing mindset. When it looked like I really wasn’t going to buy, she played the trump card.

“Do you know, our No-Payments-for-6-Months sale ends today?

I thanked her for her time and kept browsing. Then, as the playbook would dictate, her manager came over to try to close the sale she couldn’t close. It wasn’t happening. He left me with this …

“Do you know, our No-Payments-for-6-Months sale ends tomorrow?

For more ways to earn your customer’s trust, buy this book!

This is why customers don’t trust us. They know we are all about the sale. We’ll say anything to get that sale.

Thanksgiving is one of those opportunities we used to earn back some trust by showing we cared about more than just the sale. We posted every year on social media that we were choosing to stay closed on Thanksgiving and open at our regular time Black Friday morning. We did it so that my staff could enjoy the holiday and/or go shopping for Black Friday deals themselves. We’d have coffee ready when the shoppers visited at our normal hours.

This willingness to forego opportunities for sales paid off long term because it strengthened our reputation of caring more about people than money. Lose the battle to win the war.

Plus, that post went viral almost every single year.

Twice our local newspaper wrote about it. The radio and television news people talked about it several times.

Trust is fragile, yet it is a critical element for winning customers’ hearts and minds (and eventually their pocketbooks). When you sacrifice sales for the purpose of serving your staff, your customers, and/or your community, you build that trust up. When you say or do anything just to get the sale, you lose that trust. Your choice.

-Phil Wrzesinski
www.PhilsForum.com

PS If you are in a mall, you have no control over your hours. If you are in a strip mall or shopping center where there is a big draw that brings in a lot of traffic, it behooves you to be open for all those customers the other store is attracting. That’s smart customer service. But if you are a stand-alone or in an area where no one else is drawing traffic, you can choose to not be open early. It won’t cost you as much in sales as you think, but it will win you a ton in trust.

PPS If you cannot control your hours, there are other things you can do and state publicly such as pay your staff overtime, grant them extra comp time, have food for them while they are working, serve coffee for staff and customers, and donate to charity. Show the public what you truly value. Those that share your values will find you.

What is Worse Than That? The Lower Bar of Customer Service

This morning my bladder woke me up about twenty minutes before my alarm was supposed to go off. (TMI?) I am not a morning person so I was not pleased.

When something like this happens, you only have a few options. Tell your bladder you’ll get up when the alarm goes off and hope you don’t wet the bed. Get up and go, then try to get another fifteen minutes of sleep before the alarm sounds. Get up and start the day twenty minutes earlier than planned. (Or in my case, try to go back to sleep and instead write a blog post in your head.)

Can you think of anything worse for a non-morning person than having their bladder (or their dog or someone honking the horn) wake them up twenty minutes before they planned to get up?

How about going through the checkout with a cart full of groceries, have everything bagged and back in your cart, and then be told the cash register is frozen and you’ll have to go to the next register, and scan it all over again because they haven’t updated their hardware or software since Y2K, and then when you get to the other register the scanner isn’t working there either so you have to cart everything one more time and try a third register?

How about going to the big department store where you have been buying the same turtleneck for the past twenty-three years, getting to the department and finding the place trashed, having to sift through tons of shirts tossed everywhere until you finally find one in your size, going up to the checkout to find there are only two cashiers in a store of 150,000 square feet, and after waiting twenty minutes in line you learn that the shirts are an extra 30% off today only (if you can find another one in that mess in your size by yourself and are willing to wait another 30 minutes to checkout)?

How about reading an ad in Sunday’s paper, seeing an item you have been wanting for a while, and it is now on sale at a price you can afford, heading to the store that afternoon only to find your store never had any in stock in the first place?

How about walking into a store about 20 minutes before closing time and being told by the greeter (and I use that term loosely), “We’re closing soon so if you have a big purchase that is going to be a hassle you need to do it right away,”?

How about holding an item in your hand that is the right size, wanting a second one, and being told by a sales clerk too lazy to look something up, “They don’t make it in that size,”?

How about trying on a shirt, asking for a new size, and when the clerk comes back with the new size, asking if they have any more styles in that size and being told, “I don’t know,” before the clerk walks away never to return?

How about ordering a food item at a fast food restaurant and being told that it is cheaper to get a bunch of other items you don’t want with that item, so that you end up wasting food just to save money?

These are just a handful of situations that cropped up for me in the past few days. I asked the audience at the MAEDA presentation if any of them gave poor customer service, just treated their customers like crap. Not one person raised their hands. Then I asked them if anyone had received poor customer service in the past two weeks. Most every hand went up.

I tell you this to point out what is happening in terms of customer service and how that will affect you and your business.

The good news is that poor customer service is so rampant that it lowers the bar of expectation and makes the service you are striving to give look amazingly good.

The bad news is that as the bar of expectation gets lowered, so does the tolerance of the general public for getting worse and worse service. If you get complacent in the service you offer, you let the other guys win. You let them set the bar. Your slightly better service will seem outdated and expensive.

If you ramp up your service to such an amazingly high level that you surprise and delight customers at every turn, then you reset the bar in your favor and expose your competitors for the non-caring companies that they are.

The minimum would be to …

  • Make sure you have ample supply of anything you advertise on sale.
  • Make sure you have proper signage on the displays of items on sale explaining the deal.
  • Make sure you keep your merchandise neat and tidy and sorted and easy to find.
  • Make sure your hardware and software is up to date and functioning properly everywhere.
  • Make sure you have enough staff to make the shopping experience fun and easy.
  • Make sure your staff are trained to never say, “No.”

If you do the minimum, you’ll get the minimum. The maximum, however, has exponential returns.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, all of those experiences happened in major chain stores, but not all big box discounters. A couple happened in a store that has had a few rounds of closures. A couple happened in stores that should know better. I would like to say that I had some surprise and delight moments, too. Unfortunately, the only surprise was that they didn’t suck as much as I expected. Not exactly reassuring.

PPS Yeah, that’s how my brain works at 5:41am.