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Author: Phil Wrzesinski

Is JC Penney Making a Mistake?

JC Penney announced a brand new pricing strategy. They are getting away from the over-inflated regular prices with everything on some kind of a sale all the time including scattershot coupons and deals.

They have already implemented it in my local JCP.

And my wife is not happy.

She went shopping there recently and was more confused by their pricing than ever. More importantly, she walked out without making a purchase. She asked me about it at lunch today, and I told that while I am a huge fan of not using sales and gimmicks (the old JCP model), I think they have a hard road ahead for three reasons.

THEY TRAINED THEIR CUSTOMERS

The first problem is that JCP trained their customers to expect a sale, to expect a discount, to wait for the coupon. For the next few months there will be some pain as customers try to adjust to this new program.

My wife was looking at a sweater. The new price tag said $25.00. It used to be priced at $50 in the old scheme. Then with a 40% off in-store sale and a 15% off coupon, it sold for $25.50. But without those “sales”, my wife ended up putting it back. It did not feel like a bargain any more.

You cannot get rid of that sale mentality overnight. We all know stories of customers who buy things on “sale” at other stores even when the “sale” price is higher than our price.

PRICING HAS PERCEPTION

I have been saying this all along. The numbers you use in your price give off a perception to the customer. JCP has changed all their prices to end in .00 instead of .99 as most retailers use.

The only problem is that .00 looks like “full price” while .99 looks like a discounted price. My wife, a full blood Transactional Shopper, mentioned this first. The price just looked too high. She even went so far as to say that she would have given it a second look at $25.99 instead of $25.00. So JCP, by their new pricing strategy is making everything look perceptually more expensive.

(For a full explanation of the way prices are perceived, download my free eBook Pricing for Profit.)

CAN THEY RELATE TO THEIR CUSTOMER?

Let’s face reality. JCP, Kohl’s, Macy’s, Elder Beerman, and all the other department stores like them are relatively interchangeable. They all carry similar goods at similar prices. And they all go after that Transactional Customer, the one who shops solely on price.

But with this shift, JCP is hoping to get away from that price-shopping mentality. Does this mean they are now going to go after the Relational Customer, the customer looking for an expert she can trust? I don’t believe they have the staff and the training to accomplish that. They certainly are not going to compete with Nordstrom’s any time soon.

So while they alienate their Transactional Customers in the short term, they are going to have to find new ways to attract those customers (who have been their base for so many years) back to the store with some really sharp pricing on those every-day-low-prices. JCP is right that not everyone is duped by the mark-it-up-to-mark-it-down policy so many department stores use. But not everyone is good at math, either.

We’ll see if JCP has the guts to stick it out. Personally, I’m hoping they do. (But please change those prices back to .99)

-Phil Wrzesinski
www.PhilsForum.com

PS If you have not yet seen my Pricing for Profit presentation, I am doing a revised version at the ASTRA Marketplace in Baltimore this coming June. According to those who have seen it, it might be the single most profitable hour you might ever spend.

Gotta Keep Learning and Growing

I have not been blogging as much as usual. Sorry about that. You would think that with the hectic Christmas season behind me I would have more time.

Wrong.

I have been busier than ever.

One of those projects that has kept me busy is that I was asked by the American Specialty Toy Retailing Association (ASTRA) to write a book about the financials of a toy store. A comprehensive guide to help independent toy stores understand their financial statements, how those numbers get calculated, what are the industry averages, and how to figure out why your numbers might be higher or lower than your fellow store owners.

Yeah, they asked me to write a book on financials. The same guy who says right on the home page of my website that I am not a financial guru.

So for the past few weeks I have been doing my homework to become that financial guru. Okay, maybe not guru, but learning enough so that I can help you understand your numbers, too. And the journey has been worth it.

For the first time, when my accountant came in to help us make those year-end adjustments so all our accounting lines up, I finally understood everything he said. A couple of times I even knew before he said it what he was going to say.

Don’t get me wrong. I am not going to pass any accounting exams in the near future. But the thrill of knowing I had learned something useful has given me a new excitement towards the business and a refreshed energy.

Maybe you could learn something new to give you that same feeling of newfound enthusiasm. If so, I have a list of topics worth exploring right here.

-Phil Wrzesinski
www.PhilsForum.com

PS Last year I posted a free eBook on Reading Your Financial Statements. It is pretty good. Not as good as the book ASTRA will be publishing this spring, but a decent start. I will be correcting a couple errors in it soon, but even this version might be a big help for those of you struggling to speak accountantese.

Lessons from MLK Quotes

If you have seen my live presentations, you know I love great quotes. I love quotes that make you think, quotes that teach you a lesson, quotes that give you perspective.

Here are some of my favorite quotes from Martin Luther King, Jr. that relate to our type of business.

“Never succumb to the temptation of bitterness.”

We all have customers who try to take advantage of us. It is easy to want to feel bitter about them or react by creating programs or policies to deter them. Unfortunately, those changes always come across as bitter or anti-customer. Do not succumb to those feelings. Accept that some people will act that way. Treat them well anyway. You never know what they are thinking and how you just might make a difference in their lives through your kindness.

“Faith is taking the first step even when you don’t see the whole staircase.”

The pretty much epitomizes the mindset you need to be a successful retailer. Have faith in your abilities. Have faith in your business model. Have faith to take risks even when you do not see the outcome clearly because you will never see the outcome completely clearly. The only outcome that is clear as a bell is that nothing good will happen if you do nothing at all.

“Love is the only force capable of transforming an enemy into a friend.”

Embrace your tough customers. Embrace your unhappy customers. Say, “I’m sorry,” when someone is unhappy with your business. If they are unhappy, there is something you did wrong. Apologize, accept that you were wrong somewhere, and then make it right. Love those tough customers and instead of writing bad things about you on Yelp, they will become your most loyal supporters.

“Everyone can be great because everyone can serve.”

Put yourself in the service of others – both your customers and especially your employees – and they will lead you to greatness. The best training you can offer your staff is to role model the behavior you expect of them. Your staff will never care more than you so you need to care more than they have seen. They will never work harder than you, so you have to work hard (smart) enough that your staff’s lesser efforts are more than your customers expect.

“All progress is precarious, and the solution of one problem brings us face to face with another problem.”

The one mistake we often make is believing that once the next problem is solved, it will all be smooth sailing. If you wish to succeed, you need to be prepared to meet each problem head on. One way you do that is by furthering your education, furthering your own personal growth as a leader, as a retailer. You will never not have problems, but you can overcome them more easily the more you prepare yourself.

Happy Martin Luther King, Jr. Day!

–Phil Wrzesinski
www.PhilsForum.com

PS If you are looking for a way to grow your retail business and are in the Jackson area, next Monday starts the fifth year of the Jackson Retail Success Academy. Contact me to find out how you can get signed up.

PPS If you are not in the Jackson area, but are interested in the contents of the Jackson Retail Success Academy, I offer a two-day workshop that includes all of the best content from that class in two jam-packed days. Contact me for pricing and booking information.

This Will Be a Succesful Year If…

I don’t like making New Year’s resolutions.

I resolve to lose weight, pay off debt, exercise more, eat healthy, save money, go to sleep earlier…

The moment you stop, you fail. I prefer success.

So instead of resolutions destined to fail, I like to take a moment to define what success will look like.

Finish the following statement:

This will be a successful year if…

…if I get to be in business next year
…if I book 6 new speaking engagements
…if I publish a new book
…if I average 100 readers per blog post

The difference between doing it this way and resolutions is that you are focusing on the goal, the end result, instead of just the method. If the method you are using does not help you reach your goal or is unsustainable then you can try new methods.

You get to keep working on that goal from any angle you choose.

Like everyone else, I encourage you to write it down. Go get a blank piece of paper and write across the top “This will be a successful year if…” and start filling in the rest.

You can make categories – Personal, Professional, Individual, Family, Financial, Social – if you want. Just be sure to jot something down for each.

Once you have done that, start strategizing the How. Start brainstorming the What. Start piecing together the Who and the Where.

The When is right now. Define your success and you have a better chance of reaching it.

-Phil Wrzesinski
www.PhilsForum.com

PS For those of you who have already downloaded my free eBook Staff Meetings Everyone Wants to Attend, you recognize that this is the same statement I use when planning those meetings. In fact, it is written right across the top of my Staff Meeting Planner Worksheet. And my clients know I ask the same question of them. How will we define success? How will you?

Do You Want Fries With That?

McDonald’s gave us the best punchline for the upsell.

“Do you want fries with that?”

But that one little phrase made them a lot of money because it increased the average ticket, the average dollars per transaction.

It makes intuitive sense that if every customer spends just a little bit more your store will be more profitable. That is why you want to track your Average Ticket.

In the last post we counted the number of transactions you had for the year. Simply divide your gross sales by this number and you have the Average Ticket. Now compare that number to last year’s number. Did it go up or go down?

Simple knowledge of the world tells you that it should go up just to keep pace with inflation. Your prices went up a little so even if you sold the same amount of items to the same amount of people, that number should go up.

But what if it went down?

There are three big reasons why your average ticket might go down.

  1. You do not have the right merchandise.

  2. Your staff is not selling the merchandise you have.

  3. Your customers are in a hurry to leave.

Let’s explore those.


THE RIGHT MERCHANDISE

If you do not have the merchandise customers want to buy, then they are not going to buy from you. That is simple enough. But one easily fixed mistake some retailers make is not having the necessary accessories to complete each sale.

This is something I preach to my staff constantly. Make sure that a customer making a purchase has everything she needs to use that product the moment she gets home. Is it an electronic toy that needs batteries? How about a model that needs paints… and glue… and paintbrushes… and thinner… and a display case?

If you do not sell all those accessories then you are leaving money on the table by not having the right merchandise.

YOUR STAFF IS NOT SELLING

At least the McDonald’s clerks are offering more products with their fries statement. Are your sales staff doing the same? There are plenty of less offensive ways to do that. The first is to do what we just discussed – complete the sale. Make sure the customer does not have to make a separate trip to get everything she needs because if she does, it won’t be to your store (and neither will the next trip she makes to shop).

You also want to keep asking the customer if there is more you can do. Keep asking until the customer says no. Here are some simple questions any sales person should be comfortable using:

  • Who else is on your list today? (thanks, Bob)

  • Is there anything else I can show you?

  • What else can I do for you today?

If you are not asking, you are not selling. Anyone can point a customer to the product for which they asked. The better sales people lead them to the product, asking questions as they walk. The best sales people then offer two or three best options to fit the needs of the customer. And then those sales people show them matching, coordinating and accessory products. And then they ask for more.

It costs way too much to acquire a customer to let them walk out without being given every opportunity to buy. They will let you know when they are done shopping. Always let the customer end the shopping, never you.

YOUR CUSTOMERS JUST WANT TO LEAVE

It is a simple axiom of retail. The more time a customer spends in the store, the more money she will spend, too. So you need to encourage your customers to stay longer. You do that by making them feel more comfortable. Offer to take her coat. Offer her a beverage. Engage her in conversation. Get her to talk about herself. if she has kids with her, make sure their needs are met.

The right music, the right lighting, the right temperature are also important. If it is too cold your customers will not stay. Sure, you might save a penny or two in heating costs, but you’ll lose all those pennies in customers who did not stay. Likewise, too hot makes customers just as anxious to leave. They may not even know why they want to leave. But they will leave. If you made a change in your thermostat to save some money and your Average Ticket went down, you might want to change it back.

Odors are also powerful drivers. Heavily perfumed areas can be as much a turnoff as bad odors. Don’t mask the bad smells with perfumes, find the source and eliminate those odors. If you must use a scent, food scents are better than florals. They tend to be more comforting.

The layout of your store also affects the length of stay. Walk in your front door and see what captures your attention. Where does your eye go? Is there anything to attract a customer deeper into the store? The deeper they go the longer they stay.

Also look at your traffic patterns. Are the aisles wide enough to handle the flow? Do the aisles make sense? Is it obvious where to go? Confused people will not shop long. Do not confuse your customers.

Number of Transactions is something over which you only have partial control. Average Ticket is completely up to you. Whether it is going up, down or staying flat is a quick indicator of how well you are performing in the store. Raise the performance and you’ll be punching a higher ticket.

-Phil Wrzesinski
http://www.philsforum.com/

PS For more on merchandising, download my free eBook Merchandising Made Easy. To raise the bar of Customer Service so high your customers are singing your praises to everyone they know, download my free eBook Customer Service: From Weak to WOW! The books are free, but the information in them is priceless. (Why would I give away such information for free? I want you to succeed. When one independent retailer improves, we all improve.)

How Many Customers Does it Take to Change a Retailer?

Two numbers every retailer should track are Number of Transactions and Average $ per Transaction. (Yes, if you know the first number then you can calculate the second).

Number of transactions is simply how many times you rang up someone on your register. Did that number go up or down? If it went up, life is probably pretty good. You can skip the rest of this post and wait for the next one talking about the Average Ticket.

If it went down, read on…

There are two reasons for your number of transactions to go down:

  1. You didn’t get enough traffic through the doors

  2. You didn’t convert that traffic into purchases


YOU DIDN’T GET ENOUGH TRAFFIC

There are a number of reasons why you might not have as many people coming through the door. Here are the most obvious ones…

The market shrank. The population in your area decreased or at least the population that shops your category decreased. We have seen a decline in births in county for four straight years. Since we sell baby products it is not surprising that the number of transactions has declined. Fewer babies being born means fewer people buying cribs.

You can get population information from your local government. They track things like foreclosures, house sales, rental property availability, unemployment claims and taxes to determine what is happening with the local population.

In a similar vein, did your market dramatically change? Was there road construction outside your door? Was there a major shopping center constructed somewhere else (even if they didn’t have a competing store)? Was there a fundamental shift in traffic patterns? all of these could have an effect on the amount of traffic coming through your doors.

The competition increased. Did a new competitor come to town? Did a current competitor step up their game? Although I often tell retailers to focus more on what you can do than on what your competitors are doing, you still have to watch them. In 2010 Toys R Us opened a pop-up temporary store in our market. It only took a small piece of the pie, but in our shrinking market every crumb counts.

Your advertising did not work. Did you cut back on your marketing efforts? Did you change your message? Did you forget to change your message? If you cut back or made major changes to your message you may have caused the drop in traffic. (Not sure what your message should be? Download this free eBook “Understanding Your Brand”)

YOU DIDN’T CONVERT TRAFFIC INTO TRANSACTIONS

Two main reasons why this happens:

You didn’t have the right products. When there is a hot product in your market and you don’t have it, you’ll get plenty of lookers, but no buyers. Nothing cures more retail ills than having the product everyone wants. Did you have a bunch of calls or requests for a particular item? I know one store that has a daily worksheet that all the staff fill out including what requests were made to which they had to say NO. From that worksheet she often finds new products and categories to carry. Her rationale? Customers come in thinking she should have it. Why disagree with the customer?

Your sales staff wasn’t up to par. How much did you commit to training? How much did you work with the staff on what great customer service looks like? How much did you leave to a manager to do? Does the manager care at the same level as you care? Not only does a poorly trained sales staff cost you in conversions, it costs you in average ticket (which we’ll explore in the next post), and it costs you in repeat business (traffic coming through the door).

More than likely, if your transactions are down it is a combination of many of these factors. The two you can control the most are your Advertising and your Sales Staff Training. Get working on those right away. In fact, even if you had a good year, you can still raise the bar in both of those categories.

And that will make it a Happy New Year for your business.

-Phil Wrzesinski
www.PhilsForum.com

PS One other thing that could happen… Your POS could change the way it tracks transactions. Our new release of our POS software did just that. Took us two months to figure out why our number of transactions spiked all of the sudden. Got that figured out so now we’re comparing apples to apples again.

You ARE Making a Difference

Sometimes it is good to take your eye off the big picture for a moment and focus on those little things you do that are so wonderful.

This is a good time of year to do that.

The customer in front of you is one of those moments. She is stressed. The holidays can do that to a person. She has a million things on her mind. Give her your full attention. Let her know you understand, you care and you can help.

Solve her problem.

And be thankful for that moment to make her life just a little easier and a little less stressful.

Her family will be thankful, too. They may not know to thank YOU for that. But they will be thankful nonetheless. And you will know it. And that is all that counts. Enjoy all those little moments. There will be time to look at the big picture soon enough.

Merry Christmas my friends! Thanks for all you do.

-Phil Wrzesinski
www.PhilsForum.com

PS Here is a video of a song I wrote when my first son was born called The Greatest Gift

Be the “Hot” in Your Category

Seth Godin pointed out something the toy industry has known for a few years…

There is no singular HOT toy to drive in the traffic.

Hasn’t really been one since the first Tickle Me Elmo back in 1997. Oh, sure, there have been some hard-to-find items, a few crazes here and there, but nothing like the way people went bonkers over that furry red guy that vibrated and laughed. They stood in long lines, got into fist-fights, paid hundreds, even thousands, of dollars to get one.

Those days are over. And that is good news for you.

The traffic still craves direction and guidance. The traffic still wants to know where to go and what to buy. The traffic is still looking for something Hot.

So instead of the Hot item, be the Hot store.

You do this by being innovative.

Are you in a downtown location with limited parking? Offer free valet service. Are you in a winter weather environment? Offer coat check and coffee or hot cocoa. Are you in a category that requires special knowledge? Offer classes and tutorials. Do you get a lot of out-of-town traffic? Offer local maps to interesting sites, fabulous restaurants and other great shops in your area.

Rotate your merchandise regularly. Make fun and surprising displays that get people to talk about you and want to see what you are doing.

You do this by being iconic.

You know that every woman in the room pays extra attention to the package wrapped in the turquoise blue. Tiffany owns that color. What can you own?

You do this by being fun.

Smiling and saying hello makes people happy. Genuinely having fun gets those happy people to talk about you. You could play guessing games. You could have quick polls and sign-in books. You could run contests. You could have giveaways. Just make sure you hire fun people.

Regardless of what the media tries to promote, there is no hot toy anymore. Only hot stores. Be one of them.

-Phil Wrzesinski
www.PhilsForum.com

PS It is no longer about Customer Service. It is all about Customer Experience. The better the experience, the more people will want to have that experience.

Be Good for Goodness Sake

(Yes, Christmas music has taken over my brain…)

Just a quick reminder that during this busy season it is easy to dismiss problem customers. It is easy to not give your full attention to a needy customer. It is easy to blow off that demanding customer.

You are already plenty busy enough. What difference does it make if you do not give everyone a great experience? Your numbers are good.

This year.

But you are also planting the seed for next year.

Retailers are farmers. We plant seeds, water and fertilize all year long so we can reap the harvest at Christmas. But unlike the real farmers who plant in the spring and harvest in the fall, we plant during the harvest.

We plant the seeds for next year in how we treat the customers this year. Treat them well and they will become perennials. Treat them poorly and your harvest next year will suffer (and you won’t know why).

This is your busiest time of year, the time when you see the most people. Do whatever you have to do to make sure every single one of them gets the best possible treatment. Next year’s harvest is counting on it.

-Phil Wrzesinski
www.PhilsForum.com

PS If you want some good ideas on how to fertilize that crop, download the FREE eBook Customer Service: From Weak to WOW! The one card you can consistently play and always trump your competition is the Customer Experience card.

Someone Is Lying to Me

My favorite gas station just changed all their pumps to Pre-Pay.

The clerk told me it was a corporate decision. She had no choice in the matter. She also told me that she had been getting flak all day long for it. She did not like it. Neither did the customers.

But somebody at the home office thinks that pissing off customers and upsetting the employees is a necessary way to do business.

The part I really do not understand is that every time the general public complains about price-fixing in gasoline, we are told by these gas stations that they do not make any money on the gas, only the soda and snacks they sell inside the store.

Yet, they just gave me an excuse to not have to set foot in the store again. I just swipe my card at the pump, get my gas, and go. Probably will be good for my diet. Probably will not be good for their bottom line.

So either they are having a rash of drive-aways or they really are making money on the gas. I think we would have heard about the former. Somebody is lying to me.

But it begs the question we all should ask about our business. Where do we make the money? And are we setting up barriers to our customers that keep them from giving us that money?

I think that second question is the driving force behind this corporate decision.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you should put your best, most profitable merchandise in the best location in the store. Start there and build everything else around that focal point. That is the number one rule to merchandising. For more rules and thoughts on merchandising, download my FREE eBook Merchandising Made Easy.