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Author: Phil Wrzesinski

Phil Wrzesinski is the National Sales Manager of HABA USA toy company, a Former Top-Level, Award-Winning Retailer, a Thought-Provoking Speaker, a Prolific Author, a 10-Handicap Golfer, an Entertaining Singer/Songwriter, and a Klutz Kid who enjoys anything to do with the water (including drinking it fermented with hops and barley), anything to do with helping local independent businesses thrive, and anything that puts a smile on peoples' faces.

My Staff Training Philosophies

One of the fun things about closing up the shop is finding hidden treasures as I empty filing cabinets. This is one of those treasures. I don’t know when I wrote it, but I do remember writing it. I was on a flight home from a conference or workshop and one of the speakers asked us to write down our philosophy about our staff and why we should train them.

Here is what I wrote…

For those who can’t see the image or read my handwriting…

Philosophies

Staff Training –

-Staff is only as good as you allow them to be

-Staff rises/falls to your expectations

-Attitude of Management directs attitude of staff

-Communication is #1 key
–Communication of Expectations
–Communication of Information necessary to do job
–Communication two-way street

-Empowerment is key #2
–Empower to make decisions
–Empower to use Imagination/Creativity
–Empower to solve problems

-Motivation is key #3
–Motivation through financial rewards
–Motivation through personal satisfaction
–Motivation through recognition

-Need to put staff into position to succeed
–Play to their strengths
–Give them “tools” to do their job

-Have Confidence in…
–Your Knowledge
–Their Training
–Their Abilities

There you go. There’s your blueprint for a killer staff. Go make it happen.

-Phil Wrzesinski
www.PhilsForum.com

PS I think I wrote this after a trip to Wizard Academy, but I’m not exactly sure. Based on where I found it, it was likely written between 2004-2009.

Our Version of the 1%

Lately everyone has been talking about the 1%. In politics that might be the ultra-rich. You either are them, hate them, or on your way to becoming them.

In retail the 1% I want to talk about is your unsaleable merchandise.

We ended our closing with only 1% of our inventory remaining. Yeah, pretty good when you consider during our closing we sold 17% of our merchandise at full price, most of the rest at 20% off, and only went to 40% off those last few days when the inventory got below 10%.

Here are two lessons you can take from this.

NO BUYER IS PERFECT

No matter how well you think you have your finger on the pulse of your customers, you will make some buying mistakes. That’s a freeing thought. You know you won’t be perfect so don’t try to  be perfect. Take a few risks. Try some new things. Some will work, some will not. 1% you won’t be able to give away. That’s not the end of the world.

You might have jumped in on a fad too late (or even too early). You might have gotten seriously undercut by a rogue retailer online or a vendor dumping the remaining stock through a discounter. You might have simply liked a product more than your customers did. It happens to even the best buyers. There will always be inventory that just won’t move at regular price, and there will be inventory that just won’t move at all.  In fact, make it a game every year to figure out what your 1% will be. Have your staff vote right before the busy season on what they think are the flops. Offer a gas card or local restaurant gift card to the winner.

DON’T SIT ON OLD INVENTORY

Knowing you will make mistakes, you have to have a system in place to recognize the slow movers early on so that you can get them moving out the door. The game is actually a fun way to engage your staff as they will be checking to see if their choice is “winning”. One interesting effect of this is that your staff, by paying attention to those perceived flops, will actually help you sell that merchandise.

Your point of sale system is your best set of eyes. Any POS system worth the money you spent will at the very least tell you what items are old and not moving. Be cold and ruthless with that inventory. Don’t invest any emotion. The sooner you recognize bad merchandise, the sooner you can turn it into cash and move on.

When you have to sell off everything you own like I just did, you see the stark reality of your buying decisions. Fortunately, since we had a process for recognizing bad merchandise and moving it out each and every year, we weren’t stuck with a lot of product at the end of our day – only 1%. I can live with that.

-Phil Wrzesinski
www.PhilsForum.com

PS Remember all those free displays your vendors gave you that you’re no longer using? You can sell those, too, and make up the money you lost on your 1%. In fact, a fixture/display sale is a good combination to have when you’re moving out the mistakes. It takes some of the sting away (and gives you back some room in your warehouse). Manage your inventory and cash flow and you could be part of that group on their way to becoming a 1%er.

When It Is Time to Move

Maybe it is declining sales in your current location, or maybe you’ve peaked out your sales and don’t have the room to expand. Maybe the demographics of your location have shifted or maybe your store’s product mix doesn’t fit in with the surrounding stores. Maybe a new development has made you an offer too good to be true.

There are dozens of reasons you can justify for moving your store (and just as many for staying put – too costly, lost sales during the move, will the customers still find us? can we afford it? is the grass actually greener? etc.)

The decision to move your store has to be something you research and consider the issues carefully. A bad move will sink you. A great move will grow you. A lateral move will wear you out.

Here is the short version of this blog…

  • Don’t move unless you have to – if it ain’t broke, don’t fix it
  • Prioritize what you need from your new location – More Traffic? Parking? Accessibility? Visibility? Better Demographics?  Do your research
  • Plan for extra expenses – moving costs, lost sales, etc. all add up quickly
  • Buy what you can afford – yes you expect your business will grow eventually, but make sure you can afford it on day one.

NO LONGER SUITS YOUR NEEDS

The first decision is the desire to move. You move when your current location no longer suits your needs. Your business model is working but your location isn’t the ideal spot. It’s too small, too big, too quiet, too expensive, too hard to find, wrong demographics, wrong part of town. There was an auto dealer in San Diego that was constantly advertising that if you would work with their location, they would work with your price. It became their gimmick, but at a great advertising expense. That low overhead from the lousy location was instead spent on advertising and profit margin.

Moves are risky. There are no guarantees your move will grow your business. If your current location suits your needs, the risk factor for moving goes up exponentially and it is often better to stay put.

WHERE DO YOU GO?

Just making the decision to move is huge, but you have to also know where you want to go. What are you lacking at your current location? Is it traffic? You’ll likely have to pay more in rent to get better traffic. Is it space? You can find bigger spaces, but you might have to give up something else like traffic or parking.  Is it better demographics? Do you know your demographics well enough to know what “better” demographics look like? The most important question is this…

Can you afford the new location with the money you’re making currently?

We all would like to think our business will grow hugely at the new location. But that isn’t always the case. Plus there are a lot of costs involved in moving that eat up any extra sales and profits. You have the lost days of sales while you move. You have the build out of the new place. You have the changing of phone and address and lost mail and lost shipments. You have the revving up of the new location as your regulars try to find you before the newbies have discovered you. You have the advertising of the change of address including the banners at the old location, the grand opening banners at the new location, the advertisements and the big grand opening event itself.

PRIORITIZE YOUR NEEDS

We moved once in our 67 years in business. The store started in a house. We bought neighboring houses and tore them down for a parking lot and a couple expansions. But we maxed out our location at about 10,000 square feet. My grandfather wanted three things in his move. First he wanted a larger building. He drew up two plans for a 20,000 sq ft building and a 24,000 sq ft building. Second he wanted to be along the busiest road in the downtown district (suburban shopping malls were not yet a thing in 1967.) Third, he wanted his own parking lot.

He found his location – an easy right hand turn off the busiest road in the downtown with plenty of room for parking in both the front and back of the building – and opted for the 20,000 sq ft building because that was all his current level of business could afford. He also had the expenses of moving. Even as a big fish in a small town, the newspaper didn’t cover our move. He had to take out his own ad in the paper. He used this picture with the headline,

“But Grandpa, Momma Won’t Like it if We Play in the Mud”

Yes, his business grew – fast enough that he needed that extra 4000 sq ft only five years after moving. Fortunately he also had the foresight to buy a piece of property that would allow such growth, and he now had the money to pay for it.

That location served us well for many decades even as new competition came to town. But when the demographics of the whole county changed, so did the options for moving. The criteria that served us well before were no longer the criteria we needed. Our options were downsizing greatly or moving to a new community, neither of which we wanted to do.

Moving is a big deal and can be a huge benefit for your business. It can also sink you. Make sure you are moving for the right reasons.

-Phil Wrzesinski
www.PhilsForum.com

PS I didn’t discuss renting versus owning. That is a topic worthy of its own post (or three).

In Retail it is All About Location

Let’s get the elephant out of the room right away.

How can I write a blog about being a successful retailer when I closed my retail store? I can sum that up in three words…

Location. Location. Location.

Yes, we were having a tough time with cash flow. That’s the usual culprit behind any store closing. Much of that was due to our location.

Location Issue #1

The population of Jackson has been stagnant at best the last several years. The youth population, however, has shrunk considerably over the last several years as birth rates declined for all groups but teens, and school enrollment is down huge since 2007. On top of that, average household income in the city fell from around $35K per household to $27K per household (well below the national average of around $56K).

I have constantly talked about paying attention to your Market Share. To know your Market Share you first have to know your Market. Our market has shrunk over 40% since 2007. Fortunately, our Share of that market had stayed the same. We still had our piece of the pie, but our pie had turned into a tart.

Location Issue #2

We own and occupy a large building on the north edge of downtown. We have been a large toy store for decades, carrying toys, hobbies, baby products, sporting goods, scouts, and more. When the market could bear it, we had a ton of inventory, but scaling back inventory to match the needs of the community meant less efficient use of space and less of the “impact” of being that large store that had everything.

We discussed converting to a smaller store, more in alignment with the population and income, but that would have led to many long-time customers lamenting that we just weren’t the store we used to be or the store they remembered. Better to close while the memories were still positive.

Location Issue #3

I am a big believer in downtowns. Call me naive but I still believe downtown shopping districts can be successful. It takes dedication from the shop keepers, the landlords, and the city leaders to make it work. It takes smart policies, united fronts, and strong relationships to make it work. We have some of that in Jackson, especially among the retail owners. We also have a city council dedicated to improving the streets and sidewalks and green spaces in our downtown. Unfortunately, that also means a ton of disruptive construction. Two years of it! (and counting.)

Our city leaders are not retailers and don’t understand how construction affects retail. They saw an opportunity to get roads fixed and attract new development (all good things), but didn’t see the consequences to the existing retailers and restaurants. When you are trying to dig out of a cash flow hole, having the busiest street in town—the one that goes right by your building—be restricted from three lanes to one with backups that stretch for blocks for an entire spring and summer is not a good recipe for success. At one point we had so much construction downtown that one detour actually led you to another street closure dead-end, and only if you had local knowledge would you know which alley would get you back to open road.

In a couple years, our downtown is going to be new and fresh and repaved and ready for business. But the last two years were pretty tough on the businesses already here, especially for us as our market declined.

Yeah, Amazon is a deal-changer for many retail categories. Yeah, our own vendors are making decisions that hurt the indie retail channel. Yeah, customers are as fickle as ever and have power like never before. None of those are insurmountable. You can still compete. Even as we closed, we were holding our own for our market. We just didn’t like the direction our market was heading.

If your market is your problem, you can do one of four things, Move, Close, Change or Wait. We chose to close.

Now you know.

-Phil Wrzesinski
www.PhilsForum.com

PS I’ll discuss the other three options and what would make them attractive in future posts. Right now I have to go let the big elephant in the room out to roam the savanna.

What I Learned in 2016

2016 was a learning experience for me. I went through two life-changing events that taught me a lot about myself and about business. I got a divorce and I closed my toy store. Although they weren’t the kind of things one typically wishes for, they were incredible experiences filled with lessons I will share in 2017.

This blog is back. You will be getting posts on a regular basis filled with thought-provoking ideas and simple things you can do to make your business better.

 

Although I cannot put all the lessons from 2016 into one blog, I can sum them up for you in one sentence.

“Life and business is all about the relationships.”

We’ll explore how to build better relationships for 2017.

-Phil Wrzesinski
www.PhilsForum.com

PS My first goal will be to rebuild my relationship with you. Sorry for not blogging in 2016. With the store closed you are my main focus for 2017. Let me know your fears and obstacles and challenges. We’ll find ways to overcome them.

Friends With Benefits

Align yourself with charity. Pick one or two local organizations (or more if you’re up to it) that you feel strongly about. Do something special for them. Help them out. Be their friend and ally.

You’ll both benefit from the friendship.

Santa Paws 2015 #1

This is a picture of the Cascades Humane Society doing their annual Santa Paws event – pictures of your pet with Santa Claus. They called me a few weeks ago looking for a space to take the pictures. I have a stage. I love dogs – especially rescued dogs. I said yes.

They coordinate getting Santa here. They hire the photographer. They set up the backdrop. They sign up and schedule the photo shoots. They work the tables. They get the profits.

We get the traffic. We get the goodwill. We get the customers telling us how nice it is that we are doing this for them. We get the social media exposure. We get exposed to everyone on their mailing list. We get our name mentioned in their press releases (and non-profit press releases get picked up far more often than for-profit press releases).

Our friendship with them brings benefits to both of us.

When you partner with a charity, you expand your reach. You get exposure to a crowd of generous people who love to give to charitable causes (can you think of a better demographic for the independent retailer?). You get touchy feely goodwill because you are helping out. You don’t just look like a greedy merchant. You strengthen your community (the better the non-profits do, the better everyone does).

Make friends with a charity or two. You’ll reap the benefits.

-Phil Wrzesinski
www.PhilsForum.com

PS Your charity doesn’t have to be aligned with what you sell. We don’t sell pet toys or pet food. Pick charities based on a few different factors such as…

  • Do they have an active base of followers?
  • Do they want to “partner” with you (or simply have you do all the work)?
  • Do they align with your own personal core values?
  • Are they well-respected in the community?

Those are all good reasons for making friends.

My Big Fat Email Subject Line Mistake

Your subject line is the most important part of your email. Period.

Get it right and your email is a success. Get it wrong and nothing else matters. I learned that the hard way yesterday.

We’re doing a big promotion on Election Day. Something new. The subject line in my email read…

“Election Day ONLY – 20% Off all Gift Certificate Sales! See inside for details…”

The first two people I talked to about the promotion asked the same question. “Do we get 20% off the purchase of a gift certificate or 20% off purchases made with a gift certificate?”

I went back and read the content of the email. It clearly states that you get 20% off the purchase of a gift certificate. How did they get so confused? Then I read the subject line again. I saw the error of my ways. It wasn’t as clear and concise as it should have been. I left room for interpretation.

TWO LESSONS

First, before you send an email, understand that many people will only ever read the subject line. They get so much email that they scan subject lines and hit the delete button. Therefore your subject line has to get your point across clearly and quickly with no room for doubt. Clever and cutesie subject lines leave too much room for interpretation. There should be no doubt about the purpose of your email. There should be only one interpretation of your subject line.

The best way to make sure your subject line is tight and to the point is to ask for help. Ask someone outside of your bottle to read your subject line and tell you what it means to them. Try to ferret out all the possible meanings. Then rewrite it to eliminate any confusion or misinterpretation.

Second, if you can’t make your point in the subject line, perhaps because it is too nuanced or complicated, then make sure your subject line has enough enticement to make people want to open the email. According to MailChimp, the average open rate for email from retailers is about 22%. In other words, 8 out of 10 people likely won’t open your email. You have to give them a reason.

Make it clear. Make it concise. Make it work for the 8 out of 10 that don’t open emails. Make it legitimate and not sounding too spammy. Make your subject line get people to want to open your email.

-Phil Wrzesinski
www.PhilsForum.com

PS In case you’re wondering why I am doing a promotion like this for the store, here are the reasons…

  1. I get a huge influx of cash right when I need it most to help stock up for Christmas.
  2. Customers who redeem gift certificates often spend much more that what the gift certificate was worth.
  3. I get my customers to commit to shopping with me now before some shiny bauble from someone else catches their eye later.
  4. I get to promote Election Day as an important day.
  5. My Transactional Customers get a great deal!
  6. About 10% of all gift certificates go un-redeemed, so I’m really only giving away a small bit of margin.

You Don’t Make it Up in Volume

(Warning: this post contains math. Proceed with caution.)

“We lose a dollar on each one we sell, but we make it up in volume.”

Yeah, we all know that isn’t right, but there is a mistaken belief that if you lower your prices, you can easily make up the lower margins through higher volume.

Warehouse Melissa and Doug 2

Let me show you why that doesn’t necessarily work.

First, we have to make an assumption together. Your business has fixed costs that do not change as your sales change (utilities, rent, etc), and your business has variable costs that go up as you do more volume (credit card fees, payroll, freight, advertising, etc).

Agreed? Good.

DOING THE MATH

Here is some simple math…

You have an item you purchase for $10 and sell for $20. Let’s say you sold 24 of this item last year. That gives you a gross profit of $240 (24 units x $10 in profit per unit = $240 gross profit).

But you have the grand idea to lower the price 10% to $18, figuring you’ll make it up in volume.

 

To get the same $240 in gross profit, you now need to sell 30 units (30 x $8 = $240). That’s a 25% increase in units sold. With more units sold, however, your variable costs will go up. Maybe it is advertising because you had to spend more to get the word out about your lower price. Maybe it is extra sales people needed to help boost sales. Maybe it is more credit card transaction fees.

Realistically, just selling 25% more units won’t even break even because of the rise in variable costs. You’ll probably need closer to 30% more in units sold to cover your 10% discount.

Do you think 10% Off is enough to sell that many more units?

GOING LOWER

Okay, maybe 10% isn’t enough to move the needle. Let’s go 20% Off and sell them for $16!

Here’s the math…

40 units x $6 = $240.  Yes, you now need to sell 67% more units just to get the same gross profit! More than likely, as your variable costs go up, you’ll probably need to sell about 70-75% more units to truly break even.

How about 30% Off?

60 units x $4 = $240. If you go to 30% Off, you better be able to sell 250-300% more units to make it up in volume.

That is a lot of extra traffic you’re going to need to draw, and a lot of staff you’re going to need to handle those sales.

GOING HIGHER

When you do the math, making it up in volume isn’t the answer. But ask yourself this question…

If I raise my prices a little, how many sales might I lose?

A 10% price increase could handle a 17% drop in units sold and make you the same amount of gross profit.

See? Those math classes in high school can pay off!

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you can raise your prices. With the way insurance premiums, taxes, utilities and other expenses keep rising, you have to find ways to make more money just to stay in business. But just a straight increase across the board isn’t the strategy. Download my FREE eBook Pricing for Profit in the Free Resources section to see smart ways to raise your prices (that won’t cost you a single unit sold).

 

REI Stands Up for Their Beliefs – You Should Too

Your actions speak louder than your words.

Put your money where your mouth is.

Be true to your values.

We’ve had plenty of examples of these platitudes by businesses, such as Chick Fil A and Hobby Lobby being closed on Sundays. But never has there been an example as extreme as what REI just announced.

REI will be CLOSED on Black Friday! One hundred and forty three stores shuttered on one of the busiest shopping days of the year. #OptOutside. Do the math and I bet this will cost them a millions in sales.

I love this!

I am already a fan of REI. I just became a bigger one. REI just told me they care about more than money and profits. REI just told me they believe going outside is more important than going shopping. REI just told me they put their employees ahead of their profits (a paid day off to go outside and play? Genius!!)

REI has earned a higher level of trust of millions of customers with this move. They have shown that their Core Values are more important than the bottom line. The funny thing is I suspect this will help their bottom line tremendously. Yes, it might hurt their top line revenue, but they will make that up in margin from loyal fans who share their values.

Being absolutely and steadfastly true to your Core Values is the easiest and most profitable way to build brand loyalty long term. REI’s decision is going to hurt a little this fall. But a little pain now will pay off huge dividends later.

-Phil Wrzesinski
www.PhilsForum.com

PS To be true to your Core Values, you first have to know what they are. Then you have to be them openly. Download my Free Resource – Understanding Your Brand – and the accompanying Branding Worksheet to help you identify the Values most important to you and your business. Then figure out how you can put your money where your mouth is.

Is Customer Service Dead?

I just spent several days in Las Vegas for the ABC Expo, the largest trade show for the juvenile product industry.

Las Vegas. What happens in Vegas stays in Vegas (btw, they mean the money you gamble stays in Vegas).

NO BEER FOR PHIL

One thing that didn’t happen in Vegas was me drinking beer. Not that I didn’t try.

I ordered a beer in a burger & beer joint in one casino. Took almost 20 minutes to arrive. I probably would have had two if I hadn’t filled up on water waiting for the first one.

I ordered a beer at another restaurant just as I started my meal. When the waitress finally returned to see if we wanted our check, I switched it from a tall to a regular.

I understand the concept of not bringing the check in a restaurant until they ask for it, on the hopes that people will continue drinking and run up the tab, but I wasn’t getting either the drink or the tab. It’s hard to pay 20% on over-priced meals when you get service like that.

NO PRICE LISTS EITHER

It wasn’t just the restaurants, either. I was in one of the largest booths on the trade show floor. I asked for a price list so that I could place my order. The sales rep said she was instructed not to give them out.

Huh?

I’m about to write an order equal to one month of your salary. You have a stack of price lists in your arm that I can see clearly. And you won’t give me one? Did you forget why you were here?

Time after time, booth after booth, I had to ask to make sure they gave me a price list with the catalog. It was baffling how hard many of these vendors were making it for us to do business with them.

CUSTOMER SERVICE IS DEAD

Another store owner and I, while waiting for our dinner check, had plenty of time to discuss the general lack of customer service everywhere. We shared stories of trips to the big box stores, department stores, mall stores, and yes, even indie retail stores where the bar was not met.

Think about it. Here are two retailers who understand the challenges of retail. Our bar of expectation is probably more forgiving than others. Yet we were lamenting how we couldn’t find anyone to consistently give us even simple basic customer service.

Yet a new survey from SAP SE says that one of the keys to future growth is, “Improve the in-store experience, because while a focus for many years on the in-store experience has paid off, retailers must continue to evolve and innovate to keep up with changing customer needs.”

CUSTOMER SERVICE CPR

The key phrase is changing customer needs. Actually they aren’t changing as fast as you might think. But if you aren’t hyper-focused on your customer’s needs, whether it be a beer or a price or just a friendly smile, your customer service is dead and dying.

My fellow retailer and I came to a simple conclusion. Customer Service is really quite simple…

Give the customer exactly what she wants.

WOW Customer Service is not much more difficult.

Give her exactly what she wants and then a little more.

We didn’t find that in Las Vegas. But if you do that in your store, it will pay off in ways the slot machines never can.

-Phil Wrzesinski
www.PhilsForum.com

PS Your brick & mortar competition (chains and big-box behemoths) have pretty much given up on Customer Service. You know who hasn’t? The online stores. Amazon is hyper-focused on the customer. Other major online sellers are doing the same. If you can start exceeding your customers’ expectations, you can own the b&m landscape. Need an idea of how to raise that bar? Download Customer Service: From Weak to WOW! in the Free Resources section.