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Growing in a Shrinking Market

Our market is shrinking.

The 2010 census showed that we have 3200 fewer children in the county than we did in 2000. For four straight years the number of births in the county has dropped from the previous year. Plus, people are spending less on toys than ever before thanks to the economy and the electronics market.

The toy-selling pie has shrunk considerably. (In fact, it is more of a tart than a pie right now.)

Yet, I still have all the same competition. More, if you include the explosion of ecommerce websites. My expenses like utilities, health care, and property taxes continue to go up. And my access to profitable lines of products gets smaller each year as vendors use discounting sites to move their products or choose to sell direct online.

Sounds like a recipe for disaster.

There are three ways to combat this disaster and stay profitable as a company.

Right Size Your Business

Rather than focus on growth, focus on being the right size for your market. Shrink your overhead by moving to a smaller location. Trim the fat out of your staff by letting the poorest performers go and training the remaining staff to do more. Bring some of the outside services like payroll and accounting back in house.

Rather than lament the losses, figure out exactly what the market will bear and what your take of that market should be. Then build your business around that size.

Grab Market Share

When the pie is shrinking, you need to get a bigger piece of it. You do that by hyper-focusing on your strengths. Carry exclusive brands that cannot be found everywhere. Ramp up your customer service beyond any level previously seen in your area. Make your marketing stand out so that it moves people to want to shop with you.

That last one is easier than you think. You can take greater risks with your marketing when your back is against the wall. Go ahead and be remarkable and memorable and moving. What have you got to lose?

Expand Into New Markets

You can do this two ways.

First, consider moving into a different geographical market. Go find a town that is growing or under-served in your category and move or expand your business there. Or add eCommerce to your website and see if you can grow sales all over.

Second, find new complimentary product markets into which you can expand. If you sell toys, can you sell books or hobbies or baby products? If you sell furniture can you sell decor, wallpaper, paints, appliances? If you sell jewelry can you sell scarves, hats, or purses?

Both expansions are tough and can be costly. You’ll have new competitors, new costs, new headaches. But when times are tough, you have to be tougher.

If your market is shrinking you can still grow. You just have to do it and measure it differently.

-Phil Wrzesinski

www.PhilsForum.com

PS For the last few years we have focused on grabbing a bigger piece of the pie through better customer service. Right now our market share is over 11% in both toys and baby products. This year we have been right-sizing, too. Next year? Expansion? Yeah, in some way, shape or form. Stay tuned…

What Gets Measured?

We had a meeting of downtown business leaders to share our “one big thing”, that one nugget of truth that helps us be successful. Local businessman Bob Smith said…

“You can’t manage what you don’t measure.”

Frances Schagen, who helped me with the eBook Reading Your Financial Statement, had a more positive spin on the same message…

“What gets measured gets done.”

What are you measuring?

I looked at my web stats for http://www.philsforum.com/ to see from where I got my traffic, to see which documents were downloaded, to see which eBooks were most popular this week.

I was surprised that my newest eBook – Customer Service: From Weak to WOW! – was only fourth on the list of eBooks downloaded for the week. Apparently more people were interested in Inventory Management, Staff Meetings Everyone Wants to Attend, and Understanding Your Brand.

Usually when I announce a new eBook, it dominates the downloads for the first week.

Now I need to read into the tea leaves from this data and decide one of three things:

  1. People are not interested in the new eBook on customer service.

  2. People are not aware of the new eBook on customer service.

  3. The other eBooks are more important to my readers than customer service.

Since I track these numbers regularly, I have some understanding that the Inventory Management downloads this week have been unusually high. This is a good thing. I also know that the Customer Service: From Weak to WOW! downloads have been weaker than a typical launch.

But previous posts on Customer Service have been some of my most popular posts (I know this because I measured it.) Therefore, the most likely answer to why the new eBook was not tops in downloads is a combination of #2 and #3.

Which means that my message in the launch of the eBook needs to be tweaked…

I just wrote a new eBook that you can download for FREE that will help you raise the bar of your customer service so high your competition will not even be in the conversation!

It is called Customer Service: From Weak to WOW! and although you will hate me for some of the things I have written, and you will dismiss some of my advice out of your own denial, you will be thankful you downloaded it and shared it with your staff. More importantly, your customers will be thankful when you quit giving lip service to customer service and start WOWing your customers.

At only four pages, how can it be that good?

Download it and see for yourself. It’s FREE!

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

PS Why do I give away so much for FREE? I want you to succeed. Period. That brings me lots of joy. Plus, I know that if you find it useful you’ll reprint it, re-tweet it, share it with others. Then even more of us independent retailers will see success. My goal is to raise the water level for all boats, even if I have to do it one harbor at a time.

PPS Of course, my other favorite thing is when I get hired to speak to groups of retailers. Giving information away like I do gets my name out there and helps establish me as an expert. The more you share what I say and the more you help me spread that influence, the more likely I get those opportunities. Thanks!

Building Your Customer Email List – Stolen Idea Made Better

I stole this idea from George Whalin.

To build your customer email database, put a fishbowl on your counter with a sign-up for your email and offer a drawing for a $25 gift certificate each month for anyone who signs up that month.

Works like a charm.

I shared this idea with some of my toy store owner friends. Tracey Harding of Kidz Enterprise in Tyngsboro, MA took it one step smarter.

She posted that the winner would be announced in her monthly email.

Guess what her open rate is?

Yeah, a lot higher than yours and mine.

Thanks, Tracey!

-Phil Wrzesinski
www.PhilsForum.com

PS Follow this link for some words of wisdom I wrote on how to make an email newsletter campaign work for you. I wrote it in 2009 and the principles haven’t changed.

What if the Coach is Wrong?

Everyone knows in sports you do not question the coach.

The coach says.. You do…

Everyone has to be on the same page for the team to be successful.

But what if the coach is wrong?

Every season someone ends up in last place. Someone is the biggest loser. Even though the team did everything the coach asked. Either the team didn’t have the talent or the coach was wrong.

But in sports, unlike retail, if you’re the biggest loser this year, that’s okay. Next season you start 0-0. In retail, if you go 0-16 this year you start next year in a deep hole. There is no reset.

Two quick lessons from this…

1) If you’re the coach, you better be right. You better have done your homework, planned for all contingencies and plotted a fabulous course. Then all you need to do is get the team to buy in.

2) If you have a coach and you know the coach is wrong you have to decide. Do you try to change the coach’s mind or simply do the right thing?

Yes, I do advocate mutiny. If your coach is obviously leading you into last place, you need to do what you can to change that, even if it means subordinating the coach.

There is no reset in retail. You carry over your wins and your losses from last year into this year. The bank and your customers will remember and judge you on your previous season.

When the coach is right, all is good. But when the coach is wrong…

-Phil Wrzesinski
www.PhilsForum.com

PS Before you choose mutiny, however, you have to understand. Following a coach into last or subordinating the coach are both going to lead to struggles. But as long as you’re playing to win, at least you have that to fall back on. And if you don’t know where your coach is leading you or why, you need to ask first. They may have a vision they just haven’t explained well.

The Emperor Has No Clothes

That’s where Roy H. Williams found himself in today’s Monday Morning Memo talking about Facebook & Twitter – as the boy in Hans Christian Andersen’s tale telling the truth nobody wanted to hear.

Facebook and Twitter are not the be-all-end-all fix to your marketing & advertising woes.

They are just the latest dazzling jewels being passed on as our next marketing saviours. But like many jewels that have blinded us before, Facebook and Twitter will not be your knight in shining armor. They will not lead you out of the dark. They will not transform your business into greatness.

Oh they might help a little bit. But alone they are as naked as Andersen’s Emperor. They need to be clothed with the right message.

Remember the message? Your message? The one relevant, salient, memorable point that speaks to the heart of your customer? The message that makes them feel not only a connection with you but a partnership? A loyalty?

If your business isn’t growing there are only two things to blame.

  1. Your market is shrinking. If you sell typewriters, sorry, dude, but the game is up.

  2. Your message isn’t connecting.

And not just the message you give through your advertising, but the message you give through the experience in your store. Do you echo your marketing in your services? In your attitude? Do you show the same heartfelt caring towards your customers in person as you do online (and vice versa?)

Figure out your message. Put all your time and energies into coming up with that one relevant, salient, memorable, heartfelt message. And once you have your message, make it sparkle in every single element of your business from the bathroom floor to the phone message to the way your employee says Hello.

Then it doesn’t matter which jewel you use. With the right message they all shine. Even Facebook & Twitter.

-Phil

Yeah, I like to call this “Branding”. And when you understand your brand, you have all the jewels you need.

Bigger Rewards Require Bigger Risks

Tomorrow I am taking a huge risk. I am undergoing surgery to correct two physical abnormalities, an elongated soft palate and uvula, and a tongue that is positioned farther back in the throat than normal.

I suffer from sleep apnea. And in the long run, if I don’t treat it, it will kill me.

I tried the easy routes…

Tried all the over-the-counter fixes, Breathe Right Strips, Anti-snore sprays, etc. Not worth the money or aggravation.

Wore a CPAP mask for three years religiously. But the mask came off 15 times a night no matter what mask I tried or how tight I cinched it.

Wore two different oral appliances. One didn’t work worth a darn (don’t buy them over the Internet), the second almost worked but just couldn’t overcome the odd physical circumstances of my throat.

So tomorrow I will have my tonsils removed, my soft palate trimmed, and my tongue pulled forward. The surgery is long, painful, and the recovery brutal. And there are risks, too. Any surgery involving the throat runs serious risks for breathing. Although the surgery itself will have no negative effect on my voice, the anesthetist will have to run a tube down my throat past the vocal chords. For a guy who makes his living with his voice (speaking, teaching, singing), those are some serious risks.

But those are the risks I need to take to set myself up for long-term health.

There’s a business lesson in here, too. Your business has some long-term health issues. Are you addressing them? Are you willing to take some serious risks to set your business up for long-term health?

Have you extended your hours to meet the demands of convenience-driven customers?

Have you tightened your pricing to stay competitive in your field?

Have you raised the Experience level in your store to the point people are bragging about their trips to see you?

Have you made the necessary investments in technology to keep you current with best practices, and help you manage your inventory and cash flow better?

Have you made the necessary upgrades to make your store look fresh, new and exciting?

Sure, there are some risks spending the money necessary to make those kinds of changes. And there is no guarantee you will succeed. Even my surgery only has an 80-90% chance of success.

But without those changes, your business will die a slow (?) death.

Take the risks necessary to ensure you are set up for long-term health. That’s what I’m doing both personally and at Toy House.

When I recover from surgery I’ll let you know what we have in the works for Toy House. It’s every bit as exciting and scary as tomorrow.

-Phil

Built-in Advantages

Some businesses have built-in advantages.

The big box chain stores have the advantage of Price through buying power and a bully position to demand and extract better pricing out of their suppliers. Some have the advantage of Convenience, too. Great locations and one-stop shopping.

The Internet sites have the advantage of Convenience. Shopping in your pajamas from the comfort of your own home. Some have the advantage of Price through low overhead. Warehouse space is cheaper to build than retail space.

And those two channels are fighting big time for customers who value price and/or convenience.

Independent Retailers rarely have either of those advantages. We work on tighter margins to stay price competitive. We pay higher rents to try to be convenient. And although good to have those things, the one area where we do have the built-in advantage is Experience.

To be successful, we have to out-Experience the competition.

We can offer not just good customer service, but outstanding, bend-over-backwards customer service, the kind that gives people something to talk about.

  • Have a problem? We’ll fix it.

  • Have a special need? We’ll take care of it.

  • Have a desire? We’ll fill it.

We can know more about the products than even the most savvy Internet researcher. And it isn’t just important to have knowledge. We can know how to apply it.

  • Let me tell you why the folding mechanism on that stroller is better for you.

  • Did you know that this game teaches skills that will raise your child’s math scores?

  • The manufacturer recommends this age because younger children don’t have the hand-eye coordination to be successful.

We can WOW our customers every time they step through the door.

  • Yes, I’d be happy to carry that out for you.

  • I’d like to give you this free gift as a token for shopping with us today.

  • Of course we deliver.

If your store isn’t built around the concept of Experience, you’re missing out on the one built-in advantage you have that your big-box and Internet competitors don’t. And if you aren’t actively working every day to improve your Experience, you’re not only hurting yourself, but every other indie retailer in your town because you’re teaching customers that Experience isn’t that important.

It is. You can do it. So make it so.

-Phil

Are You Working ON Your Business or IN Your Business?

Morgan Freeman’s character “Red” said it in The Shawshank Redemption, “You either get busy living or get busy dying.” Never have more truer words been said about retail.

So what are you busy at right now?

Are you busy coming up with new ways to market your business?

Are you busy evaluating your inventory mix to make sure you have the right items, the right amount of items, the right prices?

Are you busy measuring your financials to make sure you have enough cash flow, are keeping expenses in line, and building profits for the future?

Are you busy training your staff, teaching them how to please your customers and make their experience both memorable and worthy of talking about?

If you want to get ahead, you have to spend just as much time working ON your business as you spend working IN your business. Maybe even more.

Here are some simple things you can do to find more time to work ON instead of IN.

  • Don’t waste your time stapling, folding, cutting or hole-punching. If you don’t have a staff person in need of a simple project, give it to your kids or grand kids. (And if that isn’t an option take it home with you and do it while you catch up on your favorite show).

  • Don’t micromanage. Train your staff how to do it. Then empower them to do it. Even encourage them to come up with their own ways to do it better.

  • Don’t ever say or think “it would be quicker for me to do it myself.” The first time, you’re right. But if you teach someone else how to do it, the first time will be your last time.

  • Hire somebody. Let them do all that day-to-day stuff that bogs you down. Not only does it free up your time, but it forces you to work ON your business just to find the money to pay them.

And if you aren’t sure where to begin working ON your business, think about it as a three-legged stool.

  • The seat of the stool is the products. Without the seat there is no need to prop it up.

  • The first leg, then, is the marketing. What are you doing to get people in to see your products?

  • The second leg is selling. How well trained is your staff? Do they know the benefits of the products?

  • The third leg is the financials. How is your cash flow? Profit? Inventory levels? Expenses?

Pick the wobbliest leg and get to work. (Let me know if I can help).

-Phil

A Room Full of Sellers

I attended a networking conference yesterday for entrepreneurs. It was designed to be a way for people looking to go into business for themselves to meet people who could help them along the way.

It looked more like a shark feeding frenzy.

There were at least 5 people per entrepreneur in attendance. That’s 5 people hoping to sell their services for every one person with a dream.

And that’s the biggest complaint I hear from anyone who attends a networking event. It’s a room full of sellers and no buyers.

But networking is still a powerful tool for growing your business without spending a ton of money. You just have to be smart about how you do it. You have to know that you are walking into a room full of sellers.

The best advice? Be a buyer. Take the attitude that you are going in to meet only a handful of people and see how they might be able to help your business. Don’t worry if they have services you don’t need or want. Don’t worry if they give you hard sells. Just listen, ask questions, and give them a platform to talk. At the end of the conversation you’ll know somebody new, and if you listen hard enough, you’ll know them well.

And best of all, you will have planted a seed in them without turning them off. Yes, selling turns people off. Listening turns them on. So listen and learn, and plant seeds that will sprout somewhere down the road.

If you make it a goal to be a buyer in a room full of sellers and try to meet only one or two people per event:

  • You’ll have more fun

  • Your dance card will always be full

  • You’ll make connections that will pay off down the road

Now imagine the seller at a networking event who can’t find a buyer. He’ll call the event a waste of time. And you’ll be laughing all the way to the bank.

-Phil

Measuring Success

Last night was graduation for the fourth class of the Jackson Retail Success Academy. Eight weeks of Monday nights building the foundations for their success, culminating in a presentation by each student of what they learned and how they were going to apply it in their business.

How Would You Measure Success?
At the opening night I asked each student how they would measure success. How would they know if they had learned what they needed or expected to learn?

As they gave their presentations I went back to their comments the first night about measuring success. With each student I asked the question, “Based on how you said you would measure success, was this class successful for you?”

Some enthusiastically said Yes! Others said the content of the class made them completely rethink how they would measure success.

Most importantly, they all had a stick against which they could measure success.

Going Stickless
Too often we go forward with our business without having a stick, without having a way to measure our success. We plan our advertising based on the pitch from the latest ad salesperson. We base our product selection on the neatest thing our sales rep brings to our attention. We train our staff only after they make a major mistake.

Then we wonder why we aren’t getting the results we think we should. We wonder why our business seems to be sitting out this economic recovery.

Define It
Don’t leave it all to chance. Set a bar or a goal or simply a stick by which you will measure your progress and your success. Finish these sentences for your business:

I will have a great product selection if…

My advertising plan is designed to…

My staff will consistently…

Then set about figuring out how to make those sentences come true. Once you know how to measure, then you know what to manage. That is the true key to success.

-Phil