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The Death of Mom & Pop Retailers?

Do you remember when the Sears Catalog was going to destroy all the Mom & Pop Retailers? Yeah, probably not. That was back in the early parts of the 20th century when you could even buy a house (IKEA-style) in the catalog and have it delivered right to your property.

The last year of the Sears catalog was 1993, coincidentally right around the time AOL and the Internet were coming to fruition. The last year the Sears catalog was of any consequence to the toy industry was in the late 70’s. We used to hold a “Catalog Sale” every fall where you brought in your catalog and we matched the prices. By the late 70’s the prices in these catalogs were the same or higher than they were in our store.

Mom & Pop Retailers survived.

Do you remember when the big-box category killers like Staples, Home Depot, Barnes & Noble, and Toys R Us were going to destroy all the Mom & Pop Retailers? That was a more recent development in the 1980’s and 90’s. A lot of our vendors left us for the supposed greener pastures. Heck, they even stole our moniker and still to this day, many in the media call those stores “specialty stores” because they “specialized” in one industry.

Yet we all found ways to compete around them, by changing our product mix, out-servicing them, and staying current to trends in our industries.

Mom & Pop Retailers survived.

Do you remember when the big-box discounters were going to destroy all Mom & Pop Retailers? Wal-Mart, Target, and K-Mart would be the death of us all through their discounted buying, bullying practices with vendors and suppliers, and their sheer size (and deep pockets). 

They ended up being even less of a threat than the category killers as they raced to the bottom selling only the cheapest of the cheap. Our customers realized cheaper isn’t always better. Instead those stores fed on each other until K-Mart was eaten alive.

Mom & Pop Retailers survived.

Do you remember when the Internet—and especially Amazon—were going to destroy all the Mom & Pop Retailers? How could we compete with their prices? How could we compete with their selection? How could we compete with their convenience?

Yet many retailers either embraced them or learned to work around them. And in reality, the biggest bite Amazon took was with the department stores, the category killers, and the big-box discounters.

Mom & Pop Retailers survived.

Yes, there were some casualties along the way. Technology disrupted and destroyed the record store industry. But it wasn’t another retailer that did them in. It was a fundamental change in how we consumed music.

The same can be said for the video stores. It wasn’t Netflix’ DVD mail service that did video stores in. It was online streaming.

Heck, those industries aren’t even completely dead. Video stores still exist. Vinyl is on the rise. Independent book stores withstood Barnes & Noble, Borders, and Amazon and are back on a growth trajectory. Independent toy stores outlived Toys R Us. Pet stores are multiplying faster than the bunnies they sell.

Mom & Pop Retailers survived.

The point is that pundits have predicted the death of Mom & Pop Retailers several times over the last century, yet you’re still standing.

You’re still standing because you adapt to change.

Change is inevitable. The death of Mom & Pop Retailers is not.

-Phil Wrzesinski
www.PhilsForum.com

PS Not all change is detrimental. We computerized Toy House in 1989 with an IBM AS/400 that needed a custom-built cabinet large enough to house it. The sales reports took hours to run. I planned my afternoon work by running reports all morning and my morning work the next day by running reports all night. Nowadays my retailers can pull up reports in seconds on their phones while in the booth. Technology, when properly embraced, has made being a mom & pop retailer much easier than ever before.

PPS Yes, most of my blogs are about “tools” you can use to make your business better. Think of this post as a “mental tool” to use. When you take on the mindset that change inevitable and go out looking how to use the changes to your advantage, you will always be more successful than the businesses that run around screaming the sky is falling.

A New Beginning for Me, An Old Lesson for You

Today is an exciting day for me! Today I start a new job as the National Sales Manager for HABA USA, a wonderful toy and game company I used to sell at Toy House. I will be responsible for helping the sales reps get more HABA toys into more retailers.

What does that mean for this blog and the resources on this page? Not a whole lot.

I will be blogging less, but the resources will remain, and the insights will only increase as I expand my scope of understanding of all aspects of the retail market. I will still be available for presentations and workshops (albeit my schedule will be a lot tighter and less flexible). And I will always be looking for new ways to help indie retailers and small businesses succeed.

In fact, because of my new position, I had this experience happen last Saturday that we all can learn from.

SATURDAY AT THE MALL

I needed to updated my wardrobe. After years of wearing Toy House logo shirts, and two years of working at home 85% of the time, my wardrobe isn’t ready for trade shows and meeting with retailers and reps. That meant shopping.

I went to a large mall with several of my favorite stores. I used to be a Dockers guy, but have found Haggar pants to fit me a little better. The outlet store was having a sale on pants, too! Road trip.

Of course, when you study retail for a living, you don’t shop like a typical guy—run in, grab, and go. Don’t get me wrong. That’s exactly what I did at Haggar. But then I walked the rest of the mall to see what was happening. Plus, there was a toy store in the mall. I wanted to know if they had HABA in their store.

The store was nice. Decent traffic as would be expected midday on a Saturday. A sales clerk approached and asked if I was finding everything okay (cringe). I said, “I was wondering if you carry HABA toys?” I had seen a few of HABA’s competitors on the shelves but not HABA at that point.

She said, “I don’t know. Let me check.”

While I kept browsing, she went up to the registers and looked it up. A few minutes later she came back and said, “No we don’t.” Then she walked away never to be seen again.

In her mind she thinks she gave me good customer service. She approached me and answered my question.

In reality she missed the boat completely. I handed her the most perfect opening for starting a conversation and building the relationship that could lead to a sale. She could have asked me one of several questions …

  • What does HABA sell?
  • Why are you looking for HABA?
  • What product in particular were you hoping to find?
  • Who are you shopping for?
  • Can I show you some alternatives?

Instead she walked away. 

This is a problem we all have with our sales clerks. At best, they make an attempt at the low-hanging fruit, but never reach beyond that first branch. They shy away from actually helping a customer and making a sale. They back off at the first hint of rejection.

Last summer I created a new presentation for the Independent Garden Center Show called How to Push for Yes (Without Being Pushy) (click the hyperlink to download the FREE eBook) just to help with this situation.

If you want your sales team to go after the better fruit on the higher branches you have to first equip them with the tools to do so. Then you need to motivate them to step out onto the limb. That’s what HABA has hired me to do with their team. I am looking forward to it!

-Phil Wrzesinski
www.PhilsForum.com

PS I love the IGC Show! Last summer they challenged me to create five new presentations from scratch that collectively went on to become my half day workshop The Ultimate Selling Workshop. this summer they have challenged me to create five new presentations on selling. As always, I am looking forward to that challenge. As long as I live there will never be a shortage of new lessons (or takes on old lessons) for us to all collectively learn.

Making the Most of Trade Shows

In two weeks the world of toys will be on display in New York City for the International Toy Fair. All the vendors will be there showing off their new products. Retailers from around the globe will be there to take a peak.

New York City is a fun place to visit. Oh sure, February might not be the optimal time. I trudged through three 12″ plus snowstorms over the years and braved wind chills that matched the polar vortex of the last couple days here in Michigan. (Unfortunately I missed the unseasonably warm 2017 where temps got into the 60’s.) But with all the fine dining and top-level entertainment, it is fun no matter the weather.

My friends outside the industry would hear our tales of fine dining, bar-hopping, and Broadway. The partying was legendary.

The work was legendary, too.

We just never shared those stories.

There are countless articles about how to prepare for a trade show including tips that tell you to …

  • Run reports
  • Map your course through the show
  • Bring comfortable shoes
  • Don’t forget your business cards

There aren’t as many that tell you what to do at the trade show. Here was my approach …

WALK THE FLOOR

I rarely ever made appointments at the big shows. I didn’t want to be crisscrossing a large floor and adding a couple extra miles to my day.

Instead I chose one end of the floor to start and walked the whole showroom aisle by aisle, stopping in at my regular vendors as I passed them by. When I had to make appointments (LEGO wouldn’t let you in without one) I tried to make them either first thing in the morning or last thing in the afternoon so that I could walk as much of the floor as possible without interruption.

LOOK FOR NEW

The main purpose of a trade show is to find new items. You don’t need to see the stuff you’ve already seen, bought, and sold. Included in that “new” is new vendors. You should plan to visit several new vendors at any trade show.

This is where my affiliations with industry associations paid off handsomely. As a member of American Specialty Toy Retailing Association (ASTRA) I would look for new vendors who were supportive of ASTRA. ASTRA also had a special meeting one night at Toy Fair called Share the Fair where several retailers gathered to highlight the cool, new stuff they had seen. Those resources alone more than paid for my membership.

Every year you should be replacing your bottom 20% performing merchandise with something new. Trade shows are one of the easiest ways to find those new items.

TAKE NOTES

I learned this from my father. He would always ask for a catalog and two price lists. The first price list he used for notes. As he walked through a booth he would scribble notes on the price list next to each item. He had his own system. Mine was easy. I would star things I liked, circle things I knew I wanted to buy, cross off things I wanted to avoid, and write down short, descriptive words of the new items to remind me later what I thought of them. (Too small, price?, copycat, super cute, etc.)

Every night I would sort through all my notes and write down my thoughts on each vendor I visited. I would then sort the catalogs and price lists into two piles. One pile was going home to look at later. The other pile was for lines I might possibly write orders while at the show.

SAVE ORDER WRITING FOR YOUR LAST DAY

At some trade shows I brought orders I had already created. As easy as it would be to simply drop those orders off as I walked by the first time, I always held them until my last day. I wanted to see everything before I made any decisions.

More than once I added to an order because I loved all the new stuff the vendor was showing. More than once I canceled an order because I saw something I liked better from another vendor.

As soon as I finished my first walk-through of the trade show floor I found a table to sit and process my notes. I had three criteria for which orders I would place at the show and which ones I would take home to write later.

  • Show Special – if the show special was a good one and only was good until the last day of the show, that vendor went into the write pile. (Note: sometimes I would write at the show even if the show special was extended because I knew I wouldn’t see my sales rep before the deadline.)
  • Excitement – if I was really excited about a product and wanted to get it in right away (or feared there would be limited quantities), that vendor went into the write pile.
  • Sales Rep – if I had a lousy sales rep that I didn’t trust would see me soon enough to get the order placed, that vendor went into the write pile.

I knew I would be busy with all the other aspects of running a business as soon as I got home. Writing orders often went to the bottom of the To-Do List. I relied heavily on my sales reps to get in and help me write orders. My great reps knew that and always stopped in to see me right after a show.

The rest of that day was about plotting the second walk-through.

USING THE MAP

Every vendor would remind me their booth number in the multiple emails they sent before each show. I never cared until that last day. If you’re on the showroom floor, I’ll walk by you at least once.

My second walk-through, however, was plotted. I made a list of every vendor I needed to see a second time. Some of those second visits were to write orders. Some were to ask questions and get clarification. Some were to help decide between two competing products.

This is where the trade show maps come in handy. I always made my list by booth numbers. It minimized my walking and maximized my visit time. The list also made sure I saw everyone I needed to see. I circled all the vendors on that list where I knew I was writing an order. That way, if time got short, I had my priority list.

At our peak, we were buying product from over five hundred vendors. Trade shows were critical to our success in finding the right products, staying on top of industry trends, and building the relationships with our vendors that mattered.

This system served me well for close to one hundred trade shows. And when done right, it made the partying even more fun!

-Phil Wrzesinski
www.PhilsForum.com

PS The “partying” served a purpose, too. That’s when I would meet up with other store owners and share all the new stuff we saw. That’s when I would go out with some of my vendors and build stronger relationships. Find a restaurant or bar that is not so loud that you cannot talk. The evening will be much more fun, and as long as you drink lots of water, you’ll feel much better in the morning.

Self-Diagnosis Tool #2 – Market Potential

When my son was in Cub Scouts, his Den Master was the manager of one of our local Kmarts. He gave me some amazing insights into the world of big-box retail including numbers of what the big-box stores in Jackson were doing in sales both overall and for toys.

It was an eye-opener, especially when I learned we were doing more in toy sales than both Kmarts in town combined.

Knowledge like that is game-changing. Knowing where you stand in your market, and what is happening to your market is critical to your success. Heck, just knowing if your market is even viable is quite important.

If you were a start-up looking to get into business, I would actually put this Tool ahead of Tool #1 – Core Values. Let’s go find a viable market before we even begin with the other stuff. As it is, if you’ve made sure your business lines up with your Core Values, the next step is to look at what is happening with your market. How big is the pie and how big is your slice of it?

CALCULATING MARKET POTENTIAL

The best way to find the potential amount of sales in your area for your industry is to follow this step-by-step formula.

  1. Find the total dollars spent in your industry in the US. Usually a quick Google search can find you this number. For instance, in 2015 the Toy Industry was $19.1 billion.
  2. Divide that number by the US Population. In 2015 there were 322 million people in the US. $19.1 billion divided by 322 million equals $59.32/person
  3. Multiply that number times the population in what you consider your Trade Area. For instance, we considered Jackson County our Trade Area. Population 158,000 people times $59.32 equals $9.4 million Market Potential

For years I did the calculations and stopped right there. It is a close approximation. But it isn’t accurate. I needed to add two more calculations to get a true picture.

ADJUST FOR HOUSEHOLD INCOME

We didn’t sell groceries. We didn’t sell commodities. We didn’t sell basics like clothing. I needed to adjust the Market Potential based on the local economy. The number I used was Average Household Income (AHI). Find out the AHI for your Trade Area and compare it to the national average.

Back in 2015 the national average was $55,775. Jackson County was $43,170 or 22.6% less. (The city was much lower, but I used the county because we considered the entire county our trade area.)

That adjusted our Market Potential down to $7.3 million.

If you sell luxury items, this is a critical step for understanding your Market Potential.

ADJUST FOR INDUSTRY DEMOGRAPHICS

You may also need to adjust your numbers based on a demographic specific to your industry. Since we started with total US sales and total US population to get a sales/person amount, you might get a number that is skewed for your area.

For instance, if you sell boats, your market is much bigger in Michigan, with the Great Lakes, or Minnesota, with ten thousand lakes, than it might be in Nebraska or New Mexico. You might look into average boat ownership per population and compare your Trade Area to the national average.

If you sell books, you might want to look at the educational level in your Trade Area compared to the national average.

If you sell toys, you might want to look at the youth population in your Trade Area.

This number may be harder to find. I was able to cross-reference the US Census to find that Jackson County had 6% fewer children than the national average. That dropped our Market Potential down to $6.8 million. 

Notice how those two adjustments really changed our Market Potential?

CALCULATE YOUR SHARE OF THE MARKET

Once you know your Market Potential, it is easy to find your Market Share. Simply divide your sales by the Market Potential. In 2015 our sales were 15.7% of the Market Potential.

I used a spread sheet for all of these numbers. I put in the formulas for calculating percentage differences. All I had to do each year was find the raw numbers and plug them in.

The power of doing this math is two-fold.

Not only do you know exactly where you stand in your market at any given time, you also know how your market is changing.

WHERE YOU STAND

Walmart has 25% of the grocery market and around 10% of the entire retail market in America. As sobering as that may sound, at one point back in the 1950’s Sears had over 50% of the appliance market. That’s a mind-blowing number—especially when you consider where Sears is today.

The real Gold Standard for any retailer is to achieve 30% of your Market. It will likely take a perfect storm to get any higher than that. Back in the early 1980’s before we got a second Meijer, a Target, a Toys R Us, and a Walmart, we were pretty close to that mark. For most independent retailers the more likely expected number is 3-5%. Our 15.7% was a combination of store size and longevity in the market, along with all the other things we were trying to do right.

The interesting point here, though, is not in how many people shop with you but in how many people don’t shop with you. Almost 85% of our Market didn’t shop with us. That’s a lot of potential customers. If I wanted to grow my business by 10%, I only needed to convince another 1.57% of the 158,000 people in the county (2500 people) to walk through our doors. If you only had 5% of your Market, you would only need to convince another 0.5% of those people to shop with you to achieve 10% growth.

Trying to convince 2500 people is far easier and much different than trying to convince 158,000 people. You only need to find 2500 people who don’t yet know you, but share your Values.

CHANGING MARKET

The other critical piece of information you can gain is by doing this calculation year after year and watching how the numbers change. Is your Market Potential growing or shrinking? Is your share of the Market growing or shrinking?

We watched two critical numbers during the Great Recession. One was Average Household Income. One was Youth Population.

From 2007 to 2016 our Youth Population for Jackson County dropped over 40%. I drilled down into those numbers and saw even worse news. While national birth rates were dropping during that time, our birth rates were even lower than the national average except for one glaring segment—teen births. The city’s birth rates, thanks to this segment, were similar to national averages while county birth rates were well below average.

Average Household Income didn’t fare much better. At one point the AHI in the city limits was hovering around the poverty line at $27,000. Our closest customers had no money for toys. The outer areas of the county where the money was had no children. Not a good recipe.

Add into that mix, we watched the Sales per Person of toys in the US also decline from a peak of $75.17/person in 2004 to only $59.32 in 2015. People were spending their money on electronics like smart phones, tablets, and computers.

Over the years our Market Share didn’t change a whole lot, but our Market Potential did. In 2007 it was $11.9 million and we had 16.5% of it. In 2015 it was down to $6.8 million and we still had 15.7% of it (even though Amazon had become a major player in toys around 2011-2012). 

COMPETITION

The other barometer Market Potential and Market Share gives you is your own business’s health compared to the competition. While top line sales are nice, the true question you need to ask is whether your Market Share is growing or shrinking. You could be up 10% in top line sales, but if your market grew by 15%, someone else is eating your lunch.

If you have done your spread sheet and have several years of data to analyze, plot into the data when major competitors came to town or made major changes to their businesses. See how that affected your numbers. For instance, I can see that when Walmart opened in Jackson in 2005 our share dipped from 16.5% down to 15.9%. I can also see how we jumped back up to 16.4% the following year after the novelty of the new store wore off. I can also see how we dipped down to 16.1% in 2011 and 15.8% in 2012 when Amazon became a serious player in the toy market.

All of these numbers tell a story far more compelling than whether your store’s sales are growing or shrinking. They help you understand your business on a far greater and more important level.

If your Market Potential is growing, there is money to be made, but be cautious. The big guys are tracking that number, too, and might be looking to expand into your market. If your Market Potential is shrinking, you might need to look at moving, changing, or finding an exit strategy.

If your Market Share is growing, you’re doing things right. If your Market Share is shrinking, you have work to do.

That’s why you should make this your second priority to diagnose and understand.

-Phil Wrzesinski
www.PhilsForum.com

PS Where does that 3-5% number come from? This comes from looking at average store sales for several different industries including toys, pet supplies, shoes, jewelry, photographic supplies, and flooring. While there are many outliers and the range is quite broad from large to small, the average store for most of these industries has enough sales to grab about 3-5% of their market. I use it purely as a benchmark for start-ups to be realistic about their business prospects in the first few years. Getting to 3% within two to three years is a realistic goal. If you’re in a town with a strong Shop Local movement that might be easier, but you might also have more indie competition. If there are no indie competitors, you have an unusually large store, and you’ve been the fixture in town setting the bar of expectation for over sixty years, your numbers should be much higher.

The reality, however, is that the number itself doesn’t matter nearly as much as what is happening with that number. Is it going up or down? If it is going down you need to find out why.

Go here for Self-Diagnostic Tool #3 Customer Service

 

What Value are You Selling?

Sell “Play Value”

That’s the first line of the business plan my grandfather wrote back in 1949 when he founded Toy House. I found his spiral notebook with the plan while looking for something else in the archives of the store. Page two outlined the possible names for the store including Toy House and House of Toys.

Having written a few business plans over the years, what fascinates me is the simplicity of what he started out to do. He didn’t say he was going to open a retail shop. He didn’t even say he was going to sell toys. He was going to sell something of value—“Play Value.”

In an interview I did with my grandfather a couple years before he passed away I asked him what he thought was the reason for the long success of Toy House. We were about to celebrate our 60th year in business. He said, “I think its because we didn’t set out to be just a toy store. We wanted it to be a store of value. I’ve always sold on the value.”

In a 2005 survey I sanctioned about toy shopping in Jackson, the survey respondents were asked to name the first store that popped into mind when certain words were read. We were mentioned most for words like Friendly and Helpful. Walmart owned Affordable and Cheap. Kmart owned Dark and Dirty. Toys R Us owned Cluttered and Confusing.

The most surprising result from that survey was that we also owned the word Value.

While my competitors were advertising low price, I was talking about Play Value. While my competitors were offering discounts, I was teaching customers how to calculate the True Cost of a Toy (Cost per Hour of Play).

Value.

Products come and go. Nothing is exclusive anymore. You’ll never make it in retail if your only calling card is exclusivity of product. You need to be clear on what you are really selling.

Your competitors are going to advertise the heck out of brands and discounts. If you want to stand in stark contrast to them, advertise the Value your customers are buying.

For instance …

  • A shoe store customer is really buying health, comfort, or safety
  • A clothing store customer is really buying self-esteem, success, or comfort
  • A jewelry store customer is really buying love, romance, or gratitude
  • A candy store customer is really buying happiness, comfort, or indulgence
  • A gift shop customer is really buying nostalgia, relationships, or contentment
  • A sporting goods store customer is really buying health, happiness, or even time

What Value are your customers buying?

Does your staff know this? Do you talk about it daily, weekly, monthly? Do you do things to reinforce this ideal?

Do your customers know this? Are you making sure your social media posts, email newsletters, and other advertisements all portray this message?

Here are some radio ads I ran back in 2016 …

Happy Dance
Last year, a professor said the toys that are most open-ended and creative are the toys kids play with the longest. My grandfather was saying that back in the 50’s. Another professor last year said that a toy should be 10% toy and 90% child. My grandfather was saying that back in the 50’s, too. When the professors confirm something you’ve already known, there is only one thing to do… A happy dance. Toy House and Baby Too in downtown Jackson. Come join us in our happy dance.

Real Play Value
Remember that toy your child saw on TV that he begged and pleaded and wore you down until you bought it? Only to find he never played with it again? Quit making that mistake. Anyone can make a toy look good for 30-seconds. Do your child a favor, don’t cave. Get toys with real play value. Your kids will be playing, laughing, and growing. They won’t even turn on the TV. Go to Toy House in downtown Jackson, the largest selection of toys in America. We’ll make you smile, while your kids play

Play is Important
Everyone is talking about education and how to fix it. The answer is easy – Play. Google Play. You’ll get thousands of studies why kids who play more do better in school. Don’t wait for the politicians to figure this out. They don’t win votes stumping for recess. For the greater good of this country and your child, you need interactive, open-ended, creative play. The same kind we’ve been advocating for sixty-seven years. Toy House in downtown Jackson, because Play is actually quite important.

While Target was trying to cram as many brand logos into one TV spot as possible, we were talking about making a difference. Value.

When you make it clear what Value you are selling, you’ll find plenty of customers who want to buy those Values.

-Phil Wrzesinski
www.PhilsForum.com

PS Does selling Value really work? When we closed shop in 2016, our Market Share was at 16%—far larger than the typical indie toy store, the largest in our market, and the same it had been for several years even as Amazon was growing. It was only the shrinking local market that helped us decide to hang it up.

PPS This “value” is only slightly different than your Core Values. I know the terms can be confusing because of similarity. Think of your Core Values as being the driver behind what you do. Think of the Value you Sell as being the Benefit your customers buy.

What’s In Your Training Packet?

There used to be a locally-owned office supply store in downtown Jackson. I bought a lot of stuff from them over the years. They had a storefront but most of their business was done by phone from their catalog. I’d call in an order today and it would be delivered to the store tomorrow. I loved going in their store even though the selection in stock was only a tiny fraction of their available merchandise.

One thing they always had in stock was three-ring binders. I bought several of them every fall to put together my Team Member Handbooks for the new hires. I spent the better part of a day prepping these books for my new employees (until I finally learned how to delegate this task).

Here is what went into this binder …

THE WRITTEN HANDBOOK

The written handbook was the basis of the binder and consisted of five sections:

  1. Policies
  2. Store Procedures
  3. Layaway
  4. Evaluation Process
  5. Addendum

Policies included all of the policies of employment including dress code, terms of employment, employment status (full-time, part-time, etc), vacation and holiday pay, sick leave, tornado warnings, and anything else related to them being an employee.

Store Procedures included all of our major services like free gift-wrapping, delivery, assembly, UPS shipping, etc. It gave explanations of how to offer and perform these services, including guidelines for each one.

Layaway was such a large and detailed service that it garnered its own chapter in the book.

Evaluation Process talked about the criteria by which an employee would be evaluated. (Note: this one should be screened by an attorney familiar with HR laws.)

Addendum was a color copy of the major forms we used with detailed instruction how to fill them out. I also included our delivery map and delivery service guidelines here.

You’ll notice there wasn’t a section for Cash Register. The instruction book that came with our cash registers was thicker than the 1-inch binders I used for the Team Member Handbook and would have been too costly (and pointless) to reproduce for the Handbook so we left it out and kept it as a separate book.

The purpose of all this information was to make sure everything was spelled out not just for the employee’s sake, but for our sake as well. It helped make sure we treated everyone fairly and equally within the guidelines of the law.

I am a huge fan of having such a handbook for your employees. It helps clear up confusion and solve disputes—as long as you follow what is written in your handbook. I had an attendee in one presentation tell me his attorney friend makes a living suing businesses because of their handbooks. Those lawsuits are almost always when a company doesn’t follow its own rules. I advised this guy to hire his attorney friend to review his handbook. That would ensure the handbook was crafted within the laws and that his buddy could never be the one to sue him.

I’ll give you the same advice …

Have a lawyer familiar with HR Laws review your Handbook before you publish it.

 

THE BROCHURES

We had seven different brochures that we handed to customers over the years. With each new hire I made sure there was a copy of all of the current brochures in the back pocket of the binder. As I sat down with new hires the first day, I would show them each brochure and tell them since customers were reading these it was important that they knew what each brochure said.

(Here is a link to three of those brochures from the Toy House website.)

 

THE eBOOKS

In the back pocket, along with the Brochures, I printed out three eBooks that customers could also download for free from our website titled:

These fully explained our philosophy on toys, including why we sold what we sold. These documents, more than anything else, helped teach our staff how to find the best solutions for our customers time and time again.

If you have a different philosophy than your competitors for why you sell what you sell, you need to have a vehicle for sharing that with your customers. It might turn some people off, but for everyone else it creates a higher level of trust and loyalty. Just make sure your new hires know this philosophy right away, too.

I also included an article I wrote about why I believe in Santa. I wanted my new hires to better understand me and our store’s official position on the jolly old elf.

 

THE PAPERWORK

The front pocket contained the paperwork including:

  • IRS W-4 Form
  • Schedule
  • Parking Lot Map with assigned parking spot
  • A key to the employee entry door
  • Employee Training Checklist
  • Employee Handbook Reading Slip

The first four are fairly self-explanatory.

The Training Checklist was a worksheet with all of the areas of necessary training the seasonal employee needed to complete. Each section had a blank line in front of it. As one of my regulars taught the new person a skill, the veteran would initial the line next to that skill. That way, if the new person didn’t have a skill down to my satisfaction, I could go back to the employee who trained him or her to see how to improve the training. (Page 3 of this pdf is a copy of an older version of that Training Checklist)

The Employee Handbook Reading Slip was a half-page piece of paper with the following paragraph …

I acknowledge that I have read the Toy House Team Member Handbook and understand its provisions.  I understand and acknowledge that my employment at Toy House, Inc. is indefinite and for no specified length of time.  I understand and acknowledge that my employment can be terminated at-will by myself or by Toy House, Inc. for any or no reason, with or without previous notice. 

I know that this handbook is not a contract of employment and that its provisions are subject to change.  I will ask questions about any issues or areas I do not understand.

Name___________________ Signature____________________________ Date_____________

 

I paid my employees an extra hour of pay for reading their Team Member Handbook and signing this piece of paper. Yes, I quizzed them on its contents. I even played a little game. In each section of the Written Handbook I hid little symbols like this ⊗. If they found all of them and included the section and page numbers on the signed piece of paper, I gave them an extra half-hour of pay. (Hey, it was a toy store. Of course we played games. And this game ensured that, if nothing else, they looked at every page in the book!)

Anyone in education knows that people have different preferred styles of learning. Some learn better by reading. Some learn better by seeing. Some learn better by doing. I made sure my new hires got all three.

The Holiday Season is your time to shine. Make sure your new hires are up to that task. Give them the tools they need. Your Training Packet is an important tool in that toolbox.

-Phil Wrzesinski
www.PhilsForum.com

PS If you would like a word doc copy of the first two sections of my written handbook, shoot me an email. As I said before, however, before you use it for yourself (with modifications, of course) please have an attorney look it over. Times change. Different states have different rules. Different cities have different rules, too. Most importantly, don’t publish any rules you don’t intend to follow.

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.

Ask Your Customers What They Want

The one “service” my biggest competitor had that I didn’t was a Birthday Club. I wanted one for my customers. I already knew one thing I would do differently. That was the big Birthday Bell you got to ring when you came in to celebrate your birthday. What you probably don’t know was that I actually wanted a bigger bell than the 32-pound brass bell we ended up getting.

Phil holding the Birthday Bell

I wanted to run a hole through the ceiling and put a little steeple on top of the store with bronze church bell inside. That way, when you rang the bell, not only would everyone in the store know you were celebrating your birthday, so would everyone outside the store.

Unfortunately that would be a potential violation of the noise ordinance, so we went with the indoor bell.

The two parts of the Birthday Club I wasn’t sure about were the offer and the age limit. So I asked my fans on Facebook.

I first asked what people got from other birthday clubs for kids. Most birthday clubs offered a small coupon good on a larger purchase with a limited time frame to redeem. The general sentiment was that $2 and $3 coupons, especially when they came with strings attached such as a limited window to redeem and a minimum purchase, were of little interest to the child and often not enough to even garner a visit to the store. That was useful information. I knew I had to go big or go home.

With this knowledge, I sent out a postcard that was a $10 gift certificate—no strings attached. Well, okay, we had one string attached. It could only be used by the birthday person. Period. How that person used it was up to the individual. The postcard never expired. The postcard didn’t have to be used with anything else. There was no minimum purchase (although you didn’t get change back if the purchase was less than $10).

A lot of people gave us the postcard and 59 cents for their birthday purchase ($9.99 plus 60 cents for MI sales tax).

A lot of people spent way more.

Our average ticket for the birthday postcard was just under $30, which meant we made a profit (albeit a small one) on those transactions. More importantly, the postcards drove traffic. Over the last couple years we averaged over 300 postcards a month. That’s over 10 per day. Imagine ten happy customers ringing a bell and having fun spending their free money. Not only did it create excitement in the store and drive traffic, it drove word-of-mouth advertising. Everyone took pictures and video of their kids ringing the birthday bell that they posted on social media. On top of that, it created lifelong memories. I have had several customers come up to me since we closed saying that was the one thing they miss the most!

I had one more question to ask … “How long should the Birthday Club last?” Some stores aged you out at 10 years old, some at 12 years old. I wondered what my customers thought.

When I asked that question of my fans on Facebook one mom answered, “40?”

I didn’t need any more answers (although I got several that echoed her sentiment). I knew right then and there our Birthday Club would have no age limit. Sure, some of the parents and grandparents used their postcards to buy gifts for the little ones. Some, however, bought stuff for themselves. One young lady celebrated her 96th birthday by ringing the bell and buying two new decks of cards.

Without asking my customers, I might have structured the Birthday Club quite differently and it wouldn’t have been the successful program it was.

Toy House Birthday Bell

Find out what your customers want. Give them that and a little more.

We only had the Birthday Club and the Birthday Bell in the last decade of our operations, but it quickly became the highlight and focal point of a visit to Toy House. The bell was engraved and now rests in the capable hands of Ella Sharp Museum where they pull it out for special displays of Jackson’s history.

-Phil Wrzesinski
www.PhilsForum.com

PS The Birthday Club worked on a variety of different levels. The ringing of the larger-than-life, 32-pound brass bell was about creating memories and spreading the word through social media posts. Rarely a day went by that we weren’t tagged in a photo or video somewhere. The $10 gift certificate was an act of generosity that outshone our competitors and positioned us as being more customer-centric than they were with all the strings attached. The no expiration on the postcard allowed customers flexibility for using it whenever it worked best for them. One family saved them all up and made a family trip in for everyone to spend their cards on one special day. One family was always traveling around their daughter’s birthday so they appreciated not having to “use-it-or-lose-it.” Another family held it for their son to celebrate his December birthday in July. Any time you can delight your customers, you should.

PPS If Goodyear had asked its dealers (its customers), I’m sure they could have helped create an even better system that would surprise and delight the end-users more than the frustrations they caused yesterday.

How to Find Out Your Business Reputation

Some of you read them. Some of you don’t. I often get asked why each blog post has a Postscript (PS) or two. Postscripts are also called “afterthoughts.” In the case of my blog, I use them to reinforce different points made in the post, without clunking up the writing. I also use them to clarify and/or sum up something I’ve said. Often the PS is an action step or an application of the idea posed by the post. Sometimes it is a humorous anecdote or story from my past experiences.

Sometimes the PS hints at the next post. That was the case yesterday.

According to Roy H. Williams, aka The Wizard of Ads, your brand is “every single interaction someone has with your business, plus how they feel about it.”

In other words, your brand is not your slogan, your color scheme, or your logo. It is the way people feel about your business. It is your reputation.

In 2005 I wanted to know what people thought and felt about Toy House. Before I could create a stronger brand, I had to know from where I was starting. To do that, I needed to do a survey. Here is what I did.

LOCAL COLLEGE STATISTICS CLASS

Image result for phone surveyI contacted a professor at Spring Arbor University who taught statistics. Fortunately I already knew him. We had met at a networking event (one more reason why you should attend those events).

I told him what I wanted to do. I had a survey. I had the questions. I just needed someone to figure out the sample size, do the calling, and compile the results. It would be a live exercise for his statistics students. I agreed that I would write a letter of recommendation for all the students who participated, and that I would host a pizza party for the students when they had the results.

The professor thought it would be a fun exercise, and put it into his lesson plan at the appropriate time.

The students did the math and figured out we would need a sample size of 400 Jackson County residents to accurately measure the entire county within an acceptable margin of error. They also devised a random way to find those 400 people using the phone book. Each of the twenty students was then tasked with getting twenty survey results back within a two-week window.

QUESTION #1

The script I gave the students came from Roy. In a class I took, he showed me how to get an accurate assessment of where Toy House stood in the minds of Jackson County residents. It also showed how I compared to other stores selling toys in the area.

When someone answered the phone, the student would say …

“Hello, my name is (____). I am a Spring Arbor University student. My statistics class is doing a survey on toy shopping habits in Jackson County. Can I ask you a couple questions?”

If they said yes, the first question was this …

“Please name all the stores you can think of that sell toys in Jackson.”

The students had a worksheet with all the possible places listed and a few blanks for some out-of-the-box thinkers. As the person named stores, the student would number them in the order they were named. After the person stopped, the student would say, “You named (list of all stores they named). Can you think of any others?” This went on until the person said they could not think of any others.

The beauty of this question is that it helps you see how much awareness people have of your existence. You also see how you compare to everyone else in your town. It was eye-opening to see what percentage of Jackson County shoppers knew we existed. The results looked like this.

  1. Toys R Us 84.1%
  2. Meijer 82.3%
  3. Walmart 69.5%
  4. Toy House 64.8%
  5. Kmart 59.1%
  6. Target 45.2%

Thirty-five percent of the population could not think of us when asked to name a store that sold toys in Jackson. That was a shocker. (So was the fact the 16% couldn’t name the iconic national brand of Toys R Us and over half the population didn’t think of Target as a place to buy toys.)

QUESTION #2

Once the first question was answered, the student would then say, “For the second part, I am going to read you a few words. From the list of stores you just gave me, I want you to tell me the first of those stores that comes to mind with each word. There is no right or wrong answer. Just blurt out the first store you think of.”

The list of words I had the students read included positive words like Affordable, Caring, Clean, Friendly, Fun, Helpful, Knowledgeable, Quality, Value, and Welcoming.

The list also included negative words like Arrogant, Cluttered, Confusing, Dark, Deceptive, Dirty, Expensive, High Pressure, Indifferent, Over-Priced, Pushy, and Rude.

The list also included one word that upon reflection could be considered either positive or negative—Cheap.

The deal here is that whoever is mentioned the most for that particular word owns that word in the minds of shoppers. That is your reputation, good or bad.

  • We owned the words Caring, Clean, Friendly, Fun, Helpful, Knowledgeable, Quality, Value and Welcoming from the positive list, and Expensive and Over-Priced from the negative list.
  • Walmart owned the words Affordable, Deceptive, Indifferent, Rude, and Cheap.
  • Kmart owned Dark and Dirty.
  • Toys R Us owned Cluttered, Confusing, High-Pressure, and Pushy.
  • Target and Meijer didn’t own a single word on the list.

(Note: in that first survey, no one owned Arrogant. We were in a virtual tie with both Walmart and Toys R Us for that word.)

The one thing I didn’t include in my list of words was all of our Core Values, but mainly because I didn’t know them in 2005 like I did in 2007. We did a second survey in 2007 adding Education and Nostalgia to the list and owned those words hands-down. The only other changes in 2007 were that Walmart tied us for Value, and we took over Arrogant.

RESULTS

There were several takeaways from these results. The first was the lack of awareness for our giant, colorful store that had been in business for 56 years in the heart of downtown Jackson. More people mentioned Walmart, yet they had only been open a couple months when this survey was done. When we did the survey again in 2007, our name recognition jumped from 64.8% to 76.0%, whereas Walmart’s only went from 69.5% to 76.5%. We were still fourth overall, but had closed the gap significantly. (TRU and Meijer held steady.)

I was okay with owning the negative words Over-Priced and Expensive. That’s a common belief of indie retailers and I expected it. I was especially okay because we also owned Value. Value and Expensive are not exclusive. Value and Over-Priced don’t go together, but for every person that thought of us as Over-Priced, there was someone else who saw the Value in our offerings. I was okay with owning Arrogant in the 2007 survey, too, since I also owned nine of the ten positive attributes.

Most importantly, we owned the things we wanted to be know for. We owned our Core Values of Helpful, Fun, Education, and Nostalgia. We owned the things we were already advertising such as Friendly, Knowledgeable, and Quality. We owned the one word that made my mom the happiest—Clean! So we knew we were on the right track with our advertising, but more importantly we were on the right track with our actions.

Advertising cannot change your reputation. It can only enhance it. Actions speak louder than words.

Now you have the blueprint for doing your own survey to find out where you stand compared to your competition. If you don’t like your results. First change your actions.

-Phil Wrzesinski
www.PhilsForum.com

PS The interesting question about doing a survey today is whether to do it online or by phone or both. Back in 2005 and 2007 most people still had landlines. Today, if you only do a phone survey with numbers generated randomly from a phone book (assuming those still exist), you’re missing out on a huge segment of the population. That will be the challenge for your statistics class to figure out. It might cost you a little more than pizza, but it will be totally worth it.

PPS One other benefit from the survey was that I had a classroom of 20 college students who now knew about our store and saw the reputation we had. That alone was worth the pizzas and a quick letter thanking them for running the survey.

“Customer Service” is Dead

I make a living teaching businesses how to raise the bar on their Customer Service. It is one of my favorite presentations that always gets rave reviews. In fact, I have several presentations built around the concept of how and why to offer better Customer Service.

Yesterday I got an email from a toy store manager who was struggling to get her new team to connect their Customer Service Training with actually serving the customers. She was looking for ideas to help them understand and deliver the concept of Great Customer Service. It was then I realized something profound …

“Customer Service” is dead.

Not the action, just the phrase. It means nothing. It has no basis for today’s workers. It is vapid and useless and needs to go on Lake Superior State University’s list of banished words (might I also suggest adding “omnichannel?”)

The phrase is meaningless because so few retail outlets actually offer anything remotely resembling what it used to mean. Think about today’s young adults. Where are they shopping in brick & mortar? Big-box discounters like Walmart and Target? Check. Discount and close-out rack stores like TJ Maxx, Marshall’s, and Home Goods? Check. Cheapie stores like Dollar General and Five Below? Check. Under-manned and under-trained department stores like Macy’s, Sears, JC Penney’s and Kohl’s? Check.

When you tell your staff to focus on offering great Customer Service, they have no point of reference to understand what you mean. Most of them have never been in a Nordstrom’s at the peak of their game. Most of them have never been in an indie store like yours that spends the time and energy you do on training your team. They have heard the phrase, but cannot connect it to anything meaningful in their experiences.

Image result for problem solvingMy response to that toy store manager was to quit training on Customer Service. Drop that word from the vocabulary and instead focus on something for which they have a frame of reference like “Problem Solving” or “Surprise and Delight.”

Problem Solving is something we all have to do in our lives, something we all have experience with doing, something to which we all can relate. Instead of telling your staff to offer better Customer Service, teach them to be better at figuring out what problem a customer has come in to solve.

It might be someone needing a birthday present, or someone changing their wardrobe, or someone just killing time. Because of all the churches downtown we often had families in nice clothes show up on a Saturday afternoon just to kill time between the wedding and the reception.

It might be someone working on a project, or someone trying to replace an heirloom, or someone who saved up their money for a big purchase. In a toy store we often got kids with allowance or baby-sitting money burning a hole in their pocket.

Whatever the problem, your team’s true goal is to figure it out and help the customer solve it. We had a dad in the store one Saturday morning with the kids. He was filling time. We showed him all the demos and displays so that he could be the hero taking his kids around the store to play. We often had customers on their way to a birthday party that started ten minutes ago. Our staff would take the item before they checked out, leave the price tag at the register, and start wrapping it just to save time (and with a nice helium balloon on top, it was the hit package at the party.)

Surprise and Delight is another frame of reference to which we can all relate. We’ve all had that moment when something really cool and unexpected happened. Work with your staff to identify those moments when you can surprise and delight customers. Maybe it is something you give out of generosity. Maybe it is saying, “Yes!” to some crazy request. Maybe it is identifying what the customer truly desires and offering not only that but a little more. Maybe it is doing something totally unexpected. On several occasions, including a few Christmas Eves, I made after-work deliveries of large, bulky toys and baby products to customers who couldn’t be home during our normal delivery hours, or who needed the items right away.

When you get your staff laser-focused on Problem Solving or finding new ways to Surprise and Delight, they can relate better and understand their role better. At the end of the day, they are raising the bar on Customer Service, whether they know it or not. You just aren’t using that phrase.

-Phil Wrzesinski
www.PhilsForum.com

PS Reinforce this concept with your staff by always having them regale the tales of when they solved a problem or delighted a customer. I always started my staff meetings with Smile Stories (our tagline and my focus with my team was, “We’re here to make you smile.”) These were the moments when the staff truly made a customer happy. Not only did it reinforce our purpose, it started our meetings off on a positive, feel-good high, which made the meeting far more productive than the typical here-is-what-you-did-wrong-last-week berating that poor managers use to start their meetings.

PPS Since closing Toy House, I have abdicated the throne of being the “Largest Independent Toy Store in America.” There are some amazing contenders for that throne. One of them is The Toy Store with locations in Lawrence and Topeka, Kansas. It was one of their managers, always seeking better ways to train her staff, who reached out to me with the question above. I have full confidence her team will be solving problems and delighting customers at every turn by the time they reach the fourth quarter. If you want to see a magical toy store, check them out if you’re ever near their towns.