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Reaching the People Who “Think” They Know You

I’ve been out at YMCA Storer Camps the last couple days teaching sailing again. This time, instead of teaching the kids, I’m just working with the staff to make sure everyone is on the same page for teaching the kids. While walking to the waterfront, one of the new instructors asked me where I sail when I’m not at camp.

“Nowhere,” I replied

They called me Admiral Graybeard!

I have sailed other places in the past. I sailed for the University of Michigan Sailing Club. I sailed on the Great Lakes with a different, larger boat that the camp used to own. I’ve even sailed in races hosted by the San Diego Yacht Club (no, not The America’s Cup) a long time ago. But for now, my only chance to sail is out on Stoney Lake in camp boats.

Sailing is not my true heart’s desire. Teaching is.

At the camp I have taught Archery, Riflery (bb guns and pellet guns), Canoeing, Kayaking, Sailing, Swimming, Horseback Riding, Snorkeling, Wilderness Survival, Ropes Course Climbing, Rock Climbing, Backpacking, Biking, Team Building, Cross-Country Skiing, and Nature. Out in California I taught Earth Sciences, Astronomy, Geology, and Ecology. At Toy House I taught Car Seat Installations, How to Buy Toys, How to Buy Baby Products, How to Sell, and How to Work With Children of Special Needs. At Henry Ford Allegiance Health I teach new and expectant fathers how to be better dads. On the speaking circuit, I teach Marketing & Advertising, Customer Service, Hiring & Training, Inventory Management, Retail Math, Team Building, and Management Skills.

“Whenever you are asked if you can do a job, tell ’em, ‘Certainly I can!’ Then get busy and find out how to do it.” -Theodore Roosevelt

(Forgive me if it sounds like boasting. I’ve just said, “Certainly I can!” several times.)  What I’m really trying to do is find new and better ways to Help You (one of my Core Values) so that I can convince you that I can help you even more. Therefore, I teach.

Teaching is not only a love, it is a means to an end. If I can teach you one thing, hopefully you’ll trust me enough to want me to teach you other things. That’s one way I generate new business.

Last weekend I taught a group of toy store owners looking to capitalize on the disenfranchised Toys R Us shoppers that there are two reasons those people didn’t shop with independent specialty toy stores like theirs.

  • They don’t know you
  • They “think” they know you

That first group is fairly easy to reach. Any extra marketing or advertising you do will find them because they will be looking. That second group will be a lot harder. They have opinions about you (usually wrong) that won’t be swayed by a fancy radio or TV ad.

The best way to reach that second group is through Word-of-Mouth. Do something big to get your current customers to talk to them about you.

I told the toy retailers last week that was the only way to reach them. I was wrong. 

While I was walking down the trail to the waterfront with these soon-to-be sailing instructors I realized there is a second way … Teach!

Seriously. Just like me, you have some crazy, cool knowledge you could share. You have some wisdom and understanding of the products you sell that they won’t find just surfing the Internet. You have some tips and techniques for using and maintaining those products that might be a lifesaver for those customers.

The people who “think” they know you can be enticed to attend a free training program about the products they don’t know.

That was our Shopping for Baby 101 class. Free information about how to buy certain baby products including what to look for, what questions to ask, and what criteria to use when making buying decisions. The class was never a sales pitch, just useful information.

We picked up a lot of new customers that way who only thought we were a toy store.

We also began changing the way they thought about toys. Many of those same people who bought into our teachings about baby products also bought into how to buy toys, and became lifelong customers.

What do you include in the class? Answer these questions …

  • What info do most customers either misunderstand or not know about our products?
  • What info separates the smart customers from the average customers?
  • What questions does your staff have to answer over and over and over about the products?
  • What info would be fun and shareworthy?

Have a free class. Serve refreshments. Give out vendor-donated prizes. Make it fun and informative. You’ll sway a bunch of skeptics in the process.

-Phil Wrzesinski
www.PhilsForum.com

PS Teaching is a lot like leading. Think of your lesson plan as a path. You want to guide your audience by starting with what they know and building onto their knowledge and assumptions until it is time to break those assumptions. Then lead them back to safety with new knowledge that shows them why their assumptions were false in the first place. This template works time and time again.

PPS Teaching leads to word-of-mouth, especially when you weave in a lot of stories for your audience to share.

PPPS If you didn’t see a topic up there that might work with your group, follow this link. That list above was already way too long.

Five, Ten, Fifteen Years Ago

Do you remember the start of the Great Recession back in 2008? Did you see it coming? Were you prepared in advance, ready for it?

Okay, you can stop laughing. No one saw it coming. Very few were prepared. Yet if you remember it and are reading this blog, it means you likely survived the Great Recession.

No matter how you got through those tough years, I’ll bet your business looks a lot different now than it did in 2007. I’ll bet for most of you, today’s version of your store only merely resembles the store you had fifteen, ten, or even five years ago.

Things change. We learn new stuff. We grow. We adapt.

The business model that worked in the 80’s (open your doors, stand back, and watch the traffic roll in) wouldn’t last a month in today’s retail climate.

Here is another truth …

Flag Raising circa early 1970’s

The store you’re running five years from now will only merely resemble the store you’re running today. 

The name will be the same. The Core Values will be the same. Some of the services will be the same (some will be unnecessary, some will be enhanced). Some of the fixtures will still be there (but hopefully not in the same place as today).

August 6, 2016 Flag Raising

Yesterday, at the annual business meeting of the American Specialty Toy Retailing Association (ASTRA), the past chairperson, Ann Kienzle, gave a speech. Apparently she had heard from some ASTRA members who were there twenty-six years ago at the first meeting, where less than fifty people got together to do something for the independent specialty toy retailing industry. This past weekend the attendance was measured in the thousands.

Those people noted how ASTRA looks a lot different than it did just ten or fifteen years ago. I wasn’t there to know if they said it with admiration or disdain. I only know what Ann said at the meeting.

“I’ve heard from some of the original members of ASTRA who noted that ASTRA doesn’t look anything like it did fifteen years ago. You should be proud of that. … If we looked the same today as we did fifteen years ago, you should be hugely disappointed.”

The reality for ASTRA and for you is if you look the exact same as you did fifteen years ago, you’re likely already out of business. In fact, it would be harder to stay the same than to change and grow because the atrophy (and apathy) would take you down more and more each year.

If you have been in business the last fifteen years, as Ann said, you should be proud of what you’ve done. Your business has changed and will continue to change.

I have said often that you should always be changing. Here are previous posts that tell you how or what to change …

JULY 6, 2017 – Some Things Change, Some Things Shouldn’t

AUGUST 9, 2017 – The Biggest Thing That Needs to Change

JUNE 15, 2012 – When and What to Change

SEPTEMBER 14, 2011 – A History Lesson About Change

APRIL 14, 2009 – What to Change, What to Keep the Same

I can’t tell you exactly what your store will look like in five years. Like you, I was blindsided by the housing crisis of 2008. But if your store more closely resembles your Core Values and has changed everything else that wasn’t productive or consistent with those values, it will look like my favorite store—an OPEN one!

-Phil Wrzesinski
www.PhilsForum.com

PS When you change what needs to be changed, do me a favor. Make it Over-the-Top! Go big or go home. Put the WOW Factor into it. Give people something to talk about. I’ll give you some ideas of what I’m talking about later this week.

“Everything Cheaper Somewhere Else”

I used to hate anonymous commenting on news articles and blog posts. It is so easy to hide behind a pseudonym and take unsubstantiated potshots at people and businesses, spread rumors, and even spread downright lies.

As a retailer, I took every negative comment and review of my business personally. Some of them hurt, especially when they weren’t true. The misunderstandings were one thing but the outright lies were the worst. They cut to the bone.

I remember one day in the infancy of online news when a fellow downtown business owner alerted me to comments posted on an online news story that attacked both my store and me personally. He warned me not to read them. I didn’t heed his warnings.

One person had taken it upon him or herself to just rip the business up one side and down the other, calling us, among other things, price-gougers who were just out to destroy the little people in town. This person claimed that he or she could find everything we sold in our store cheaper online.

I took offense to the first part. The person posting the comment had no idea what I paid myself or my staff or our profit margin or what we gave to charity or what causes we supported. I am a forgiving person, though. I will forgive them their ignorance.

The second part, however, was pretty much true. Not only could that person show you the items cheaper, I probably could, too. After all, I had Internet access. I could also show you sites and stores where just about everything we sold was more expensive than our prices. That exists, too.

In fact, if prices weren’t fluid across different channels, Retail would look a whole lot different and be a lot less fun. Everyone would pretty much do the same thing and charge the same for it. Yawn.

Image result for valueRetail is a game, and the game can be boiled down to this … Find the Value you can give the customer that will make it worthwhile for them to pay the price you wish to charge.

At the ballpark they charge you more for a single beer than you would pay for a twelve-pack at the store. You buy it because you want to drink a beer during the game. There is enough Value in enjoying that beer while watching the game that makes you pay the price. (Don’t want to pay their outrageous prices? You can eat before you go to the ballpark. Most people can handle 3-4 hours between eating. You can also drink water for free. They have to provide it to you.)

People call them price-gougers all the time. It doesn’t stop them from raising their prices and making money. They offer you the Value of being at the game and watching the action in person.

The real question you need to ask yourself as a retailer is … What Value are you adding to the equation and will that Value be enough to get people to pay your prices?

You can add Value in several ways. You can:

  • Offer services other stores don’t have (i.e. layaway, free gift-wrapping, assembly, delivery)
  • Curate the selection to help customers get only the best solutions
  • Align your business with a social cause
  • Offer follow-up services (such as the free 30-day riding tuneup that we used to offer with every bike we sold)
  • Build relationships to the point that the customer feels as much ownership in your store as you do.

Any one of those is a way to “play” the Retail Game. Play more than a few of them and you’ll never worry about how someone can find “everything cheaper somewhere else.”

Were we the lowest priced game in town? Nope. Never tried to win that race to the bottom. But in a 2007 survey of Jackson County residents about stores that sell toys in Jackson, we were rated as having the highest “Value” ahead of Walmart, Target, Toys R Us, Kmart, and Meijer (all whom love to advertise their “lowest prices”.)

What Value are you adding to the equation?

-Phil Wrzesinski
www.PhilsForum.com

PS I have a good friend also named Phil who also ran a toy and baby store in the other Jackson (MS) who never liked MAP (Minimum Advertised Pricing) because it made everyone price their goods at the same price. He said true merchants have no problem with the undercutting of prices on the Internet because they know how to offer Value and make sales at higher margins. As much as you hate to admit it, he’s right. MAP only protects you at the margin the vendor thinks you should make, not the margin you deserve for all the value you offer.

PPS As for anonymous negative comments online, if they are an attack on your character or the character of your business, ignore them completely. Your actions speak louder than your words. Use your actions to prove that person wrong. If the comments are simply something misunderstood, you can respond for clarification, but only if you can substantiate your claims without putting down the person who made the comment. More often than not, however, it is best to ignore anonymous comments, period. I’ll talk about how to respond to Reviews in a future post.

PPPS A few of those ways to play involve the skills and training you give to your front line staff. As I pointed out before, that is probably the easiest way to add the kind of Value your competitors are not adding to their equations.

KB-Toys Making a Comeback(?)

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

(picture from edplay magazine)

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

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

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

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

  • The Experience
  • The Selection

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

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

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

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

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

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

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

-Phil Wrzesinski
www.PhilsForum.com

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

Yes I Have Heard About Toys R Us

I was tagged seventeen times on Facebook last week about Toys R Us pending liquidation, wondering if I had seen the news.

Friends, I write a blog about retail. I do workshops for retailers. I am a presenter at the upcoming American Specialty Toy Retailing Association (ASTRA). I subscribe to three news digests specifically about retail. I subscribe to two national news digests. I belong to two retail groups on Facebook and one on LinkedIn.

I appreciate you checking with me to see if I have heard the new. Thanks. I have heard the news.

With that said, I do appreciate the links to articles. Most of the articles reiterate the same info. Barring a last-second deal, TRU is likely to go into Chapter 7 Bankruptcy, which means liquidation of all assets.

What I have found interesting has been the comments after each article. Most of the people commenting have no clue what happened to Toys R Us. Most of them get it dead wrong, blaming Amazon for their demise.

Here is what really happened …

The decline of Toys R Us started in 1992 when Walmart surpassed them in total toy sales. TRU took the wrong road and tried to beat Walmart at Walmart’s game—lower prices. TRU lost big time. So did the entire toy industry because “toys” were now considered a commodity instead of the tool they truly are.

While TRU was floundering, big money venture capitalists came in and bought the chain, primarily because of their real estate value. The second misstep happened here. In simplistic terms, the VC’s leveraged TRU and saddled them with so much debt that they didn’t have the capital to change with the tide as other big chains were going online, updating infrastructure, investing in better technology, etc.

At the same time, the toy industry went into decline. Parents were buying more electronics and spending less on traditional toys. While TRU was able to get into electronics, they also were getting into a lower profit margin item with more big competitors, which also didn’t help their bottom line.

Shortly after that the economy tanked. While the economy has recovered, not all segments have recovered the same.

Amazon was more the straw on the camel’s back than the cause. The decision to play Walmart’s game was the real cause. It gave away TRU’s one true advantage over Walmart, Target, Dollar General, and even Amazon—being the trusted resource for the quality toys that encourage imagination and creativity in children, true tools that required careful thought and selection. Once that was lost, TRU was in trouble.

Losing capital because of the debt was the second factor because the one playing card left for TRU was to be the destination store parents wanted to take their children. But without cash, they cut back on staffing,they cut back on updating their store and creating an experience. TRU was nothing more than a big-box discounter without the groceries, hardware, and home accessories.

One article asked the question where the TRU shoppers were going to go once TRU was gone. The comments on that one made me laugh out loud. Several said that the people had already chosen, since TRU was in bankruptcy and closing. Friends, TRU did $11 billion dollars in sales last year. That’s billion with a “B”! The average ticket in toys is around $40, in electronics it is much higher, but even at $100/transaction, that’s 110 million customers! That’s a lot of traffic. They weren’t doing everything wrong. They just didn’t have the cash to do everything right.

You can blame their demise on three things.

  • Allowing their largest competitor to name the terms
  • Not updating the infrastructure and staying on the cutting edge
  • Not having the cash to transform the store into one that can compete in the new retail landscape

Your lesson in all of this is simple.

  • Define the retail game not by what your competitors do, but by what you do.
  • Stay current and up with the times.
  • Keep some money in reserve.

More importantly, do the one thing you can do better than all the big guys out there. Take better care of your customers than they expect and make a visit to your store an exhilarating experience.

-Phil Wrzesinski
www.PhilsForum.com

PS Where do I think that $11 billion is going to go? Some of it will go to Amazon, Target, Walmart, etc. Some of it will go to Best Buy and Apple Stores. But there is a big part of TRU’s base that still believed in the shopping experience. Face it, a large in-store selection and the fun of being in that kind of store was the one card they had left. Amazon cannot duplicate that. Neither can the other big guys. Heck, even Barnes & Noble struggled with it. The independent toy stores in towns with closing TRU’s better be on the ball. If they can demonstrate their ability to give shoppers a great experience while touting their well-curated selection and convenient, friendly services, there is a lot of money left on the table.

Other Uses for Market Share Knowledge

The first time I was truly introduced to the idea of calculating my market share was from Roy H. William’s second book Secret Formulas of the Wizard of Ads. It was 2003 and I was trying to learn all I could about marketing and advertising. My math was rudimentary. I didn’t adjust for local economy or youth population. Simply raw numbers. I came up with our market share at about 12%.

At first I was a little disappointed. Roy teaches that the gold standard for any business is 30% market share. That’s a big number. Despite its dominance, even Walmart only has 25% of the grocery market. The optimist in me, however, said 12% was a good starting point and now I had a goal to shoot for. I had just read an article (which 14 years later I cannot find—go figure) that said only 9% of the general public was inclined to shop at local indie stores in the first place. I was already 3 points above that number.

I never did reach 30%, but I did have some other revelations about my Market Share number.

Image result for upward trend free clipartFirst, after going back and adjusting my market size for economy and youth population, our 12% was really closer to 16%. It stayed in that neighborhood until a Walmart Supercenter opened in 2005. We dropped into the 14-15% neighborhood and stayed there until Amazon became a serious player in the toy industry around 2010-2011. We stayed around 12.5% for the next several years until we closed. Even though you can beat a big guy head-to-head, the more big guys in town, the more businesses taking a piece out of the same pie.

Second, that original 12% number got me thinking. A full eighty-eight percent of the market were NOT currently shopping with me. That’s almost 9 out of 10 people. When you look at it that way, it changes your perspective on a lot of things.

In terms of marketing and advertising I realized I didn’t need to reach the entire market to grow my business. If I could just convince 1 more person out of 20 people to shop with me I would have growth beyond my wildest dreams. I really only needed to convince about 2 more people out of 100 to shop with me to have double digit growth. If you only are trying to sway two people out of a hundred you might say something totally different than if you’re trying to sway fifty out of a hundred. With two you can say something direct and personal to a small audience that gets right to the heart of the matter. Trying to reach fifty, you say something generic and non-offensive hoping other forces will come into play to swing them to your side.

In terms of product selection I realized I didn’t have to be all things to all people. I could pick and choose the products I wanted based on my beliefs in the products and how they benefited my customers. Not only does that help with the buying decisions, it helped us stay true to our core values in terms of what we sold and why.

Speaking of Core Values, we didn’t have to be someone we were not.

Meg Cabot said it best when she said, “You’re not a hundred dollar bill. Not everyone is going to like you.” We didn’t have to be liked by everyone. Sixteen percent is a pretty low approval rating. Yet it was higher than any other single store in our market.

Knowledge is power (France is bacon). Knowing your market share might be the piece of knowledge that finally liberates the way you think about your place in the market and the risks you can now safely take with your business.

-Phil Wrzesinski
www.PhilsForum.com

PS Let me first admit that 16% is actually pretty high for an indie retailer. Many of you might do the math and find yourself in the 3-5% range, especially if you have other indie retailers fighting for the 9% that skews shop local. But before I pat myself on the back, you should know that in the early 1980’s we were at that mythical 30% gold standard and then some. Of course that was before Jackson got Walmart, Target, Toys R Us, Sam’s Club, a second Meijer, a new KMart, and a whole slew of other big chains in town (without a population growth to match), and well before Al Gore invented the Internet. We were the large store that was here first. That’s what gave us much of our edge. But even if you do find yourself in the 3-5% range, if the market is big enough, you can do a lot of business with only 3-5% of your market. Plus, when you only have to convince 1 more person out of 100 to get 33% growth, advertising becomes a whole lot more fun.

PPS It used to upset me that about half my friends were not regular shoppers at my store. My parents saw about that same percentage from their friends. Then it dawned on me … Fifty percent of my friends versus twelve percent of the general population. I was ahead of the game. I slept much better that night.

Taking a Deep Breath of Perspective

We all meet interesting people from time to time. For one year I had a person enter my life that gave me a world’s worth of perspective. At the time he was the store manager of one of the big-box discounters in town. While our sons shared activities together, he shared amazing information not only about his store, but about all the big-box discounters in town. It was eye-opening to say the least.

If you have only recently found this blog, you should know that I am a big believer in calculating and understanding your overall market size for your category and knowing your share of that market. The easiest way to find the size of your market is to find national numbers for your industry, divide by the US population and multiply that result times your market population.

For instance, if you are in a $20 billion industry, divide that by 323 million people in the USA to get $62/person. If your market is 150,000 people, then multiply $62 x 150,000 to get a market size of $9.3 million. You can adjust that number up or down based on your local economy (your average household income versus the national average). You can also adjust for other factors like geography (more boats are likely to be sold in Michigan or Florida than Nebraska), or demographics (your percentage of children compared to the national average if your category is marketed primarily to children). It gives you a rough estimate, that if you calculate the same way year after year shows you exactly where you stand in your market.

I’ve been doing this in the Jackson market for decades and measuring our share over the years.

My big-box friend handed me numbers of what the big-box stores were doing in toy sales in our market. Adding them up, the math fit what I already knew about the size of the market in Jackson. The part that made my heart flutter was knowing that I was doing more in my single store than any one of those big guys.

 

Is it a Vase or Two Faces?

Here’s the perspective part … 

All of these stores do way more volume overall than I do because they also sell grocery, clothing, hardware, electronics, and household goods among other stuff. All of these stores have way more traffic on a daily, weekly, monthly basis than I could ever imagine. All of these stores run weekly sales and discounts with huge flyers in every Sunday’s paper to go with their national TV campaigns and other advertising efforts. All of these stores focus on the hottest TV-advertised toys every year, adding the vendors’ marketing efforts to their own. All of these stores get full-blown media coverage, too.

Think about that last one for a second. This holiday season you are going to hear stories about Amazon, Walmart, and Target. All. The. Time. You are going to hear about their sales. You are going to hear about their overall volume. You are going to hear about their strategies to draw more traffic (more discounting—you read it hear first!) Your customers are going to hear all that, too.

Yet locally, without the discounting, without the hot items for your industry, without the national TV campaign and Sunday flyers and vendors marketing for you, without all the grocery-driven traffic, without all the media hype, you’re going to stand toe-to-toe with these big giants and still do amazing numbers in your category, maybe even equal or better than they do individually.

When people tell you it is all about price, and that discounting is the only way to get sales, go ahead and nod your head in agreement until those uninformed people walk away. Then remember that a guy in a small, depressed, blue-collar city in Michigan with all the inherent disadvantages was able to beat all the big guys through better service, better staff, product knowledge, smarter marketing, and higher prices.

You will, too!

-Phil Wrzesinski
www.PhilsForum.com

PS Calculating Market Size and Market Share can be incredibly helpful, even if your business is growing. If your market is getting bigger, but your share is decreasing, then even though you are growing, you are still losing out to competitors. Something needs to be fixed. It can also help you understand why sales are decreasing and when to get out of the market. We saw our market shrink to a size that wouldn’t sustain us in our current model. Our options were to shrink to fit the market, move to a different market, or close. We chose the latter so that I could spend my time helping a bigger market … you!

PPS That store manager left Jackson the year after we met to run a larger store in another part of the country, but not before leaving me with a wealth of knowledge and a perspective for which I am eternally grateful.

Where to Spend the First Million

Reports are that Toys R Us has secured $3.1 billion in financing to get them through the holiday season. Thanksgiving is only nine weeks away. I have a plan for the first million dollars they should spend that will change the culture in their stores immediately and just in time for the critical holiday season. It will take about seven weeks to fully implement. Have David Brandon call me ASAP.

There are 866 Toys R Us and Babies R Us locations in the United States. I would fly the 866 store managers in to headquarters for a full day of training. That training would include a morning segment and an afternoon segment.

The morning segment would be all about toys and play value including:

  • The Importance of Play Value on Child Development
  • The Elements of a Great Toy
  • The Different Ways Children Play
  • Smart Toy Shopping

The afternoon segment would be all about hiring and training a staff plus how to raise the bar of customer service and would include:

  • Determining the Character Traits for the different positions on the team
  • Interviewing Techniques
  • Developing a Training program for New Hires
  • Developing a Continual Training Program for current staff
  • Raising the Bar on Customer Service

The morning would be about changing the way the company as a whole looks at the products they sell and gets them to shift their mindset away from “selling toys” to “solving problems” or “helping children develop.” As I explained previously, this is the direction they should have taken back in 1998 when Walmart surpassed them in overall toy sales. This is where they should have gone to reclaim their throne as the “king of toys.”

The afternoon would focus on raising the bar for the staff by finding better people, training them better, and creating a lasting program to continually raise the bar on their servicing of their customers. Even a big chain like Toys R Us that doesn’t offer a lot of fancy services like free gift wrapping or year-round layaway can still find new and better ways to treat customers by meeting and exceeding their expectations.

The managers would end the day equipped with new skills for hiring, training, and managing their staff while also teaching their staff and their customer base about the importance of their products and why customers should be choosing to shop at Toys R Us for all their toy needs.

Not only would Toys R Us see a profound shift in customer satisfaction this holiday season, but with better hiring of the seasonal staff, the managers would have a better pool of employees to change the culture of their stores going forward. Better hiring skills have a cumulative effect year after year.

The cost to TRU breaks down like this …

  • 866 managers flown in for training x $800 per person for flight and hotel = $692,000
  • Assorted costs for training room, lunches, and printed materials = $58,000
  • Fee for me to do 7 weeks of training (at 25 managers a day, it would take 35 days to see them all, or seven 5-day weeks) = $250,000

It would be the best million dollars they spend all year. But they better hurry. Thanksgiving is only nine weeks away.

-Phil Wrzesinski
www.PhilsForum.com

PS If you’re an independent retailer you’re hating this post. Everything I just explained that TRU should do is exactly what sets you apart from the category killer and big-box discounters you compete against. If you’re an indie retailer, though, you have secretly been scared that if the category killer in your industry ever “got it” and decided to do what I’ve outlined, it would make your job that much harder. Here’s the kicker. Do it first. Do it before they get smart.

PPS My rate may seem a little high, but that’s because I’m here to help my fellow indie retailers and small businesses succeed. If the chains want me, they’ll have to pay. You, however, can hire me to do all that for your business at fraction (very small fraction) of that cost. Get a couple of your fellow local retailers to join you and you can split it even further. Call me.

Lessons From Toys R Us

By now you have all heard about Toys R Us (TRU) filing bankruptcy. I have been personally tagged several times on Facebook linking to articles about the bankruptcy (a couple former staff members have even hinted I should reopen Toy House now.)

Here are some things you need to know.

Image result for sad face giraffeFirst, this is a Chapter 11 Bankruptcy which is a reorganization type of bankruptcy. The giraffe isn’t going away. They aren’t closing all their stores and liquidating. That’s a Chapter 7 Bankruptcy. Toys R Us is banking on being able to restructure (and relieve themselves from) their debt so that they have the operating funds to continue competing in the toy and baby retail industries.

Second, David Brandon, the former Athletic Director at my beloved University of Michigan, is not the cause of their demise. (Many UM fans who hated Brandon for his poor job hiring football coaches want to scapegoat him for this, too. It’s easy, but wrong.) They were in trouble long before he got there.

Third, this is not a happy day for the toy industry. Even though Walmart surpassed Toys R Us in toy sales in 1998, TRU still does a tremendous amount of business and sells a tremendous amount of toys. There are many vendors in position to take huge losses in this ordeal. While the big guys like Mattel and Hasbro can likely afford it, many mid-tier and smaller vendors would be gone without TRU. That doesn’t help the rest of the industry.

Toys R Us is also important for new toy launches. The big-box discounters want tried and true. Without a large store willing to take chances on new products, there won’t be as many new and innovative products from existing companies.

A lot of people have opinions why Toys R Us is where they are today. Many want to blame Amazon. Still others want to blame the economy. I’ve read articles bashing their expensive new headquarters building, their lack of leadership, and the leveraged buyout by Bain, KKR, and Vornado.

One article wanted to blame TRU for spending too much on their stores and not enough on their website. Considering that TRU reported $912 million in e-commerce and $11.54 billion in total sales, that puts their online sales at almost 8%. (For comparison, Walmart only does about 3% of their total sales online, but that is skewed by grocery.) While 8% is impressive, it doesn’t justify taking money from the part of your business that generates 92% of your revenue and giving it to the part that only generates 8%. 

My opinion is that they didn’t spend the money on their stores the right way.

The real demise for Toys R Us started in 1998. That is the year Walmart surpassed them in total toy sales by dollar (McDonald’s Happy Meal beats them both in units sold.) 

Toys R Us chose at that time to take on the beast to reclaim their crown as king. They didn’t stand a chance. Walmart had more stores, deeper pockets, a larger advertising budget, better operational efficiency, and no need to make money on a category they saw as a commodity traffic-driver.

Seth Godin said it best. “The problem with racing to the bottom is that you might win. Worse, you might finish second.” Toys R Us finished second and we all lost because of it.

Toys R Us allowed Walmart to dictate to the world that toys are commodities, not the valuable educational tools every specialty toy store owner and every educator in America knows them to be. Toys R Us allowed Walmart to dictate that price was the only reason to buy toys. Once Toys R Us decided to compete on Walmart’s terms, they were done.

Hindsight being 20/20, the best move TRU could have taken back in 1998 was to reestablish their position as the “toy leader” and put their emphasis on the value of toys as educational tools, on the value of toys for promoting growth and development, and on the importance of choosing quality toys for your children.

If toys were thought of that way today, Toys R Us would have diminished the commodity role of the big box discounters and strengthened the toy industry as a whole, while firmly establishing themselves as the clear “toy experts” instead of a warehouse full of only toys competing with warehouses full of toys, hardware, clothing, housewares, and grocery. It would have been a win-win for them and the industry as a whole. They weren’t going to beat Walmart at Walmart’s game and likely never would catch Walmart in total sales (Walmart now has over five times as many stores.) But had they played to their own competitive advantage they would still be the king perceptually and the industry would be better off for it.

That is the lesson. Play to your competitive advantage. Play on your terms, not someone else’s. 

Right now the conventional wisdom is that Toys R Us owns too much real estate. Their stores are too big and costly. They need to close them down and sell off the real estate and focus online. I wonder how different the tune would be if back in 1998 they decided to make their stores more friendly and welcoming, filled with toy demos and play areas. What if they turned their stores into educational meccas offering classes on parenting, programs for preschoolers, and events that drew traffic? (According to this article, that is a little of what they are trying to do.) Instead they turned their stores into brightly lit warehouses with minimal staff and an entrance that makes you feel like a common thief just walking through the door.

Real estate is only an asset or liability depending how you use it.

There is still a chance for Toys R Us to turn the ship around. But they need to sail into different waters. I know a little about sailing. If you know David Brandon, tell him to look me up.

-Phil Wrzesinski
www.PhilsForum.com

PS It may sound like I’m suggesting Toys R Us be more like an independent specialty toy retailer. Umm … Yes! They have a far better chance being successful in that playground than in the big-box-treat-everything-like-a-commodity-warehouse playground they’ve been playing in. They had it right in their Time Square store and oh so wrong in the 865 other locations.

Case Study: Taking Care of the Customer Science Safari Style

My buddy, Sean, owns a toy store in Cary, North Carolina called Science Safari. I am sharing his story as he posted it on FB …

Image result for science safari north carolina“Weird occurrence… It’s happened twice in the last week. I certainly don’t mind, but I’ve never seen it in 30 years of retail nor ever thought of doing it as a parent…

“I had two people print up their own (unauthorized/counterfeit) Science Safari Gift Certificates and give them to their child. One for a class and one for $10 from the Tooth Fairy (side note, what kind of Tooth Fairy hands out $10 notes?!?). 

“The parents made good on them, giving me the money on the sly.

“Strange, but I’ll take your money.”

Yes, two different parents had the idea to print up unauthorized gift certificates to his store and give them to their kids. What would your first thought be if a customer handed you an unauthorized gift certificate?

Then the parents paid him on the sly for those “gift certificates” and the kids got to use them in the store.

Three thoughts come to mind.

First, Sean should be honored that parents, when trying to come up with a cool last-minute gift, thought of his store first. That’s when you know you’re already playing the customer service game right.

Second, here are a couple of parents who need to work on their planning ahead skills.

Third, and most importantly, as strange as this occurrence was, Sean and his team didn’t hesitate one second to allow it to happen. “Strange, but I’ll take your money.” Sean served those customers the way they wanted to be served. Sean made those last-second-forgot-to-plan-ahead customers look like heroes to their kids. Sean said, “Yeah, we’ll take care of you.”

As Teddy Roosevelt said, “Whenever you are asked if you can do a job, tell ’em, ‘Certainly I can!’ Then get busy and find out how to do it.”

That, my friends, is what winning the customer service game looks like.

-Phil Wrzesinski
www.PhilsForum.com

PS Making your customers feel like, look like, or be the hero is always the right thing to do. Always.

PPS If you live anywhere near Cary, NC, put Science Safari on your radar. It is definitely a store worth visiting.