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Category: Inventory Management

Having Fun, Helping Others, Eating Lunch

For the past three weeks I have been making several drives from my home in Jackson to the Oakland County area for lunch. For those of you not in Michigan, Oakland County is one of the three counties (including Wayne and Macomb) that makes up the Greater Detroit Metropolitan area. Oakland County is the northernmost of the three and includes several cities, villages, townships, and lakes.

Oakland County is home to twenty-one Main Street programs in the various cities, villages, and townships, and also home to one of the largest county-wide Main Street support programs. It was Main Street Oakland County (MSOC) that hired me to make these drives each week to do a “Lunch-and-Learn” series of workshops. The workshops are four-week-long tracks on one of three topics: Selling & Customer Service, Marketing & Advertising, or Retail Math.

We rolled this out to three different communities. Two of the communities chose Marketing & Advertising, one chose Selling & Customer Service. All three are reporting back with incredibly positive feedback. Other communities are already bugging MSOC to be included in the next round.

The fun part for me is that I like driving and I love doing these presentations, mostly because I know the difference one or two good tips or techniques can make for a small business.

The fun part for the attendees is that they get a free lunch (or breakfast) and four 45-minute presentations jammed with eye-opening ideas, out-of-the-box thinking, and surprisingly simple techniques to improve their businesses.

The fun part for you is that there is still time to plan a Lunch-and-Learn in your neck of the woods (as long as you are within two hours driving time from Jackson which would include Grand Rapids, Kalamazoo, Fort Wayne, Toledo, Detroit, Flint, and Lansing areas).

Here are the three tracks with class titles and descriptions.

Option A: Marketing & Advertising

  • Week #1 Boosting Your Brand to Attract the Right Business – A quick lesson in branding to show you how a well-crafted brand makes a huge difference in attracting the right types of customers and business. You’ll learn how to uncover the true value in your brand and make your brand stand out in the crowd
  • Week #2 Marketing Your Business on a Shoestring Budget – Seven different ways you can get the word out about your business and draw traffic in without spending a fortune. You’ll learn how to leverage your talents and time to attract more customers to your business right away.
  • Week #3 Making Your Ads More Effective – We hate ads, not because there are too many, but because most ads suck. This presentation will show you the six principles that make the difference between your ad being remembered and acted upon or being simply ignored. You’ll learn techniques even the most highly paid professionals sometimes get wrong, and how you can apply them to your own advertising efforts
  • Week #4 Generating Word-of-Mouth Advertising – We all know Word-of-Mouth advertising is far more effective than traditional advertising, but do you know what it takes to actually get your customers to talk about you? This presentation shows you four proven ways you can generate word-of-mouth advertising. You’ll walk away with tips and techniques that get people talking the very next day.

Option B: Selling and Customer Service

  • Week #1 Selling in a Showrooming World – Online shopping is here to stay. So is the concept of Showrooming, where a customer uses your store to touch and feel the product before ordering it online cheaper. This presentation shows you the two types of customers, how to recognize them, and the very different ways you sell to them. Learn this and you’ll close far more sales than ever before.
  • Week #2 Raising the Bar on Customer Service – Every store thinks they offer Great Customer Service, but every customer can regale several stories where the customer service fell far short. This presentation gives you a different perspective on customer service and shows you how to up your game so that Great Customer Service is only the minimum. You’ll learn how to surprise and delight customers at every turn.
  • Week #3 Building the Perfect Salesperson – Finding the right salesperson is the key for any organization. But how do you identify the perfect fit? This presentation will change the way you look at interviewing and hiring and even training. When you’re done you’ll have a better understanding of how the best companies find the best employees time and time again.
  • Week #4 Training and Motivating Your Team to Perform Their Best – The carrot and stick might be good for a donkey, but it won’t get the best out of your team. This presentation will show you what really motivates people to do their best work and how to get the kind of creativity from your team that sets you apart. You’ll also learn how to turn staff meetings and training times into something your staff looks forward to attending.

Option C: Retail Math

  • Week #1 Reading Your Financial Statements – Your accountant will be glad you attended. This presentation will show you in layman’s terms how to read the two most common financial statements – the Profit & Loss and the Balance Sheet. You’ll learn how they are calculated, what they show, and an intuitive way to use them to check the financial health of your company. It isn’t as scary as it sounds.
  • Week #2 Inventory Management – Cash is King. In retail, the biggest use of your cash is your inventory. This presentation will show you simple and smart ways to manage your inventory levels better including how Open-to-Buy programs work and easy ways to increase cash flow. You’ll learn how to turn slow moving merchandise into cash and make your inventory work for you.
  • Week #3 Pricing for Profit – Most businesses leave thousands of dollars on the table because they don’t understand the principles behind how to properly price their products or services. This presentation shows you how you can raise prices and increase unit sales by harnessing the power of perception. Learn these techniques and you’ll start making more money the very first day.
  • Week #4 Unlocking the Hidden Cash in Your Business – There is more to retail than just buying and selling product. This presentation will show you some different ways to measure your business and some simple ways to make a little extra cash that might just be the difference you need to pay yourself a bonus this year.

If you just read those and said, “Dang, I could use this!” pass this post along to your DDA Director, your Chamber of Commerce, your Main Street Director, your Economic Development Director, your Shop Local director, and tell them, “Dang, we could use this!”

(Heck, you don’t even need one of those organizations. Just get a few other small businesses together and give me a call.)

Then contact me. We’ll go over what it would cost, creative ways to finance it, how to get the food and venues, and what dates to schedule this fall to have some fun helping small businesses grow and thrive, all while having lunch.

Sound yummy to you?

-Phil Wrzesinski
www.PhilsForum.com

PS Not within that two-hour drive? No worries. Instead of four lunches, we’ll do one big brunch and put all four lessons into a three-hour workshop. Call me.

PPS The beauty of what you’ll learn in these tracks is that the dividends are immediate. With many of the lessons you’ll see results right away. Having this information fresh in your mind leading into the busy holiday season will make a huge impact on your bottom line this year. Lets get some dates locked in now.

PPPS If you’re in Oakland County, MSOC is already working on the budget for 2019. Contact John Bry at MSOC and let him know you want in. If you want something this fall, however, check with the other organizations in your community to see if they will help you organize this.

Some Inventory Management is a Customer Service Issue, Too

My mom shops like a man. Get in, get what you need, and get out. Her lifetime of being raised in retail, her always efficient use of time, and her preference to spend her free time playing golf, playing bridge, reading books, or doing cross-stitch needlepoint all have led her to this shopping style. Oh, she’ll browse the dozens of catalogs she gets in the mail each week, but spending a day at the mall is not her idea of a great time.

Even in a book store, her favorite form of shopping, she’s a hunter more than a browser.

Last weekend, however, she took my boys on a shopping trip, hitting several stores in the Ann Arbor area. Of course, she hit those stores the way she always does, with purpose, focus, and an eye for efficiency. At one point in Macy’s, while my older son tried on some shorts, she asked my younger son to go find a cash register that was actually open. Her keen eye had not seen any employees at any registers yet, and she had to have her exit strategy mapped out.

She’s training my boys to shop like her, much in the way she trained me. When I’m in buying mode, I go in, get what I want, and get out. If I’m in a store to browse, I’m doing it to gather information for future blog posts, researching for my clients, or spending time with friends who love to shop (while I’m doing research.)

You might think from that description that my mom and I are mostly Transactional Shoppers who know what they want and are just on a hunt to get the best price. You would be wrong. Other than my bad habit of Diet Mountain Dew (I call it my “green tea”) that I’ll buy wherever it is on sale, I have my favorite stores where I’ll go first for all my needs. My mom is the same way.

If you consistently have the stuff we want, we’ll consistently shop at your store—even if someone else is selling it slightly cheaper.

The key phrase is “consistently.” If you are often out-of-stock of the items I regularly buy, I’ll stop shopping at your store, no matter how well you treat me.

Image result for empty shelvesIn a few days I’m going to give a new presentation at the American Specialty Toy Retailing Association (ASTRA) Marketplace & Academy. The title is “Profit Margin is Not Your Only Money Maker”. The premise is about how and when to sell lower-margin goods. One of those times is when you are the store people “expect” to sell that product. You don’t want to disappoint those customers and drive them away.

Not all hunters are Transactional. Some like to hunt at your store because they always know they’ll find their prey. Listening to my mom regale the tales from shopping with the boys reminded me of that important distinction.

Ask yourself …

  • What products do you sell on a regular, consistent basis, day-in-and-day-out?
  • What products do you sell at the highest turn ratio?
  • What products do people walk in asking for directly the most because they expect you’ll have it?
  • What products do you know your customers will buy online if they can’t get it at your store right now?

Those are your Must-Haves. Those are the products that keep your Relational Customers like my mom and me happy.

-Phil Wrzesinski
www.PhilsForum.com

PS Identifying the Must-Haves helps with your buying. If you need to add to the order to reach a better deal, add some Must-Haves. Identifying the Must-Haves helps with your marketing and advertising. Being out-of-stock often is one way to get bad Word-of-Mouth circulating. Identifying the Must-Haves helps with your overall customer service. The more your staff can say, “Yes we do!” the better they feel and the better the customer feels.

Hire Me to Be Your Coach

I played the role of Father in The Nutcracker Suite on stage at the Michigan Theatre. I was in eighth grade. It was part of our LEAP class (Learning Experience for Academic Progress). It was a play more than a ballet, although we did have a dance troupe come in and do some dance numbers. I don’t remember much of anything about the play itself. I couldn’t tell you anything about the story, the other characters, or even my performance. About all I remember was I played the role of Father and I loved being on that stage.

Panorama of Phil Wrzesinski speaking to a large crowd
Phil Wrzesinski speaking to a packed house in Grand Rapids, MI

I’ve never really been afraid of standing on a stage in front of people. Oh sure, I had a kaleidoscope of butterflies fluttering in my stomach moments before I took the pulpit to do a guest sermon at church. But those butterflies settled down the moment I began to speak.

Whether it is a crowd of 500 at a trade show conference, a group of screaming kids in the dining hall at camp, or a room full of revelers at a brewpub, I love to perform.

That’s why when I began building Phil’s Forum I focused on speaking and presenting, doing workshops and seminars and webinars. That’s what brings me the most joy (and people said I was pretty good at it.) 

But my real goal, my true focus of Phil’s Forum is about YOU. Your success. That’s all that matters.

That is the reason behind all the Free Resources for you to download. That is the reason behind writing over a thousand blog posts for you to consume. That is the reason behind offering all those classes, presentations, workshops, and webinars for you to attend.

That is the reason why you’ll find a new page on my website.

Many of you have contacted me about private, one-on-one consulting and coaching. While I often said yes, I didn’t have a plan in place for how to handle and structure those requests. Nor did I have a firm concept for how I felt I could best work with you.

Until now.

Coach /kōCH/ (noun) An instructor or trainer. A tutor who gives private or specialized teaching.

A Consultant is someone you consult for advice and opinions. A Coach is someone who teaches you how to do what you need to do to be successful.

I am chock full of advice. I give it away freely. You can shoot me an email with a question and it is highly likely I will answer it (for free). If you read this blog regularly then you can probably guess my opinion on a topic before you even ask. Lots of people get paid for their opinions. It always seems a little disingenuous to me. If you make your living that way, you always want to keep your client in a position of needing your opinion. There is almost a built-in need for keeping a client partially in the dark so that they don’t form opinions on their own.

A Coach, however, knows that his role is to teach you something so that you can do it yourself. A coach puts you in the best position to succeed.

I know this is mostly semantics. There are amazing consultants out there who really are more like coaches. They teach. They instruct. They help you grow. They never hold back.

Words, however, are important. Choose the right words and your advertising messages will sparkle. Know which words make up your Core Values and your business will attract the right people. I needed to know which word I wanted to use and why before I could be of best service to you.

I chose the word Coach.

If you want one-on-one, private, specialized instruction to learn how to:

  • Hire Better
  • Train Better
  • Serve Your Customers Better
  • Market Yourself Better
  • Manage Your Inventory Better
  • Manage Your Staff Better
  • Manage Your Cash Flow Better

Let’s get together for an exploratory meeting.

The first meeting is FREE. In that meeting we’ll discuss where you are, what problems you’re facing, what tools you might need to solve those problems, and how best I can help you. After that I’ll send you a few different proposals explaining what I will do, what it will cost, and how we’ll measure success. From there the choice is yours as to how much coaching you want.

While my love is still the stage and I hope to spend as much time there reaching as many people as possible, coaching is the next best way I can help you find your path to success.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, I do coaching remotely. We’ll use phone and email to get the job done. (Or if you want to fly me out to meet face-to-face, I’ll let you do that, too. The best way to get me to town is to convince your local Chamber or DDA to hire me for a presentation and have them pay my way.)

PPS One thing I will ask of any client who wants my coaching services is for you to know your Core Values. You can download the new, updated worksheets here.

PPPS Yes, you can hire me to do stuff for you, too. I’ll run a Team Building event. I’ll write your Hiring ads. I’ll write your advertising messages. I’ll teach your staff how to sell. I’d rather teach you how to do those things yourself, though. That’s what serves you best in the long run.

Is the Retail Apocalypse Upon Us?

You have to be older than me to remember Shopper’s Fair. That was the first store that, back in the early 1960’s, was going to put my grandfather out of business. They were gone before I was old enough to spend my first dime. I do, however, have memories of Woolworth’s downtown and Montgomery Ward at Westwood Mall. I remember walking through Montgomery Ward, marveling at how big the store seemed. (I hadn’t yet been to Macy’s in Manhattan.)

Shopper’s Fair, Woolworth’s and Montgomery Ward are gone. Each because of their own individual circumstances. Here is a list going around the Internet these days of current closures and stores struggling in retail.

Businesses often cite a variety of reasons for closing:

  • Poor Economy
  • Changes in Industry
  • Unfair Retail Landscape Slanted Against Them

The reality is that most closures happen because of a Lack of Cash Flow. 

When the money quits coming in, the stores don’t have the money to pay the bills, don’t have the money to replenish the shelves, don’t have the money to invest in technology, upgrade the infrastructure, or train the employees. Lack of cash starts a downward spiral that is hard to escape.

More often than not, that Lack of Cash Flow happens because of Bad Management. Bad management of:

  • Employees—no training on how to relate to today’s customers, build the relationships that matter, and make the sale
  • Inventory—old merchandise, too much merchandise, too little merchandise, the wrong merchandise
  • Change—not adapting quickly enough to the changes in the industry (All industries change. Some disappear. There is a distinction.)
  • Goals and Vision—not having a clear view of where you want to be today and where you are going tomorrow

Many stores have found ways to thrive in an unfair retail landscape slanted against them. Many stores have found ways to navigate the changes in their industry and customer base. Many stores have found ways to thrive (or at least survive) in poor economies. 

Bob Phibbs, aka The Retail Doctor, posted an amazing blog about the experience (or lack thereof) in music stores today that addresses the first bullet point above. As a singer and mediocre guitar player, I can relate to everything in his post. This is a problem abundant in retail right now, and one that can be easily addressed. Amazon isn’t winning customers so much as brick & mortar stores are losing customers. Go read it right now.

It will be the best thing you read this month.

Overall, retail is growing. The stores in the meme above are losing market share to their competitors because management hasn’t trained them well, positioned them well, or managed their resources well.

Is the Retail Apocalypse upon us? I don’t think so. Stores open. Stores close. Just ask Shopper’s Fair, Woolworth’s and Montgomery Ward.

-Phil Wrzesinski
www.PhilsForum.com

PS I have seen the above meme used by the left to lay the blame for these closures at President Trump’s feet in much the same way many on the right tried to hang everything bad around President Obama’s neck for eight years. I have news for you. None of these closures are because of who is president or what the president has done. They would have happened under Hillary Clinton, Bernie Sanders, you, or me.

PPS Yes, my store was a victim of cash flow problems. Our market share didn’t change, but our local market did. Because of shrinkage in population, household income, and the average money spent on toys, our market in 2016 was only 53% of what it was in 2007. Our store was too big for our economy. We could have shrunk it down to fit, but we wouldn’t have been the store you remembered. We chose to close instead (a choice discussed in the boardrooms of every one of those companies listed above). With Toys R Us closing, many have asked if I will reopen. Unfortunately, the market hasn’t improved enough to justify reopening.

Reconciling Yes and No

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.”

On the other hand, Steve Jobs said, “It’s only by saying ‘No’ that you can concentrate on the things that are really important.”

Yes and No – both valid answers!

Teddy wants you to take on any job you can. Steve wants you to only take on the important jobs.

Who is right?

Teddy is right when it comes to serving your customers. If a customer asks if you can do something for them that you have never done, you should seriously consider doing it. First, if the customer is asking, the customer must believe it is something you can do. Second, it meets and/or exceeds their expectations, which is the hallmark of WOW Customer Service. Third, it might just become the new calling card you need to set yourself apart from your competitors.

You should always be looking for new ways to take care of your customers.

Steve is right when it comes to advertising. It is easy to “dabble” in advertising, doing a little here and a little there, clinging to the false hope that the more different things you do, the more people you will reach to drive into your store. We mistakenly believe that advertising is simply a numbers game and the more people we reach, the more traffic we’ll get. Yes, it is a numbers game, but not all numbers are equal.

Roy H. Williams often asks the question, “Would you rather convince 100% of the people 10% of the way or 10% of the people 100% of the way? In advertising, both cost the same.” The goal of your advertising is to convince people to visit your store and shop with you. You don’t convince people if all you do is “dabble”. You simply annoy them. It takes time, frequency, and focus to convince the people you reach to finally decide to shop with you. You have to pick and choose your media carefully and then be in full in with that media. If you aren’t, you are wasting your ad budget.

Both are right when it comes to inventory. You need to follow Steve’s advice and make sure you first stock your store with the most important items. When cash flow is tight, focus on the must-haves. Focus on the items that customers come in asking for by name. Make sure you have plenty of the requested items and you’ll make the sales you need to keep the cash flowing. You also need to keep looking for new products and new opportunities. Unless you’re strictly in the commodities business, customers want to see what is new and fresh. If you don’t have new and fresh, you are boring your customers and eventually they won’t bother coming back.

After the must-haves, the second most important inventory spending should be on the brand-new. It keeps your store fresh, keeps your staff energized, keeps your customers returning.

Sometimes you have to follow President Roosevelt. Sometimes you have to follow Mr. Jobs. Knowing when to say Yes and when to say No is the key to your success.

Perhaps Neils Bohr said it best when he said, “The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth.”

-Phil Wrzesinski
www.PhilsForum.com

PS I used both quotes in presentations lately and it struck me how profound, yet at odds, they both seem to be. I also have found myself using both quotes in my own life. I have been asked to do a lot of new things lately. I have said Yes to creating several new presentations, different from the homerun talks I do. I’ve also said No to some opportunities because they didn’t push forward my main industries of speaking, writing, and consulting. I think knowing when to say No is truly an art, one in which I am still the amateur, but I am learning. How about you?

I’m Looking For Work

Since closing up Toy House last December I have been writing, speaking, coaching, sailing, selling, and singing for my supper. It has been an interesting adjustment from the steady paycheck of selling toys. It has been filled with highs and lows and stimulating conversations when people ask me how I’m enjoying “retirement.” I’m a few decades away from that word. I need to work.

The past few days I have thrown my hat into the ring for some full-time job openings in southern Michigan.

Yes, I am looking for work. 

This is me. Always smiling. Always ready to help.

Here is my resume: (Please excuse my bragging—that’s what resumes are for, right?)

27 years as a Team Builder: Developed, Organized and Led Team Building Activities utilizing Low and High Ropes Courses, Wilderness & Experiential Activities, and designated tasks to promote better communication, cooperation and trust for groups ranging from adolescents to corporate America. Led and Facilitated Training Programs to teach others to be Team Builders. Wrote and published blogs and articles on Team Building.

24 years as a Purchasing Agent: Created and Managed Open-to-Buy programs for multi-million dollar retail store. Negotiated Terms with Vendors. Made Purchasing Decisions for millions of dollars of inventory. Designed Merchandising Displays including Revamping 16,000 square feet of display space. Led Workshops, Seminars and Webinars on Inventory Management, Pricing, and Financials,

22 years as a Marketing & Advertising Director: Developed and Managed Advertising Budgets between $20,000 and $120,000 annually. Made Advertising Purchases and Created Content for TV, Radio, Newsprint, Billboard, Direct Mail, Email, Facebook, In-Store Signage, Business Flyers, and Press Releases. Conceived, Organized and Hosted several public and private Marketing Events. Made Public Appearances at Networking Events, on Radio, and TV. Built websites for www.ToyHouseOnline.com and www.PhilsForum.com (among others). Led Workshops, Seminars and Webinars on Advertising, Marketing and Public Relations. Wrote book on Advertising called Most Ads Suck (But Yours Won’t).

21 years as an HR Director: Hired, Trained, Scheduled and Managed a team of 12 to 30 employees. Created an Employment Manual and Training Program. Planned, Organized and Led monthly Staff Trainings and Meetings. Led Workshops, Seminars and Webinars on Hiring & Training and Customer Service. Wrote and Published a Book on Hiring and Training called Hiring and the Potter’s Wheel: Turning Your Staff Into a Work of Art. 

27 years as a Speaker/Teacher: I have given over 100 seminars to other businesses, led over 100 training workshops for staff development, facilitated over 100 team building events, conducted over 100 presentations on shopping to customers, and taught over 100 classes for new, expectant fathers at our local hospital.

9 years as a Writer: I have written four books, dozens of magazine articles, hundreds of different advertising content, and 788 blog posts (counting this one.)

I am looking for work.

You can hire me to do Private Coaching, one-on-one, in the area you need the most help. (For a lot of people that has been hiring and training.)

You can hire me to do Presentations and Workshops. My Customer Service presentation takes a unique approach by helping you define each point of contact a customer has with your business and measures your performance at every step along the way. Like my Hiring & Training presentation, this works with any type or size of business. In fact, it was a manufacturer who paid me the highest compliment telling me I had given him the “million-dollar idea” he needed to take his business to the next level (as he flew away on his private jet.)

You can hire me to help you revamp your Marketing & Advertising. Whether temporary as a coach/consultant and/or to help you create new content, or full-time as a Manager or Director, I will bring insights and skills that will move the needle for your business.

You can hire me to Write. My specialty in writing is to teach and persuade. I’m sure you can figure out how to use that in your business.

I’m not a perfect candidate. Most people look at my resume and get hung up on the fact I have Bachelor of Science in Geological Oceanography from the University of Michigan. That was 28 years ago. I barely remember that child (but I still know more about shoreline erosion than anyone really needs to know.)

Or they want to discount the above experiences because I didn’t do it in corporate America. I can see that. Of course, I did all those jobs simultaneously (plus twelve years as CEO and CFO) for a store that in 2009 was named “One of the 25 best independent stores in America!” in the book Retail Superstars by George Whalin. That’s not corporate America, but it does speak to my ability to learn and my ability to stay organized and focused while juggling a lot of responsibilities in a fast-paced environment.

I’d be happy to discuss these and any other reservations during the interview.

I am looking for work. Do you know anyone who can use a guy like me?

-Phil Wrzesinski
www.PhilsForum.com

PS I apologize if this post sounds too much like bragging. I really do need more work. I want you to know I’m not just a blogger who thinks he knows something about business. I have walked the walk. I have made many mistakes and learned from them. I don’t have the business degree, but I did have the toughest teacher ever—real life! You get the exam first and then you get the lesson. Please share this post with anyone you know who could use a guy like me.

PPS You know my Core Values are Having Fun, Helping Others, Education and Nostalgia. My ideal job is teaching and helping others. It is what I do best and I enjoy it thoroughly. My second passion is marketing & advertising, finding new ways to drive traffic. That and Free Cell are my two favorite puzzles to solve. If the right opportunity comes along, however, I’m game for just about anything that lines up with my values.

The Scary Truth of Averages

“Have you ever noticed that everyone wants to be normal but no one wants to be average?” -Roy H. Williams

Did you hear the one about the statistician that drowned in a river with an average depth of three feet?

Image result for averagesIn business, everyone wants to know the averages, the average cost of rent, the average sales per square foot, the average level of inventory, etc. Averages are interesting. They can be a nice benchmark, but they can also be misleading, and sometimes downright dangerous.

Take, for example, average inventory at cost (a number you should all be tracking). If you were an average toy store doing around $500,000 a year in sales, your average inventory at cost would be around $100,000. But if you are that same toy store, your Thanksgiving to Christmas sales will likely be around $200,000, or pretty much all of your inventory if you only had the average on hand. As nice as it would be to sell to the walls, so-to-speak, you know you can’t sell it all. You also know you need some inventory in January for birthdays and post-Christmas.

Just trying to keep your store at the average will kill your holiday sales. You’ll need a lot higher inventory to start the busy season and much lower inventory the rest of the year. Rarely will you ever have the “average” amount of inventory on hand.

Another problem with that average is that $100,000 worth of toys looks a whole lot different in a 2,200 square foot store than it does in a 1,100 square foot store.

The bigger the store, the more creative you may need to be with your merchandise to keep the store looking stocked and full. The smaller the store, the more creative you may need to be with your merchandise to fit it all in. Sometimes your store space dictates your inventory levels more than just sales or industry averages.

Averages are a nice starting point, but it is worth exploring all the reasons you might deviate from the average, and be okay with those reasons.

For instance, my payroll at Toy House was a significantly higher percentage of our expenses than the average toy store. But I could afford that because my rent was significantly lower. Our sales per square foot was extremely low compared to the average, but that was because we had wide aisles to allow for shopping carts, four cash registers lines, a large gift-wrapping area, and a stage with seating/playing area—in other words, a lot of square footage not used for showing merchandise. Our average ticket, thanks to shopping carts and toy demos however, was significantly higher. Each deviation from the norm was on purpose and with a purpose.

I do many talks about the financials of independent retailers. Whenever possible I try to use an average store for that industry. But I remind everyone in attendance that these numbers are average and they should be striving to be spectacular. If all your numbers are average, you haven’t found the place to stand out and make a name for yourself.

In retail, there isn’t a prize for being normal.

-Phil Wrzesinski
www.PhilsForum.com

PS The upside to averages is that they give you a quick check of the health of your business. If you have a number way off from the averages and you don’t know why, that might be a good place to focus your time and energies on changing. The downside is that you don’t ever want to be an average store. You are destined for greater than that.

PPS Rent per square foot and sales per square foot go hand in hand. You need to be selling at least 10x more per square foot than what you pay in rent (if your profit margin is around 50%). That’s a far better benchmark than average rent or average sales per square foot for your industry. Those averages tell you nothing.

Give Them What They Want

Tonight I’m doing a repeat performance of last week’s Campfire Sing-Along at The Poison Frog Brewery. Last week I brought songbooks with the lyrics to forty-three songs from the likes of John Denver, The Eagles, Dobie Gray, Indigo Girls, Peter, Paul & Mary, The Beatles, Garth Brooks, and more. The evening went like this … Pick a song you want to sing and I’ll play it while we all sing it. Seemed simple enough, right?

June 23, 2017 behind The Poison Frog Brewery

Immediately people started asking for songs not on the list. They weren’t bad requests. I love Otis Redding’s “(Sittin’ On) The Dock of the Bay”. But they weren’t songs on the list or in the songbook with all the words. Still, people asked.

You know me. I’m all about making the customer happy. I’ve added a few of those requested songs to the list for tonight. I’ve added a few more songs as well.

What does that have to do with retail?

Every single retailer in America thinks they have a great selection of products just as much as I thought I had a great selection of songs. But there are products your customers come in asking for by name that you don’t have. There could be a good reason why you don’t have those products. Maybe you can’t get them. Maybe you don’t like the profit margins. Maybe you consider those products inferior to what you carry.

Keep in mind, however, if a customer stops in and asks if you have something, that means the customer thought of you as a place that would sell that product.

If your customers are constantly asking for certain items, maybe you need to reconsider carrying them. Or at the very least have a far better answer than either, “No,” or “We can’t get them.” If you keep saying, “No,” they will stop coming in and asking.

If it is something you either can’t get or simply don’t want to get because there is a better alternative, you could say, “No we don’t but can I show you something similar (better)?”

If it something you don’t carry and have never really thought about carrying, you could reply, “No we don’t. I’ll have to look into carrying that. Thanks for the suggestion.”

If a customer is asking, the customer thinks of you as a place that would have it. Wouldn’t it be great if you could say, “Yes we do,” more often than, “No we don’t,”?

-Phil Wrzesinski
www.PhilsForum.com

PS My stock reply to requests not in the songbook is simply, “I’ll have to learn that for next time.” Usually I’m looking it up the very next day. If they think I can play it, I don’t want to disappoint them. Any time you can avoid saying “No” is a good time.

Adjusting the Sails

I learned how to sail at YMCA Storer Camps. I knew how to canoe and kayak (I even did an eskimo roll in a kayak on the New River – bucket list!) I knew how to use a paddle to get just about anywhere, but I had never learned to harness the wind.

That’s me in 1986 on the UM Sailing Team at a regatta at Notre Dame

Sailing looked easy enough. You just let the wind do all the work.

Andy, my instructor, taught me otherwise.

The wind is a fickle thing, always changing speeds and directions. A smart sailor has to constantly scan the water looking for those gusts of wind that might change your tactics.

Sailing may not be as muscle-bound as paddling, but it is just as much work. You are always trimming the sails and adjusting your course. It may look like a leisurely way to get across the lake, but the good skipper is working the tiller and main sheet all the time, making course corrections as the wind changes.

This Sunday I am going to be teaching Retail Math to a bunch of toy store owners. For many, this will be their first real instruction on the accounting side of running a retail operation.

Most people dread math. But reading reports is a lot like reading the wind. Reports can tell you where the gusts are happening. Reports can tell you if you’ve adjusted your sails properly. Reports can tell you if you’re heading in the right direction.

Many retailers think a Profit & Loss Statement (also known as Income Statement) and Balance Sheet are simply for the accountant to figure your taxes at the end of the year. They are much more powerful tools than that. They can tell you when your inventory is too high (or low). They can tell you when your expenses are out of line. They can tell you when it is time to raise your prices. They can tell you when you can pay yourself more money.

At the very least, you should be studying these documents once a month and making course corrections. If you aren’t already reading and understanding these reports, start running these two reports monthly. Learn how to read them. Then as the years go by, start comparing the current month to that month in the previous year. The more I read the wind, the better I get at predicting its next move. The more you read and know your reports, the better you will be at adjusting your business profitably.

Wind speeds (traffic in your store) change. Wind directions (fads, hot products) shift constantly. When your boat is on an even keel (inventory well-balanced) and your sails are trimmed properly (expenses in line), you will be sailing at your fastest (most profitable).

Scan the water (reports) and your business will sail much more smoothly.

-Phil Wrzesinski
www.PhilsForum.com

PS There are many metaphors for sailing. One of my favorites is … The pessimist curses the wind. The optimist hopes it will change. The realist adjusts the sails. You can’t adjust your sails, however, if you don’t know what the wind is doing. Check out the link above to learn how to read those reports and use them to your advantage. The math happens whether you know how to do it or not.

Words of Wisdom From 1969

Here is another gem I found buried in a file, long forgotten. My grandfather and founder of Toy House, Mayor Philip H. Conley, penned these words in June 1969, two months before hiring my dad as his new manager.

I don’t know if this was penned to put his thoughts on paper for my dad, or if it was just something that struck him one day. I do not know if it was ever read again after that day (the file I found it in was pretty darned old). I don’t even know what one of the terms means (neither did my mom or dad). He refers to “marking capacity” and “markers”. I believe those were people who put price tags on boxes like my sister and I did as young children. He also refers to “jobbers”. I know that term. Those were the wholesalers or distributors of that day. I do know there are some nuggets in there that ring so true I’m calling them universal.

Here is his June 1969 manifesto in its entirety…

Business is a matter of balance.

Good business – successful business can be achieved as good government can be achieved using a system of checks and balances.

Balance as it applies to our business, there must be a balance between the number of customers, parking, inventory, shopping carts, sales people, stock people, marking capacity, office capacity, square feet selling space, square feet of stock space, store hours, checkout capacity, and giftwrap capacity. An excess of any of these factors creates too much expense for an efficient operation. A deficiency of a factor immediately creates an excess of all other factors – this is very bad for a profitable operation. Management’s responsibility is to maintain balance.

Enough free off street parking is an obvious example. Enough shopping carts is not so obvious. If people have to wait for a cart, then their parking space becomes non-productive , floor space, sales persons, inventory, etc. all become non-productive. Very wasteful, very expensive. We must realize that the customer may be on a time limit, therefore his waiting time must be subtracted from his shopping time. And, too, waiting is most aggravating and will result in a bad attitude for the customer.

Without customers, there is no business. If a customer is not satisfied after he is in the store, there is no sense in advertising to get him in the store.

Any time a customer is not satisfied with merchandise purchased in our store, he may return it for a credit, refund, or exchange. This matter should be handled more quickly than the original purchase.

Inventory balance is most difficult for us to achieve.

Excessive inventory is wasteful as it requires too many markers, too many receivers, too much work capital, too many sales people, too much stock space, and too many markdowns. If not balanced, this is the greatest cause of business failure.

An accounts receivable policy should be set up and adhered to with all being treated alike.

Inventory turns is the number of times your total inventory is sold per year. If you subscribe to the theory that you need only a 90-day inventory, then you should turn your inventory four times a year. Food stores may turn their inventory 40 or 50 times a year. Specialty stores turn theirs considerably less. This is the nature of the business. “If you can’t find it somewhere else, go to the specialty store and pay their higher price.”

Buying direct, although at a better discount, tends to create overstock conditions. In just buying dollars alone, your better price reflects at the most an 18% savings. However, your first markdown is usually 50%. I have not referred back to the other excessive expense factors. Buying direct, except under strict control, is dangerous.

In business the obvious is not always true!!! Example: “You’re nuts to buy from a jobber when you can get from us for less.”

Jobbers have been hurting for the past several years because so many operated on buying at the best price and selling at the lowest price hoping to move mountains (and doing so) of goods. (At a profit????)

So jobbers have been financially weak which is reflected in many ways.

  1. They do not carry a complete selection.
  2. The services of a competent salesman are not available.
  3. Their plant facilities do not allow for an efficient handling of vast quantities of goods.

Historically, three or four jobbers could not supply our needs. Their selections were never broad enough. We many times were forced to go direct to satisfy our needs for a “spread” of goods as well as supplying the needs of our customers, i.e. Monopoly money, Carrom refills.

Direct suppliers and jobbers giver preferential treatment usually to the largest customers. But not necessarily sometimes to the most regular – frequent – steady – GOOD PAY buyer. Over the years loyalty is pretty much a thing of the past.

No one seems to assess the market today. In years gone by, it was wise to spend time assessing how much could be sold profitably in the market and then budgeting the business accordingly. No one ever realized how large this nation’s ability to consume really was.

Business is a matter of keeping all relevant factors (and there are untold, unseen ones) in balance.

-Philip H. Conley

-Phil Wrzesinski
www.PhilsForum.com

PS The more things change, the more they stay the same. This June I’m going to be speaking to the toy industry about how to keep things like inventory and cash flow in balance. If you would like me to speak to your industry, I have some insights that go way back.