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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

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.

The Fine Line Between Chaos and Just Plain Messy

Chaos: noun /’kā-äs/ : behavior so unpredictable as to appear random, owing to great sensitivity to small changes in conditions (thank you, Google)

Chaos is a system too complex for the average observer to see any order.

I hated to file things away. Just not my thing. I would let stacks of papers and catalogs grow to the point of toppling over before biting the bullet and putting them away where they belong.

Most people called my desk messy. But in reality it was more chaotic than messy because I knew exactly what was in each of the piles. I knew there was a system and order. it was just too complex for the average person to see.

They called it messy. And they were right. Why?

Because perception trumps reality. I could argue about my “system” until the cows come home, but you and everyone with you would just see a hot mess.

Image result for kohls mens departmentThat’s how customers often feel about your merchandising. There might be some sort of order to why you merchandised certain products where you did, but if that order isn’t easily recognized, then to your customers, your store is a mess. (Then again, you might be like the men’s pants at Kohl’s and be an actual mess!)

The degree to which your chaos will look messy has a lot to do with the general design and layout in your store. There are generally two distinctly different styles of setting up your store or department, and they have two different levels of allowable chaos. You could go Military or Whimsy.


Characteristics: Rows and aisles are straight and easily navigable. Product is displayed orderly by type and size in neat and even rows.

Pros: Easy to navigate through the store. With proper signage, it is easier to find the product you already knew you wanted. Customers who wish to browse the whole store can track where they have been and where they haven’t. Much more navigable for shopping carts and strollers. Sense of order and control for the store. Harder for shoplifters to hide.

Cons: There is less sense of discovery because it is harder to get products directly in front of a customer. Endcaps become the prime real estate but are limited. Customers are less enticed to browse. Harder to change displays and departments.

Use: This is a common layout for grocery stores and large discount stores. It also makes sense for stores that appeal more to men. Men are less likely to browse and want to find their products with the least amount of work. If you sell mostly commodities, this style suits you best.

Chaos is deadly for these stores. They are built on order. To be successful, you have to be stocking and straightening constantly.


Characteristics: No defined rows or straight lines. Lots of curves, free-standing displays, and a meandering path. Product is grouped but not necessarily ordered.

Pros: A lot of product ends up facing directly at the customer as she makes her way through the store. More chance for discovery of new products or forgotten products. Sense of wonder and discovery at every turn. Easy to change out product displays. Store always feels new.

Cons: Not easy for strollers or shopping carts. Difficult to run in and grab something quick. Can create bottlenecks of traffic. Feels less ordered. Much more difficult to spot products out of place. Easier for shoplifters to hide.

Use: Clothing stores and gift shops employ this style to great success. Everywhere you turn a new display is facing right at you. Small boutique stores of all kinds can employ this style. Even departments within bigger stores can use this style. Just remember that it is a put off for men and for customers who want to shop quick. It appeals more to customers who like to browse and discover. If you sell mostly new and unique items, this style suits you best.

Chaos is much more forgiven in a Whimsy store – as long as the displays are neat. If you have a creative merchandiser who can make displays look fantastic, you can sell a lot of cool merchandise in a store like this. The trick, however, is that unlike the Military style, it is a lot harder to notice the messes when they do happen.

There is a fine line between chaos and mess and more often than not indie retailers are on the wrong side of that line. If you’re not sure of your own chaos, have a friend not affiliated with the store come in and see if she can tell the order of your store. If not, then customers might think you’re too messy to bother.

-Phil Wrzesinski

PS The great stores employ enough people to keep the aisles and displays neat and clean and stocked no matter what style of merchandising. Plus, those extra employees on the floor discourage shoplifting. In the race to the top, this is one of the separating factors.

PPS There are several studies that show how chronically disorganized people like me are actually smarter than average. That’s fine for my desk (and yours), but you don’t need a study to know that a hot mess of a display will turn customers away. As messy as I am, I’ve walked out of several stores because I didn’t want to dig through the heap to find what I wanted. Don’t let potential customers do the same in your store.

PPPS Your merchandising is part of your Branding because it sets the “feel” of the store. It is usually the first emotion someone feels when they enter.

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

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.

An Article Every Retailer Must Read

If you are a retailer, you need to read this article about Amazon’s new brick & mortar store in Chicago. It will be one of the scariest and most eye-opening articles you read this year. Go ahead. I will wait.

Image result for amazon brick and mortar store

Amazon, who is already cleaning our clocks online, is doing in their stores what some of us have only dreamed of doing and others haven’t even thought of doing. Amazon is bypassing the biggest headache most retailers face – getting your staff up to speed on product knowledge. How? By using signs.

Every single book in their store has a sign with reviews, ratings, and answers to the basic questions your customers would ask. Plus they have signs recommending similar titles, signs giving you data and information to help you make a purchase.

Rick Segal, famed retail consultant and speaker, once told me that signs increase sales of a product by 47%. He didn’t back that up with any proof, but it wasn’t a hard number to grasp. Just think about who would prefer a sign over a salesperson…

…every man and half the women.

Men like signs. We like signs because we speak vertically. Did what I say make you think higher of me or lower of me? Given the choice, most men would rather read a sign and figure things out on their own than ask questions and admit that they don’t know something. (Ladies, now you know why we don’t like to stop and ask for directions – just give us a map.)

Introverts like signs. Introverts aren’t shy. They just like their interactions with others to be meaningful and useful. Signs give them information to formulate the right questions before they have to interact with the salespeople.

Amazon is winning that game in their brick & mortar store.

You can, too.

No, you don’t have the data that Amazon has to create the kind of signage they create. But you can create signs that explain benefits. You can create signs that compare and contrast. You can create signs that answer frequently asked questions. You can create signs that show testimonials and staff picks (and why the staff picked them).

Online is where customers go when they know exactly what they want. Brick & Mortar is for people who want to browse or have someone help them find something when they aren’t sure what they need. Signs help you take care of those customers when your sales people are busy. Signs help you take care of customers when your customers would rather not interact with your salespeople. Signs help you take care of customers when your salespeople aren’t fully trained on product knowledge. Signs sell.

Get a computer and printer up front. Create a template. Start printing. Signs can even be hand-written if the penmanship is good. (Turn this project over to your staff and it will even help them with their product knowledge.)

-Phil Wrzesinski

PS If you did the math, you are thinking right now that 75% of the population prefers signs over salespeople, so why have any salespeople at all? First, understand that not everyone goes shopping. Since extroverts gain energy from being around people, they are more likely to be in-store shoppers than introverts. And there are multiple theories explaining why women tend to shop more than men. Therefore, it is highly likely that your store has more extroverted women in shopping right now than their percentage of the population would dictate. Second, relationships matter. Some customers don’t know the right questions to ask and need the guidance. Some customers have questions your signs couldn’t anticipate. Some customers don’t want items of mass appeal. Your salespeople are critical. So are your signs. Amazon got that second part right. Very right. You can, too.

PPS Your sales staff likes signs, too. Signs give your team confidence because they don’t have to remember facts. They can’t focus more on feelings, the relational side of sales.

Do You Have Enough Staff or Just Enough Staff?

There are two ways to determine the right amount of staff to have on your floor.

You can have enough people to handle the average traffic expected that day.

Or you can have enough people to handle the peak traffic moment that day.

Yes, the second one costs you more in labor expenses because you never know when that rush will occur. But look at the pluses.

  • You’re never under-staffed. You never have to worry about a customer having a bad time and flaming you on Yelp because your staff wasn’t able to handle the rush of customers. Whelming? Yes, but never overwhelming.
  • You have plenty of extra bodies to do all the other stuff that you never seem to find the time to do. Make a list for your go-getters. Sweeping, dusting, rearranging merchandise, creating fabulous window displays, making signs, tagging merchandise, updating social media, etc.
  • You have the ability to exceed customer expectations on a regular basis. To get customers to talk, you have to do more than they expect. Imagine their delight when you have extra bodies to help them shop, wrap their gifts quickly and carry them out to the car. 

You can’t do all that with average staffing and above average traffic. As for costing you more, if you think of your staff as your greatest asset, the more you invest, the more it pays off. My grandfather had an old adage that served him well for his life – it’s impossible to overpay for great help.

Keep that in mind as you do your seasonal hiring.

-Phil Wrzesinski

PS There are ten employees in the above picture (some hidden behind big boxes). There are another ten employees not shown out serving other customers. My payroll is a higher percentage than most stores. I take that money out of my ad budget because delighting customers is every bit as important as a marketing tool as running great ad campaigns.

PPS If you need help hiring a better quality of employees, read the book Hiring and the Potter’s Wheel: Turning Your Staff into a Work of Art. It is the method of hiring that has made the biggest difference in the quality of my staff.

It’s All About the Story

One final thought from my trip to Walt Disney World…

I took two teenage boys to the land of pink princesses, Frozen queens, and fairy tales come true. I took two roller coaster freaks who think Cedar Point (a mere 2.2 hour drive from us) is the Mecca of amusement parks to the land of talking mice, mermaids, and musicals. I took two teenage boys on rides that one would expect them to find more boring than the 21 hour drive we took down I-75.

My older son summed up his experience in two words, “My Childhood!”

My younger son only needed one word, “Epic!”

Walt Disney World delighted an entire family including two boys who on the surface wouldn’t seem to fit their demographic. But Walt knew what he was doing. It’s right here in this quote I took from an area under construction…

“It is my wish to delight all members of the family, young and old, parent and child.” -Walt Disney

How did he accomplish that? It’s all about the story.

We didn’t go on a roller coaster. We took a limo across town to get to the Aerosmith concert.
We didn’t go on an up-and-down thrill ride. We visited a haunted hotel in the Twilight Zone.
We didn’t go on a water ride. We were told the story of Br’er Rabbit.
We didn’t go on a G-Force simulator ride. We flew a spacecraft to Mars.

From the moment you got in line, the story was being told. Costumes, decorations, and activities while you waited were all designed to tell you the story. No detail was spared.

Were the rides as thrilling as Millenium Force? No. But they were every bit as fun. Even DINOSAUR, which my son likened to “driving on Michigan roads”, was fun enough to do it twice.

The lesson here is that the story sells it. The story makes it far more exciting, memorable, and likable than it is on its own. The story wins the heart. Most importantly, when you include the customer in the story, when you make her story your story, you’ll win her heart and all the members of the family, just like Walt.

-Phil Wrzesinski

PS It isn’t as hard as you might think to come up with stories that include the customer. Just get the customer to start her story and then add your store and product stories to the narrative.

Don’t Marry Your Inventory

Yes, you bought it. But not for the long term. Your inventory is more like a one-night stand. Love it and leave it. Love it and sell it. Love it and let it go.

Today I am kicking a lot of my inventory to the curb. The Just for Fun Sale starts at 9:30am. Products that I loved were not loved quite so much by my customers. That’s okay. We marked them down and are going to find them all good homes.

Most of this stuff has been here less than 18 months, some less than a year, some came in just last fall. If I ordered a case of six of something and could only sell two during the busy holiday rush, those other four pieces left behind aren’t going to sell without some help.

Before we got a POS system, I would hear the wedding bells of buyers telling me, “That’s a must-have, Phil. We need to stock up on those.” After the POS showed we only sold 1 of the 24 pieces on hand over the past two years, the wedding vows would be echoing, “But I love this item. It just needs time to sell.” Or I would hear the classic toast of, “I can’t afford to mark this down…”

Don’t marry your inventory. Love it and let it go.

Makes it easier when you count your inventory, too. Missing a few items? Shoplifters got some goodies? Do the math. How much is missing? If your shrinkage is less than 1% of your sales, you’re doing pretty darn good. Years ago the National Retail Federation stated that annual shrinkage is around 3%, with employee theft being the biggest part of that, followed by customer theft and employee errors (either at the cashwrap or at the receiving end).

You are going to be shoplifted. You are not immune to theft. Put in all the cameras and security measures you want. Won’t stop it completely. Wal-Mart has cameras and other security measures and still about $500,000 goes missing per store. It is just the cost of doing business. If that cost is less than 1%, then you’re doing things right. Don’t lament the loss.

Inventory is a means to an end. Its sole purpose is to move out the door one way or another and find its long-term lover, so that you can replace it and move on. That lover is not you. You are just the go-between, the rebound guy, the pimp.

Don’t marry your inventory. Go find it the love of its life – at whatever cost – and move on.

-Phil Wrzesinski

PS Your end game is to get the customers to love the product more than you love it. Plain and simple. The most profitable way is better merchandising. Give the product good exposure on the shelf, a sign, a spotlight, or whatever it takes to make the product shine. But if that doesn’t work, dump it and move on. The sooner the better.

Three More Ways to Freshen Up Your Store

I gave you four inexpensive ways to make your store look fresh.

Here are three more things you can do that might cost a little more, but will definitely freshen up the place.

  • Do a Wholesale Change of Fixtures. Move them around. Change the directions. Change the locations. Keep in mind things like sight lines, traffic patterns, and where you want to lead your customers, but nothing does more to freshen up the joint than to do a wholesale change of the merchandise.
  • Put Posters on the wall. Hang them from the ceiling, too. Put up fun posters with cute pictures of your products in use. Put up adorable pictures with interesting quotes. Put up informational posters that talk about your philosophies, how to shop your products, or how to make smarter choices. Guys like to read posters (better than having to talk to an actual person). Introverts like to read posters, too. New signage always brightens up the place.
  • Add a new Design Element that gets people talking. Add in something fun and unexpected. Put in a stage for performers. Build a tree right in the middle of your store – complete with bark and branches (and decorate it for Christmas when the time comes). Build a mountain out of plaster and paper mache and use it as the focal point of a display. Put in a fountain. Add a disco ball to the bathroom. Put a picnic area, table and all, right outside the front door. Put up a directional mileposts pole (North Pole 3,303 miles). Not only will your store be fresh and hip and cool. People will be talking about you.

Later this week we will have these Before I Die… chalkboards up on the side of our building.

Yeah, people will be talking about us. That’s the first half of the battle. You know what the second half is.

-Phil Wrzesinski

PS Along with the Before I Die project, we’re doing three of those other things listed above. My resident artist is working on our directional milepost pole with 46 real and fictional locales (“Where the Wild Things Are” is my favorite!). More posters are going up on the wall soon. And I am heading to the lumber yard tomorrow to buy the wood for our stage. What are you doing to make your store fresh and exciting?

Four (Cheap) Ways to Make Your Store Look Fresh

When was the last time you changed things up? Is everything where it was last year? Even if the products have changed, if you haven’t moved the categories around since last year, your store looks soooo 2012.

Yet, in a store like mine, where we have huge sections and categories, just changing the merchandising around can seem a daunting task.

Here are four simple and inexpensive things you can do that will make your store look fresh, new and exciting.

  1. Paint a Wall. Not the whole store, just one wall. Paint it a wild and fun color. Something that ties into the merchandising of that area. A gallon or two of paint and a Sunday afternoon is all it takes to brighten up the place.
  2. Put a Planter with fresh flowers out front. Fresh flowers equals fresh store. You can even talk to a local florist or nursery about having them supply the planter and flowers in exchange for putting “Flowers by _______” on the planter.
  3. Put a Table Cloth on your main display. Not only does it change the look and feel, while also covering up the cracks and scratches, it highlights the product on that display and raises their Perceived Worth.
  4. Refresh the Signage. Take down every paper sign in your store and reprint them from your computer. (The investment in a good color printer pays for itself on this one). 

People want to shop where the buzz is. People want to shop where it feels like things are happening. If your store looks like last year, you won’t get that buzz. You’re already buying new products. Might as well send a few more signals out that your store is fresh and exciting. You’ll probably get some Word-of-Mouth, too, so consider anything you spend as an advertising expense.

-Phil Wrzesinski

PS I have some other ideas I will share later, but they cost just a bit more.

The Four Questions a Buyer Should Ask

One of my vendors did a survey of retailers to get ideas how they could service us better. I told them that there were really only four questions my buyers ask about a vendor before placing an order.

  • Do I like the product enough to want to sell it?
  • Would my customer buy this product?
  • Will selling this product benefit my company?
  • Do I have the room for this product?

Answer yes to all and we place the order. So a smart vendor would look at those four issues and find ways to make me answer yes.

Do I Like the Product?
Yes, it starts with the product. You better make something good, something smart, something simple that fills a felt need of the customer. If I don’t like it, I can’t sell it. Period.

Would My Customer Buy This Product?
I can love a product, but know deep down in my heart that my customers won’t. In fact, a good buyer knows the difference between what she loves and what customers will love, too. I have turned down some fabulous products because I knew they wouldn’t make sense for my customer base. A smart company understands this and markets their products to the right stores. A really smart company asks why and then decides whether it is worth it to modify their offerings or simply stick to their niche.

Will Selling This Product Benefit My Company?
This is where a number of factors come together.

The first is money. I need to make money. I have major bills to pay including rent, payroll, insurance, utilities and taxes. Are the margins and dollars good enough to help me pay my bills? Will the inventory turn fast enough to make it worth my while? Are the terms such as dating, freight and quantities realistic for my cashflow needs? Is the product one that all my competition is selling at unrealistic prices?

The second is image. Will selling this product enhance the brand or image of my store? Sometimes I am willing to take a financial hit on a line if it has other benefits. For instance, we are an official licensed dealer for Boy Scout and Girl Scout merchandise. Prices are controlled by the scout groups. Margins are paper thin. But the traffic it brings me and the prestige it brings me are worth it. Some products “legitimize” your store, which makes up for the financial shortfalls. Some products enhance the look or prestige or reputation of your store.

Companies that can sell me on the benefits of carrying their product from both a financial and an image basis have a better chance of getting the order.

Do I Have the Room for This Product?
When I speak of “room” I am talking display and storage. I am also talking room in the open-to-buy budget. I am talking room in the cashflow of the store. Companies that help cashflow with extended dating or low minimums will get a stronger look. Companies that have easy-to-display-and-store products will get a stronger look.

If you come to me with your product, you better be able to sell me on all four issues. It only takes one NO on any of those questions for me to walk away.

That’s the advice I gave one vendor who asked. I hope they listen.

-Phil Wrzesinski

PS Yes, you may forward this to your vendors. Better yet, you might want to forward this to your buyers, too.