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Retail Shrinkage – Where Does it Go?

In doing my research for a presentation on Inventory Management I’m giving at the ASTRA Marketplace next month, I found this interesting little statistic from the National Retail Federation.

Total shrinkage in the retail sector in 2008 was about 1.52% of gross sales. That’s $1.52 out of every $100 that mysteriously disappears.

More interestingly, almost half of that shrinkage (44%) is caused by your own employees, either walking out the back door in their pockets or sliding out the front door through consumer-friendly transactions.

Shoplifting accounts for about 35% of that total and accounting errors make up most of the rest.

I showed this to one of my staff members who was amazed. She couldn’t believe that our employees (her coworkers) would do this. I reassured her that, although they might do some, our shrinkage was only 0.44% of sales the past two years (up from 0.27% in 2007 – sign of the economy?). We’re doing much better than the average retailer.

Here is something to ponder… Wal-Mart has also traditionally done well with a shrinkage rate at only half the national average. How is that possible?

It would seem they would be ripe for theft. Their reputation for how they treat their employees would seem like fertile ground for some “entitlement”. Some of their limited income customers might be tempted to partake in a few five-finger discounts, too. Plus, the limited interaction between customers and staff, the huge, cavernous store with plenty of hiding spaces, and the vast quantity of product seems like a recipe for high shrinkage.

Add it all up and their results seem all the more surprising. But the answer is simple. The power to keep the shoplifters away resides in the blue-vested gray hairs standing inside every door.

What is the one thing shoplifters crave most of all? Anonymity. Not being seen or recognized. Recognition is the buzzkill for all but the serial professional shoplifters. Being seen strikes fear in the heart of the amateurs and down-on-their-luck would-be thieves.

Fortunately, we all can learn from this. The lesson is simple…

Greet your customers. Each and every one of them. Not just with a shout-out as you hide behind the cashwrap, but with a sincere “thanks for stopping by,” the kind of greeting you would give your best friend.

Not only is it a good way to start a conversation that could lead to a sale, but it is the single biggest deterrent to shoplifting.

And now you know why Wal-Mart has all those greeters. It wasn’t to protect them from age-discrimination lawsuits after all.

-Phil

PS I’ve got some ideas about how to stop employee theft, too. Will post them soon.

Turning Your Customers Into Fans

I’ve just posted a new Freebie on my website based on the presentation I gave in January at the IDEX Show.

It’s called Turning Your Customers Into Fans.

If you want to grow your business, you can use traditional marketing and advertising. But everyone knows that Word-of-Mouth is the strongest form of persuasion. And you’ll get far more WOM if your customers aren’t just customers, but are stark raving fans, evangelists for you.

Knowing how to turn them into fans, and how to empower that evangelism is now available for you free of charge. Check it out.

Cheers!

-Phil

I’m Sharing My Biggest Secrets

But not right here… (at least not yet:-)

Thursday, Feb. 25 from 8:30am to 11:30am I am doing a 3-hour workshop with the Greater Jackson Chamber of Commerce to share the biggest secret behind the incredible success of Toy House and Baby Too.

(Success? Besides growing and remaining profitable while in a shrinking industry and shrinking population, Toy House and Baby Too was recently named one of The 25 Best Independent Stores in America in the book Retail Superstars by George Whalin.)

The class is:

“Accelerated Branding: Taking Your Advertising and Your Business to a New Level”.

All the best stuff I learned from two incredible people; Roy H. Williams, aka The Wizard of Ads and David Freeman, the best screenwriting master you’ve never heard of.

In three short hours you will learn more about how advertising works (and doesn’t work) than most marketing professionals. And you’ll be able to harness that knowledge to accelerate your business no matter what the economy is doing.

I’m going to show you how to make your advertising work better (without spending a penny more) so that you attract more customers, get them to spend more, make them more loyal, and empower them to bring you even more business.

The cool thing is that there are no gimmicks, no radical changing of the way you currently run your business, no unethical or impractical practices. I’m just going to show you how to unlock the potential that already exists in your business and teach you how to harness that energy so that it works for you.

It will be a hands-on workshop in which you’ll create a simple blueprint that will guide all of your advertising (and business) decisions along with a number of examples how to put your plan into action.

  • It will be fun. (Hey, I play with toys for a living – If I’m doing a workshop, it’s gotta be fun)
  • It will be eye-opening (The downside is that you won’t ever look at advertisements the same after this class.)
  • It will be well worth your time (3 hours? $25? I’m kinda surprised the Chamber is giving away this program so cheaply – I paid many thousands for this same info and charge many hundreds to give it out individually as a consultant.)

Contact Mary at the Chamber (517) 782-8221 to enroll. But be warned. There is pre-class and post-class homework (not to mention in-class work, too). If you’re not willing to do the work, don’t bother calling. We’ll give your seat to someone who wants to grow their business leaps and bounds.

See you Thursday!

-Phil

PS If you’re one of my out-of-town followers, you’re welcome, too. The price is $40 for non-Chamber, non-Midtown, non-Jackson Local First members. That, and a little travel will be some of the best money you spend all year. If it isn’t, I’ll pay you back the $40 fee and take you to the best lunch you’ve ever had right after the class.

What I Learned in Louisville

The All Baby & Child Spring Conference just wrapped up. It is a conference for stores who sell baby products. Over 3 plus days we had speakers, presentations and a mini trade show. I was asked to be a presenter when the conference was scheduled but got bumped for a presentation on the new CPSIA law and how it affects baby products.

Twenty of the four hundred plus attendees dragged themselves into a room set up for 300 to hear the latest interpretations of this expensively pointless law. But since I wasn’t presenting, I chose to carefully observe the other presenters to see what I could learn. Here are the Do’s and Don’ts from Louisville.

Don’t give a presentation where all you do is read the ample text on your wordy slides. Give me the handout and quit wasting my time. I’m not two any more. I can read. Yes, one presenter put up slides full of text and then read them to us, often poorly because he couldn’t decide whether to read his laptop with reading glasses or turn his back and read the screen without. It’s been a long time since I rated a presentation poor. I pray it will be another long time before I do it again.

Don’t plan a 90 minute presentation when you only have 60 minutes scheduled. As much as I like the information, I also want to get to the next presentation on time.

Don’t start your presentation until you know the audio is working. Twenty minutes into a talk is way too late to find out half the room can’t hear you.

Don’t talk too fast. Yeah it may be your style, but I was out of breath just trying to keep up with you. I haven’t learned shorthand and taking notes was useless.

Don’t promote your book until the end. I’m not interested in buying until I know what you’re selling.

Do something surprising to get my interest. Rick Segel giving away a copy of his book to the first person willing to go against the crowd was a brilliant idea (and I’m not just saying that because he gave the book to me). It got everyone to pay attention and realize that dissenting voices exist and are not always wrong.

Do give me action steps. Paint me a picture of what to do next. Mike Rayburn taught me to say, “What if..?” whenever I am presented with a challenge. It was our buzzword fr the rest of the evening. George Whalin gave me a list of traits of a great manager, things I need to develop in myself or hire & train in my employees. I like concrete stuff that helps me plot a course of action.

Do something unique. The most fascinating presentation was by Mike Rayburn. He’s a guitar virtuoso, a comedian, and a motivational speaker. One of my colleagues asked me after the presentation if he was a musician who did comedy or a speaker who did music, or a comedian who did motivation. I asked what was the point. You see, there are plenty of guitar virtuosos, tons of motivational speakers, and a plethora of comedians. But there is only one Mike Rayburn who can combine all three seamlessly. If there had been a box above Excellent, I would have checked it for his presentation.

Do something fun. Rick Segel told great jokes that made us laugh out loud and helped get his points across. George Whalin put up a slide of a crazy guy in a superhero outfit that got a lot of buzz afterwards. Mike used humor and music, two of my favorites.

Do give me something to take home. I have a book, a DVD, two CD’s, and three handouts of notes. Reading material for bedtime, listening material for the drive home, and training material for the next staff meeting. It’s the trifecta of a great conference.

If you are doing a presentation, whether for a handful of co-workers in a staff meeting or a crowd of conference attendees, keep these Do’s and Don’ts in mind. And if you’re not doing any public speaking soon, why don’t you come to my talk on Wednesday, May 20th. It’s at 7:30 am at Jackson Coffee Company. The topic is How Ads Work: Understanding Branding and the APE. Not only will you learn some really cool stuff for your business, you’ll get the chance to critique me on the stuff I’ve just posted and tell me how well I did.

See you there.

-Phil