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Top Viewed Blog Posts 2012

Everyone loves Top Ten Lists.

Here is my list of my Top Ten Most Viewed Blog Posts from 2012

1. Two Thing You Can Correct Right Now – Two simple things you can do that won’t cost you an arm and a leg, but will make the next year better than the previous year.

2. Lessons From MLK Quotes – Five of my favorite quotes from Martin Luther King, Jr. and how they apply to independent retailers.

3. Two Days to Take Your Customer Service to Shareworthy Levels – Announcing a class I am teaching alongside Tim Miles at Wizard Academy on January 29-30. (You really should go!)

4. What to Do About Showrooming – We all face the problem of customers walking in with smart phones, checking out our product, asking our advice, getting our knowledge, scanning the UPC codes and buying it online. You might be surprised at my answer to this ever-growing problem.

5. This Will Be a Successful Year If… – A different, better approach to the dreaded New Year’s Resolution (Appropriate that this would make today’s list. By the way – I accomplished three out of four!)

6. Is JC Penney Making a Mistake? – They announced their new pricing policy at the beginning of last year. I had my opinions on whether it could work or not. Go see if I was right.

7. The Goldilocks Effect – I was egged on by a friend in another online group to discuss this inventory management topic about how to stock and merchandise your store to fit the needs of your customer base better. Apparently other people liked the topic, too.

8. Tell Me About a Time When… – The absolute best interview questions you should be asking!

9. Shopping Local Benefit Salt Lake City – Mostly a link to a great article about a study done in Salt Lake City. Either I have a lot of fans in Salt Lake City or people love to read more articles about the positive impact of shopping local. (You should forward the article to everyone you know in your local and county government economic development positions.)

10. Fair and Square – Another post about the JC Penney pricing fiasco. Their idea was right. Their implementation was wrong, wrong, wrong. Don’t look at their failure as a policy problem, only an implementation problem.

Definitely an interesting mix of posts, don’t you think? Covers a wide gamut from Hiring to Customer Service to Inventory Management to Shop Local to Pricing to Leadership.

Thank you to all who are following publicly, lurking quietly, or just plain stumbling onto this blog by accident. If there are topics you would like me to write about more in 2013, please let me know. I get the feeling the indie retail movement is on the cusp of some serious positive growth over the next few years.

-Phil Wrzesinski
www.PhilsForum.com

PS One of the reasons I believe we’ll see more people Shop Local, Shop Independent is because of a sense of community that they feel at your stores. If you have not yet read the book Pendulum, you need to go get it today. “Sense of Community” will be a driving force for the next decade at least. You should be playing up that aspect of your business.

Fair and Square

My wife is frustrated (and thankfully, it is not my fault). She used to love going to JC Penney. Well, love might be a strong word for someone who finds shopping a chore. But now she finds that JCP rarely makes it on her list. And she is not alone. JC Penney just reported that same-store sales fell a whopping 26.1%!

Many are blaming their new Fair and Square pricing policy.

My wife is one of them.

She says it is neither Fair nor Square. As she pointed out to me last night, our prices are Fair and Square. They are clearly marked on every package. There are no misleading header cards on the racks. There are no surprises at the register. There are no gimmicks, exclusions, mark-it-up-to-mark-it-down contrived sales. There are no hidden fees, add-ons, hoops or loopholes. The price you see is the price you pay.

That is what JC Penney promised us when they launched this new pricing policy at the beginning of the year. The problem isn’t in the policy. The problem is they failed to deliver what they promised.

Many pundits will wrongly claim that customers want sales and deals and JCP’s failure is because they aren’t offering enough deals. I will argue that their failure is because they didn’t actually make their prices Fair and Square. Every time my wife went in, the prices were not clearly marked, some items had no price at all!  The header cards rarely matched the price on the product and even less the price at the register. The prices seemed to fluctuate faster than the stock market.

Before you listen to the pundits try to tell you that customers only want sales and discounts, understand that many retailers are quite successful offering pricing that is fair, clearly marked, and not jumping all over the place. JC Penney promised us that back in January. Empty promises lead to empty stores.

-Phil Wrzesinski
www.PhilsForum.com

PS There is a Fair and Square pricing policy that keeps your customers happy and your margins strong enough to be profitable. Download the free eBook Pricing for Profit here.

I’m Gonna Raise Your Sales 300%!

I was at a conference where one of the speakers promised us he could raise our sales 300%!

Yeah, like me, you’re all laughing at him.  Huckster, Snake Oil Salesman, Liar Liar Pants on Fire and other derogatory terms crossed your mind.  But after further review, I think his plan was solid and would probably work.  Short term.

His plan was simple.*  Slash your prices by 50%.  Increase your advertising by 400%.  In short time your sales will be 300% greater than the same period last year.  You’ll be broke and filing bankruptcy, he was quick to note, but you’ll be happy because sales are up!

And therein lies the problem…

Ask any retailer, “How’s biz?” and they’ll either be happy because sales are up or sad because sales are down.  Folks, we’re tying our mood to the wrong numbers.  It isn’t about Sales.  It is about Profits.  Sure, increased sales make it easier to be profitable.  But they don’t guarantee it.

I’m still waiting on the savvy retailer, who when asked, “How’s biz?” tells me, “Awesome! I was able to cut three points off my COGS and finally got a handle on expenses.  Profit this year is well ahead of last year.”

Then again, I think most retailers are not even calculating such numbers.  They are just waiting until the year end when the accountant tells them if they made any money or not.

I get that.  Retail accounting can be scary.  Even though I’ve written a book on the complete financial analysis of the typical toy store and have also written an easy guide to reading your financial statements (those reports Quickbooks and all other accounting software can print with just a couple clicks), I’m still constantly trying to wrap my head around our financials.

But that is far better than putting my head in the sand and ignoring those numbers.  Especially now with the 4th quarter finally under way.

Now is the time to figure out a new pricing structure that might increase your gross profit.
Now is the time to figure out which expenses are out of whack and need attention.
Now is the time to figure out what inventory isn’t moving and needs to be marked down.
Now is the time to figure out where are the holes in your training program.

-Phil Wrzesinski
www.PhilsForum.com

*PS  Don’t try his plan.  Please don’t try his plan.  Even he didn’t want anyone to try his plan.  He was just trying to make a point (and I was, too).  If you try anything, try measuring your financials once a month.  Yeah, it’s more work on your part.  Yeah, it’s way more rewarding when you do that work right!  Waaayyy more rewarding.

Convenience Trumps Price

In case you need more proof that not every customer shops on price, a new study on Back-to-School shopping by WSL/Strategic Retail shows that only 26% of customers are chasing BTS price promotions to do their shopping.

Instead they are shopping based on Convenience.  Seventy five percent are going to stores where they believe they can get everything all at once, regardless of the price.  Sure, most of them are going to a big-box discounter, but that isn’t the issue.
The key word here is Convenience.  What are you doing to offer that to your customers?  Do you have services like online shopping with same day delivery?  Do you offer a wide selection that covers everything your customer needs?  Do you have an easy-to-get-to location? Front door parking? Delivery?  Personal shoppers?  A fast checkout?  Free gift-wrapping? (Heck gift-wrapping, period.)
Convenience comes in many forms.  The convenience stores that dot every other corner were designed to make shopping quick and easy when you only needed an item or two.  You paid more for a roll of tape or a gallon of milk, but you saved time and hassle.  
Personal shoppers used to be a sign that your store was expensive.  But what is the fine line between a helpful employee and a personal shopper?  You already have the helpful employees. (Right?)
Convenience trumps price.  That is why people will pay more for a bunch of screws at Wal-Mart than at the local hardware store – because they were already at Wal-Mart for BTS shopping.  
You have convenience built into your model in many ways.  The study shows that now is the time to play them up.
Phil Wrzesinski
PS  Not all conveniences are the same.  Be specific about how you are convenient, and more importantly, how it benefits your customers. (We offer free giftwrapping so that you are never late for the party.)

The Price is Right

A recent survey done by The NPD Group states that 85% of customers say that Price will be an extremely important or important factor in where they decide to shop in the future.

I would agree.  In fact, I am surprised it is not higher because almost every single buying decision ultimately ends up being about price.

But before you go around slashing prices, you ought to look at how price influences each purchase.

It starts with what I call the Value Equation.

Does the actual price on the product match the perceived worth of the product?  If it does, the item has Value and you buy it.  That is the decision you and I and just about everyone else makes before we decide to buy an item.  Every single time.  Sometimes that decision takes milliseconds, sometimes it takes days or even weeks.  That is how the buying process works.

You look at an item, decide how much it is worth to you, and then look at the actual price.  If that price is much higher, you are not buying.  If that price is much lower, you wonder what is wrong with it.  Maybe it does not do what you thought? Maybe it is cheaper quality than you thought?  Until you feel comfortable with the reason why it is much less expensive than you expected, you are not yet buying.

The key to successfully pricing your merchandise is to make sure the actual price matches the price the customer has in her mind.  Often you might find you are pricing things too low.

Pricing is important.  So is merchandising (it raises the perceived worth).  So is having the right products.  So is taking care of the customer.

Digging deeper into the statistics from The NPD Group, you will find that…
15% of the population did not list Price as “extremely important” or even simply “important”.
56% said Customer Service was extremely important/important.
60% said Convenience of Location was extremely important/important.
60% said Ease of Shopping was extremely important/important.

Get the price right and the do all that other stuff and the sales and profits will come.

-Phil Wrzesinski
www.PhilsForum.com

PS To learn more about how Perception plays a role in Pricing, download my FREE eBook Pricing for Profit.  You will be surprised at how many pricing mistakes you have made that are costing you real money.

Be Proud of Your Pricing

How much?


Well… before I tell you that, let me tell you all that you get.

We’ve all had that moment.  The customer wants to get to the bottom line before you’ve had a chance to talk up the product.  You hesitate because you are afraid the customer will balk at the price.  You know it is higher than the competitors, but with good reasons.  You think, if only you could get those reasons out first…

But if you think that way, you are thinking wrong.  

Roy H. Williams taught this to me first.  Jeff Sexton wrote a great blog using Roy’s explanation.  Here is my take.

If someone asks you the price, be proud of your price.  Take a deep breath and answer with… the price.  Yes, tell them price right up front.  The first word out of your mouth should be a number.

Then immediately tell them all they will get for that price.

How much?

$259.99 and that includes the the cup holders and the security bar so that you have options for your older child to be able to climb in and out on her own.  It also includes these self-leveling wheels that are rubber so that it will be quieter while you walk, allowing your baby to sleep better and you not to be so annoyed at the clacking racket the plastic wheels make.  It also has this simple one-hand folding technique so that if you have a toddler in one arm you can still fold it and slide it into the trunk with your other arm.  It also includes...

Do you see how the price appears to go down the more benefits you list after saying the price?  When you start with the price and then list the benefits (all the stuff following the words “so that”), the customer thinks wow, what a bargain.  Reverse the order – tell the benefits first – and with every benefit you list the customer expects the price to go up.

Same price, same benefits, different perceptions.  Say the price first, then make it go down perceptually by listing all the benefits immediately after.  Plus, when you say the price first, you are showing that you have pride in the price, which instills confidence in your customer.  And that is always a good thing.

-Phil Wrzesinski
www.PhilsForum.com

PS  For more on how perception affects pricing, check out my eBook Pricing for Profit (free download).

JC Penney Revisited

I wrote recently about JC Penney’s new pricing policy and my wife’s experience there.

I hoped they won’t muck it up, knowing if they do, no one else will follow their lead away from hyped up sale, sale, sale to a more realistic method of pricing.
Unfortunately…
My wife went in looking for a new pair of pants. Found some she liked. They were marked $20.00. There were a couple other colors of the exact same pant there, but one was marked $25.00. No sale signs, no discounts, no markings on the tags to let you believe they were anything other than the price marked.
She took one up to the register. It rang up at some incredibly low price, like $10.00. She immediately ran back and grabbed two more colors. One of them also rang up at $10.00, the other at $15.
She had no idea what to expect, whether to complain, whether to walk away happy or just confuzzled. She wondered later how many people had walked away from those pants because they thought the pants were $20.00.
We just got the JC Penney catalog explaining their new pricing policy. Now I am confuzzled. Nothing in the catalog made sense and nothing matched the experience in the store.
A simple lesson here. If you want to go after the Relational Customer, the one looking for an expert she can trust, you have to price your store in way that instills confidence and trust. You do that by clearly marking your actual prices on everything. Do not leave anything to guesswork or wonder.
If you want to maximize your sales, do not let your customer walk away because she thought something was too expensive. Put the actual price on the product. Period.
Unless you want to be like JC Penney…
-Phil Wrzesinski
www.PhilsForum.com
PS Would you like to learn how to price for maximum sales and profits? Download my free eBook Pricing for Profit. Pricing is all about perception, something I hope JC Penney learns soon.

Is JC Penney Making a Mistake?

JC Penney announced a brand new pricing strategy. They are getting away from the over-inflated regular prices with everything on some kind of a sale all the time including scattershot coupons and deals.

They have already implemented it in my local JCP.

And my wife is not happy.

She went shopping there recently and was more confused by their pricing than ever. More importantly, she walked out without making a purchase. She asked me about it at lunch today, and I told that while I am a huge fan of not using sales and gimmicks (the old JCP model), I think they have a hard road ahead for three reasons.

THEY TRAINED THEIR CUSTOMERS

The first problem is that JCP trained their customers to expect a sale, to expect a discount, to wait for the coupon. For the next few months there will be some pain as customers try to adjust to this new program.

My wife was looking at a sweater. The new price tag said $25.00. It used to be priced at $50 in the old scheme. Then with a 40% off in-store sale and a 15% off coupon, it sold for $25.50. But without those “sales”, my wife ended up putting it back. It did not feel like a bargain any more.

You cannot get rid of that sale mentality overnight. We all know stories of customers who buy things on “sale” at other stores even when the “sale” price is higher than our price.

PRICING HAS PERCEPTION

I have been saying this all along. The numbers you use in your price give off a perception to the customer. JCP has changed all their prices to end in .00 instead of .99 as most retailers use.

The only problem is that .00 looks like “full price” while .99 looks like a discounted price. My wife, a full blood Transactional Shopper, mentioned this first. The price just looked too high. She even went so far as to say that she would have given it a second look at $25.99 instead of $25.00. So JCP, by their new pricing strategy is making everything look perceptually more expensive.

(For a full explanation of the way prices are perceived, download my free eBook Pricing for Profit.)

CAN THEY RELATE TO THEIR CUSTOMER?

Let’s face reality. JCP, Kohl’s, Macy’s, Elder Beerman, and all the other department stores like them are relatively interchangeable. They all carry similar goods at similar prices. And they all go after that Transactional Customer, the one who shops solely on price.

But with this shift, JCP is hoping to get away from that price-shopping mentality. Does this mean they are now going to go after the Relational Customer, the customer looking for an expert she can trust? I don’t believe they have the staff and the training to accomplish that. They certainly are not going to compete with Nordstrom’s any time soon.

So while they alienate their Transactional Customers in the short term, they are going to have to find new ways to attract those customers (who have been their base for so many years) back to the store with some really sharp pricing on those every-day-low-prices. JCP is right that not everyone is duped by the mark-it-up-to-mark-it-down policy so many department stores use. But not everyone is good at math, either.

We’ll see if JCP has the guts to stick it out. Personally, I’m hoping they do. (But please change those prices back to .99)

-Phil Wrzesinski
www.PhilsForum.com

PS If you have not yet seen my Pricing for Profit presentation, I am doing a revised version at the ASTRA Marketplace in Baltimore this coming June. According to those who have seen it, it might be the single most profitable hour you might ever spend.

Two Ways to Look at the Amazon Deal

Amazon announced it is offering up to a $5 incentive for someone to walk out of a brick & mortar retailer this Saturday and shop online.

Facebook and blogs are lighting up on this topic.

Retailers are obviously outraged by Amazon’s blatant attempt to use their stores as free showrooms.

Before you get your panties in a bind, however, here are two different ways to look at this…

IT DOESN’T REALLY MATTER

Statistics show that about 35% of the US population uses a smart phone. And only a quarter of those people use it for primary browsing purposes.

So now we are down to only 8.75% of the population are likely to use their mobile phone for this purpose. Now figure out how many of those have that Amazon price check app. Let’s be generous and say that 80% of those people have the app. Now we are down to 7% of the population.

It has been shown before that only about half the population are price shoppers, which gets us down to 3.5%. Then figure out your share of the market. 5%? 10%?

Assuming you are rocking it in your market and have 10% market share, then you can expect about 0.35% of your customers to be using such an app.

But wait, you say. Many of your customers are early adopters. They make up a higher percentage of the smart phone owners. Yes, but at the same time, a larger percentage of your customers are not price shoppers. So it is a wash.

Bottom line? Do the math and you will see that about 1 out of every 225 customers in your store this Saturday will take advantage of this offer.

KILL ‘EM WITH KINDNESS

And when that customer does pull out her phone and zap an item, you get a unique opportunity. You get the chance to show her how wonderful and helpful your store is.

As long as you approach it the right way.

She is zapping for information. Not just price but also product specs and reviews. You can win her over by also being a knowledgeable font of information.

Help her understand if the item is right for her needs by asking important questions like, “What are you hoping this item will do for you? What problem are you trying to solve?”

Embrace the information she finds online. Ask her to share what she reads. Quite often you will find that the information is either faulty or useless. Then you have the opportunity to engage with her and steer her straight.

It is all about winning the customer’s trust. You do that by being friendly, honest and open. You do that by acknowledging the downside to a product. You do that by showing the upside, too, the benefits of shopping with you and keeping your purchases local. You do that by understanding the customer is a person with needs and fears just like you. Find out what is her fear and you know how to build her trust.

Heck, you don’t need to wait for them to use a smart phone app before you do all that.

Just saying…

-Phil Wrzesinski
www.PhilsForum.com

PS If you feel the need, you can always play the Amazon-doesn’t-care-about-the-local-community card. Just ask your customers how much Amazon contributed to the fire and police departments in your town. But the best approach is to not worry at all. Just do what you do so well that your customers want to support you.

Do You Match Prices?

If you are an independent retailer you have been asked this question a thousand times.

I was recently asked by a regular customer on Facebook. Knowing that a thousand plus people were going to read my response, here is what I said:

Dear ____,
This is a tough question to answer. I could just say no and leave it at that. I used to say, “No, because they don’t match our services.” But some might look at that as a bit of arrogance.

For the sake of everyone who might read this, I want to give an explanation of why we don’t match prices because I think it might be an eye opener for shoppers to understand what goes into a decision like this for a store like us. It is a tough decision that we do not take lightly.

We used to match prices but over the years a few factors have come into play that made it difficult.

First it was the ads for products that the store never had. Target was notorious for running ads with prices below cost of stuff that was never in their store. Yet we had plenty of stock and lost money on everything we sold matching their “price”.

Then there were stores that didn’t offer any of the services we offer like layaway, giftwrap or a knowledgeable sales staff. All of which cost money. With a lower overhead they (sometimes) offered a lower price.

Now, with the Internet there are warehouses in low tax locales, paying minimum wage to a small handful of employees to stuff boxes. They don’t have the overhead of a brightly lit sales floor, or trained and compensated sales staff. They don’t have to pay the same city/county property taxes, state business taxes, city & state income taxes, etc. (which means they do not contribute to your local fire and police) They don’t have to collect MI sales tax so they advertise it as “tax-free” even when it is not (and by not collecting that tax they don’t help the state get the money it needs for education and roads, etc).

So our choice is to either offer to match prices, but in the process drop all the services that cost money, hire fewer staff and pay them less, or to stop matching every price and keep doing business the way we believe it should be done, by offering incredible services and experiences for our customers, by getting them the right products at a fair price, one that is reasonable for the product, covers our overhead, keeps my staff employed and puts food on everyone’s tables.

That’s the route we have chosen.

Whether it works for us in the long run, whether customers see any value in such services and such a stance is the gamble we have to take. But I believe it is worth it for my customers, my staff, and my community.

Thanks for the opportunity to explain. I apologize if that was way more information than you needed:-)
-Phil

What are you saying?

-Phil Wrzesinski
http://www.philsforum.com/

PS Oscar Wilde said it a long time ago and it is still true today. “Many men know the price of everything and the value of nothing.”