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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.

MILITARY STYLE MERCHANDISING

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.

WHIMSICAL STYLE MERCHANDISING

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
www.PhilsForum.com

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.

How Much Retail Shrinkage Do You Have?

According to the National Retail Federation, in 2010 Retail Shrinkage rose to 1.58% of all retail sales.

(Note: Retail Shrinkage is the difference between your physical inventory and your “booked” inventory, divided by your total sales)

What is more interesting is to what NRF attributes all that shrinkage.

  • 44% is due to employee theft

  • 33% is due to shoplifting

  • 23% is due to other errors (billing, receiving, cash register, etc.)

Think about that…

Two-thirds of your shrinkage is caused by your staff either intentionally or unintentionally.

Here are some ways to shrink your shrinkage.

Shoplifting

Make sure you greet each customer coming through the doors. Shoplifters love anonymity. Saying hello can sometimes be the best deterrent. Wal-Mart has an amazingly low 0.75% shrinkage and I’m sure those greeters at the front door play a part in that.

The next best thing is to be available. If your staff is always walking the store working with customers then would-be shoplifters have no place to hide. In fact, make sure you design your store so that there are no hidden places. And if you cannot avoid them, visit them often. Just as a policeman on patrol deters crime, an employee on patrol deters shoplifting.

Video cameras are helpful, too, but they come with a couple downsides. As a deterrent, they have to be visible. Would-be shoplifters have to know they are being taped. But that can cause some of your better customers to feel uneasy and not want to shop in your store. Plus there is the added expense of the system. But if you are in a high-crime area or sell a lot of high-ticket items that can be easily pocketed, cameras can be your best investment.

Employee Theft

The three biggest reasons employees might steal…

  1. They are thieves to begin with – you should have done a background check!

  2. They do not feel any ownership of the store.

  3. They are pissed at you and want to get back at you.

Take care of your staff. Empower them to make decisions for the store and they will feel ownership. Reward them for great behavior. Treat them with respect as human beings. Be aware of their time, their needs, their families. When you talk about the staff as “we” instead of “they” your staff will feel like part of the family and most of them will not steal the merchandise.

Errors

Check, double check and triple check.

Check that the order confirmation from the company matches the order you requested and entered into your computer. (You do request order confirmations, don’t you?)

Double check that the packing list matches what is in the boxes.

Triple check that the invoice matches what you actually received.

Our shrinkage has averaged about 0.3% for our sixty-two year history. With an inventory as deep as ours, a store as large as ours, and the number of employees we have, we’re pretty happy about those numbers. What is your shrinkage?

-Phil Wrzesinski

www.PhilsForum.com

PS For more on keeping your inventory under control, check out my free eBook Inventory Management. Thirty seven businesses downloaded it last week to help improve their cashflow. What do they know that you don’t? (Hint: download the book and find out)

New eBook on Inventory Management

Cash is King.

And in retail, your cash is primarily tied up in your inventory.

But what would happen if you earned an extra 20 cents for every dollar you have in inventory? Multiply your average inventory times 0.2. What do you get? Extra money to play with. Extra money to pay yourself, to invest in your business, to spend attracting new customers.

Is that number worth 30 minutes of your time?

That’s how long it will take for you to read my new free eBook – Inventory Management: Cash is King.

And in those 1800 seconds you’ll learn simple easy ways to unlock the money tied up in your inventory.

What are you waiting for?

-Phil

Thieves in the Night

Got an earlier than usual start today – the alarm company called at 5am. Northwest warehouse motion detector went off.

Normally I wouldn’t have them dispatch police for just a motion detector without another zone, especially one of the outer doors, going off. But this morning I did.

Last night at 2am someone broke into the restaurant/gift shop across the street.

Or more specifically…

At 1:58am the alarm went off
At 1:59am 9-1-1 was notified
At 2:02am two police arrived on the scene – too late!

The thieves had picked up two cash registers, slammed them on the ground and made off with the loot.

Later today my staff will get a reminder of why we remove the drawers from our registers every night and lock them up in a safe. Plus, we leave the drawers wide open so anyone looking in the window can see there ain’t nuthin’ there. I hope you are doing the same.

-Phil

PS – Just a false alarm for us… hope I don’t get another one. I’ve only got one more false alarm dispatch before the city starts charging for the police calls.

Stopping Employee Theft

According to the National Retail Federation, 44% of your shrinkage is caused by Employee Theft. Yep, your own staff is stealing you blind!

Quit being in denial and do something about it.

Here’s what you should do…

Background Checks – It starts with the people you hire. Did you look up their court records? (They’re available online for free.) Did you call references? Did you verify employment? One of the best applicants I ever interviewed had a string of “retail fraud” charges a mile long. If I hadn’t checked, I would probably have been added to her list of conquests.

Training – How well trained are they? Are you sure? Have you gone back and tested after the initial training? Sometimes employee error, not theft, is the cause of your shrinkage. The more thoroughly you train them and also evaluate them, the less likely you’ll have this problem.

The Golden Rule – How well do you treat them? It is no stretch of the imagination that employees who are treated well will be less likely to steal than disgruntled employees. It also makes sense that the type of behavior you model is the behavior your employees will follow. Are you stealing from your own store in front of them? If you’re taking product off the shelf, they’ll begin to believe that it’s okay for them to do the same.

Supervision – When the cat is away, the mice will play. Who watches the store in your absence? Do you have a trusted supervisor that will keep an eye on the mice? Having that one trusted person who serves as your backup eyes and ears works well as a deterrent.

Checks & Balances – It is vitally important that you have a system of checks and balances for counting your cash drawers, verifying sales receipts, and double checking deposits. Sticky fingers get caught quickly when you have a system to double check your money.

Video – Sure, it’s the last line of defense. Yes, it can cause feelings of distrust and suspicion. No, I don’t recommend it for everyone. But the bottom line is the bottom line and if all the other methods haven’t slowed down your shrinkage, this just might be the ticket.

The key is to hire honest, ethical people in the first place, treat them with respect, and model the behavior you want to see.

Do this and your shrinkage will go down and your staff morale will go up. Win-win!

-Phil

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.