Increasing Retail Sales Now

More Customers…More Often…Buying More…

Lessons from the last recession.

In a time of retail declines, the above line should be your mantra.  It is well worth noting:

A study conducted by McGraw-Hill Research found that 
companies who maintained (or increased) their marketing throughout the 1981-82 recession saw an average sales growth of 275 percent over the next five years!

But those companies who cut their marketing saw paltry sales growth of 19 percent over the next five years.

Today let’s talk about the first of the aforementioned three mantras, once again, drill this into your head and into your team:

More Customers…More Often…Buying More…

So let’s take More Customers, and in the following two entries, I will talk about More Often, and then Buying More.

Day One: More Customers

More Customers will come from 3 key areas

1. Existing Customers

2. New Customers and Conquest of Competitor Customers

3. Conversion of Non Buying Store Traffic (Browsers)

A Magnet - What is it that attracts more customers through your doors?  Promotions, Advertising, Sales and discounts, Value and Excitement.

So, you need to build or enhance the “Magnet” that brings people to your stores and your brand.

Your magnet will need to be extremely targeted, it will need intelligence, imbedded within it, so that you can earn critical selling knowledge from all your new traffic, and you will need to be able to establish a “hook” a relationship that will let your effectively reach out to your new customers and market, in order to use your newly minted knowledge and relationship to bring these people back and sell them more in the future.

Today, there are better ways to harness the internet to generate excitement and Draw.  Retailers on the winning edge are using a new layered strategy to attract, engage and sell more.

A smart retailer will engage a strategically planned and well executed strategy to use intelligent contesting, linked to knowledge generating feedback and engagement tools, linked to rewards incentives and offers.

The result is a much wider exposure to the entire POTENTIAL  Market.  If this is executed effectively, you have:

An amazing, low cost MAGNET that sucks in large numbers of all the groups that could buy from you, and then you move to the:

COMPASS

Once you have attracted this huge new audience, you engage them with knowledge generating feedback and engagement tools, that forms the compass and the magnet that lets you craft the best offers, promotions, values and deals that will motivate purchase action at the most profitable level for each relevant group.

MAP

Once you have the audience and the knowledge and the relationship, you can create a map, that lets you figure out the best way to, clear inventory, fast, because you DO NOT WANT INVENTORY LEFT THIS YEAR.  Keep in mind that weak retailers will be saturating the market through this season and into the coming year.  Next you will want your map to help make sure that you will dominate your market.  THERE WILL BE LESS AND LESS ROOM FOR ALSO RANS.

Yes, there is great danger and risk ahead, but there is also incredible opportunity for those who see the opportunity and run with the right plan.

That is the intro to MORE CUSTOMERS.  NEXT, I WILL COVER MORE OFTEN.

Increase retail sales now, clear inventory fast, and get ready to Sell for 2009.

YOU WILL EITHER BE RETAIL ROAD KILL OR YOU WILL BE A SURVIVOR

Read the following article and then let’s figure out how to be one of the Survivors.

The dead mall problem

Experts say Atlanta, Las Vegas, and retail hubs in California and Florida are at real economic risk if thousands of more stores shutter in 2009.

NEW YORK (CNNMoney.com) — As the recession leaves more retail casualties in its wake, rising store bankruptcies and mall closures could have devastating economic consequences.

As more stores exit malls, vacancies in regional malls could rise past 7% by year-end, a level not hit since the first quarter of 2001, according to real estate research firm Reis.

Major cities across America will be affected, said David Bribery, Chairman and co-CEO of Atlanta-based The Shopping Center Group, a retail real estate services firm.

Both Birnbrey and Susan Wachter, professor with University of Pennsylvania’s Wharton Real Estate Department, warn the social and economic impact of empty stores can be devastating.

“One of the biggest consequences [of store and mall closings] is the loss of a sense of community,” Birnbrey said. “I am a big believer that malls are an essential part of Americana. A mall is a place where people gather and socialize.”

In addition, many municipalities are heavily dependent on retailers for the tax revenue and jobs that they generate.

For example, Montgomery County, Pa., gets as much as 50% of its tax revenue from the local King of Prussia mall, said Wachter.

The impact will be felt on local police service, schools and roads, said Birnbrey.

The village of North Randall in Cuyahoga County, Ohio, is on the verge of extinction after a challenging economic and competitive climate has crippled business at the Randall Park Mall.

The shopping center, once the largest enclosed mall in the greater Cleveland area, is closing after 32 years. [Read story]

The pain could be far reaching. “The Midwest, California, Florida, Atlanta and Arizona are very vulnerable to a retail recession,” said Wachter.

Forecasts look bleak

The International Council of Shopping Centers (ICSC), in its most recent forecast, expects that 6,100 chain stores will shutter this year, the highest level since 2004 “as the U.S. recession continues to take its toll on the retail sector and its job market.”

In 2009, the ICSC estimates that store closings could exceed 3,100 in just the first half of the year. However, the number of potential closings rises exponentially when the firm takes into account both public and private sector businesses.

The ICSC projects that about 148,000 retail establishments – both public and private – will go out of business this year and another 73,000 stores will close in the first half of 2009.

The ICSC projects that about 625,000 retail jobs will be eliminated this year “with little change in the pace for early 2009.”

Fewer retailers means less competition and fewer places to shop. “Right now everyone is euphoric over the big sales,” Birnbrey said. “Once the holiday season is over then we could get this monopolistic situation where the [retail] survivors realize that they don’t need to be as competitive on prices.”

Is America too ‘overstored’?

But not everyone sees a dead mall as a negative development.

“Our country has six times more retail space per capita than any other county,” said Ellen Dunham-Jones, director of the architecture program at Georgia Institute of Technology.

“We’re just cannibalizing our existing stores by building more stores even when sales aren’t increasing,” she said. “We were long due for a retail correction and we’re going through it now.”

Dunham-Jones said big-box enclosed malls have become a dying breed as more shoppers prefer going to shop at strip malls or “lifestyle” open-air malls.

“The good news is that this isn’t the first time we’ll see dead malls,” she said. In an upcoming book, “Retrofitting Suburbia,” co-authored by Dunham Jones, she’s included case studies of more than 100 places across North America that have turned dead malls or big-box stores into thriving community centers.

What’s needed, she said, is for the public and private sector to be opportunistic and develop the 100 acres of prime mall space for mixed community use like schools, libraries and new housing.

John Norquist, a former mayor of Milwaukee who now lectures on urban planning, agreed with Dunham-Jones.

“There’s no disgrace in a dead mall,” Norquist said. “In Milwaukee, we had one department store, Boston Store, in the downtown area. When that went away and the rest of retailing went into the suburbs, we focused in developing the empty space into housing and I gave fast permits.”

Norquist rationalized that more housing would eventually attract more retailing. “Milwaukee opened up for [retail] business in 2001 and it’s continued to grow,” he said.

But Wharton’s Wachter remained unconvinced. She said any talk of redevelopment in this environment is “unrealistic.”

“Everything that has been suggested needs funding. There’s no money for these adaptive reuses [of retail space] for communities,” she said.

Blirnbrey’s criticism was somewhat harsher. “It’s human nature to put a positive light on a bad situation,” he said. “It’s just a case of hope springs eternal.” 

So, time to think creatively, changes on the scale we will See in 2008-2009 represent danger, risk and opportunity.

 

What are the winners in retail doing and planning?

 

Job ONE – CLEAR INVENTORY

 

Smart retailers are looking at creative ways to attract more business FAST, and get the 2008 inventory out the door NOW, the retailers that succeed are using a variety of special offers, offers that drive larger purchase and some interesting creative “gifting strategies” that operate on two levels;

 

SMART - Increase attraction and traffic for immediate, larger purchase.

 

SMARTER - Develop a “sticky” relationship, linked to in-depth knowledge of all traffic, in order to extend attraction for purchases in the 2009 upcoming season.

 

(I have recently helped develop a number of creative strategies, that operate on multiple levels  to achieve these goals)

 

JOB TWO – GET READY FOR 2009 – FOR THOSE LEFT STANDING

 

If you listen to the above suggestions, and you are still standing, you will be able to leverage the large scale relationships and knowledge of large groups of new traffic and customers, added to your existing customer base to reach out INTELLIGENTLY to sell more and more effectively as 2009 gets rolling.

The competition will be FIERCE and you will  need to have a head start.

You will need to be smarter in reaching and understanding your market, mark my words, the market is changing fast, stop wasting money on poorly targeted marketing, that wastes encredible sums of money for questionable results that are short on accountability. 

Bottom Line: YOU DON’T HAVE MONEY OR TIME TO WASTE

Survival will be a product of fast, knowledge based, targeted actions that do the job economically.

 

I am seeing the results of this in the marketplace, the changes are breathtaking and very profitable for Retailers that seize the opportunity.  Think Walmart, but you can gain the advantage and profit for a fraction of the cost with the newest tools available.

Get on it NOW, time is wasting.

It has been a wild ride for retailers.

 

What questions should a retail organization that wants to win more customers, be asking themselves?

 

Let’s take a look at the following article that tracks retail sales this last month first, then we can pose this question in the right light.

 

(12-04) 15:53 PST – A surge in day-after Thanksgiving shopping wasn’t enough to save retailers from weak November sales, signaling the industry is likely headed toward one of the worst holiday seasons in years.

Among the many retailers that reported sales figures Thursday, Wal-Mart Stores Inc. remained one of the few bright spots, with a sales gain of 3.4 percent last month compared with the same month a year ago. But virtually all retailers faltered, even such stalwarts as Costco Wholesale Corp., which posted a sales decline of 5 percent.

Heavy discounts lured consumers to malls and shops on what’s dubbed Black Friday, generating reports of sales increases both nationally and locally. But that couldn’t offset what was overall a disappointing month, exacerbated by early holiday promotions that cut into profit margins along with a late Thanksgiving that shortens the shopping period.

“It’s going to be a very, very challenging period and a lot of companies are not going to make their numbers because consumers are still not going to be spending,” said Dale Achabal, executive director of Santa Clara University’s Retail Management Institute.

Consumers will continue to be cautious until the economy improves, Achabal said. “Until that happens, an awful lot of consumers are not going to spend because they’re not certain about their own personal situation,” he said.

Discount and warehouse-style stores tended to do better than department and specialty stores, as is typical during a economic slump. But Target Corp. had a 10 percent drop in same-store sales.

Same-store or comparable sales are considered a reliable indicator of a retailer’s health because they compare stores open at least a year, thus excluding the impact of store openings and closings.

Sales at Nordstrom Inc. sank 15.9 percent compared with the same month last year, while sales at Neiman Marcus Inc. dropped 11.9 percent and sales were down 13.3 percent at Macy’s Inc.

“Those double-digit declines like that you just don’t see very often. Clearly those apparel and department stores retailers had as tough a month as they’ve ever had,” said Frank Badillo, senior economist at TNS Retail Forward, a market research and consulting firm.

Gap Inc., which is based in San Francisco, reported a 10 percent decline in comparable sales for the four weeks that ended Nov. 29.

“In anticipation of a challenging holiday season, we made the decision to attract customers with more aggressive offers than last year,” Gap’s chief financial officer, Sabrina Simmons, said in a statement. “While this resulted in November merchandise margins below last year, our strategy allowed us to successfully clear through inventory in the month.”

Among 40 retailers reporting results Thursday, sales declined about 2.5 percent, according to TNS Retail Forward. Badillo said that number compares with a relatively healthy 4.3 percent gain last November over 2006, which makes the comparison even tougher this year.

Retail sales slide

Most retailers reported that sales declined for the month of November compared with this time last year.

Company	Change*
Abercrombie & Fitch	- 28.0%
Costco	- 5.0
Gap	- 10.0
Kohl’s	- 17.0
Macy’s	- 13.3
Neiman Marcus	- 11.9
Nordstrom	- 15.9
Target	- 10.4
TJX Cos.	- 6.0
Wal-Mart	+ 3.4

* Compares sales at stores open at least a year with November 2007.

Here are the National Retail Mall numbers, for more scary numbers:

http://tinyurl.com/5h8pjd /

 

Whenever we engage customers and browsers at the store level, in order to measure great service and sales interactions that result in:

More customers visits, more frequency, and social network referral and higher purchases during the visit, we find one factor rises above the rest, and becomes a “SECRET WEAPON” for the smart retailers. 

What is the “SECRET WEAPON“?

Retail Managers

Retail Managers build, train and motivate the team that faces customers every day.

What Talents and Behaviours Create Winning Retail Stores?

 

Mental Toughness, 

Retail Managers are in the trenches every day, trying to balance the team against the never ending work load, while keeping the team focussed on the customer, the browser, and selling.

Mental Toughness is the behavioral quality that does not let obstacles stand in the way, Mentally tough Retail managers understand at a very deep level, that “Getting the Job Done – Is Job One”

Successful Retailers use behavioural profiling tools to hire for Mental Toughness, and then they reinforce these traits with appropriate managerial sikills to give them the “toolset” to be effective.

But without the underlying behavioral “sets” no amount of “tool training” will stick.

 

Creativity, 

Winning Retail Managers face a never ending set of changing demands, and the work flow is never steady.  They need to face these challenges with Creativity, again this is a behavioral trait that can be

augmented with the right training, but don’t make the common retail mistake of trying to turn a “sow’s ear, into a silk purse”  Too many retailers don’t bother to step back and get excellent at hiring the right

traits in the most critical person in the customer facing chain, the Retail Managers, who make all the difference.

 

 

Listening to the Customer, and your Browser

A great Retail Manager needs a great “nervous system”  a tool that actively listens to the voice of the customer, and your store browsers.  In addition, it helps to be able to listen to the voice of employees with a neutral and fair tool that employees feel safe talking to.

Head office needs this tool as well, how do you really know what is happening on a day to day, hour to hour basis?

How can you understand which stores are creating the excellence experience?  How can you possibly know what part of your team is breaking down, in time to take effective action?

So, if you want to win, you need the right people at the critical point of differentiation, and you need the right tools.

15 years of helping retailers make a difference has taught me that in tough times like these, the winners will win, by making a difference, and these are the best ways to get started now.

Martin Hoffmitz

November retail sales have been scary for most retailers.  Working with a range of retailers, who are doing business from Great, to Terrible, I thought it might help to consider some common actions and strategies that the winners are using.

Winners

Winning Retailers focus on much more than the customer.

I know that received wisdom is that winners focus on the customer, but that worked when the retail tide was high, now the tide is going out.

Warren Buffet said that

“It is only when the tide goes out, that we see who has been
swimming naked”

I think we may be seeing a lot of naked retailers in the coming months, so..grab a towel or a bathing suit now.

Winning retailers are FAST.  They know that the knowledge that they have of customers is only the beginning, they understand that winning at retail means much more in turbulent times.

Successful retailers understand that they need a grasp of far more than just customers.  They want a grasp of:

Customers

Browsing non buyers

Low Brand Users

Competitor’s Customers

Targeted New Customers

Social Groups and Family

Social Networks and Rating sites

Now, with a grasp of the wider market and POTENTIAL market, they want even more…

Timeliness

Trend Analysis

Market Dynamics

Wal-Mart is winning because they have a much better idea of who the customer and the market is, and they are mastering timeliness and Trending.. (they know where the markets, trends and consumers are going, long before you do.

That is why they are winning

Let’s take a closer look at that.

Wal-Mart stumbled badly in the last two to three years.  Wal-Mart realized that they needed a better strategy to understand and get ahead of the market

Wal-Mart has built the most effective tool for understanding the marketplace and their place in it.

So, tool number one.  Wal-Mart measures the “flow” of
customer and consumer spending.  What does that do?

Wal-Mart knew long before you did that the consumer, which includes all of the extended groups I have mentioned, was experiencing increasing financial stress.

By measuring “Flow”  Wal-Mart saw far earlier, what others
missed.

Consumer spending was increasing closer to the normal pay period for most workers, and decreasing near the end of the pay check cycle.

Wal-Mart calls it “stress’

Stress has been increasing for quite a while now…

Wal-Mart analyzed the nervous system they had build talking to the extended groups that they have engaged, and they identified  clear stresses, and trending for a changing mood shift on the part of customers and consumers.  The economic STRESS would trigger changing psychology of shoppers and that would set up a major trend shift and new market dynamics.

So Wal-Mart ANTICIPATED the market and the consumer, and they took action ahead of every other retailer out there, and they are reaping the rewards.

Wal-Mart realized they needed to target a wider group of “core” items and get really aggressive on pricing and pricing erception in the marketplace and mind space of the consumer.

Wal-Mart used their new “nervous system” to get the new message propagating into the marketplace and the mind space of the consumer; think of it as “react” from intelligence and then “propagate” intelligent response into the marketplace.

Winners have a better grasp of  Customers and the entire market, they also have tools to influence and reach out to them.

What about LOSERS?

Let us take a look at a recent set of articles on SEARS

http://www.google.com/hostednews/ap/article/ALeqM5imTOVIR8LCwd1qFDdcoVToPkd4UgD94QNTO00

http://news.google.com/news/url?sa=t&ct=us/9-0&fp=49381eb0070dbe74&ei=LEA4Sc-iE47SgwP84dGMDw&url=http%3A//www.marketwatch.com/news/story/sears-stumbles-good-times-bad/story.aspx%3Fguid%3D%257BB7BB384F-9DB9-4FBB-9C87-6CEC995BC677%257D%26dist%3Dmsr_1&cid=1276835763&usg=AFQjCNGdT75UHPkoDBzNGDp-faNpXW4RcA

Sears does not understand the market, the customer or any of the other dynamics and they are struggling.

Let’s take some pithy accurate quotes:

“But for Sears, the problems go much deeper. Even in good times the company has had trouble standing out from its rivals.

Sears essentially gave up on pleasing its customers awhile ago. Early on, it was considered m for Chairman Eddie Lampert — than a retailer. It slashed marketing and store spending while raising prices. Rundown stores, disappointing inventory and
higher prices chased business away and got people out of the habit of shopping there.”

“The deck is stacked against Sears. And its challenges go deeper than a weak economy.”

http://seekingalpha.com/article/108881-sears-holdings-squandered-opportunity

“Sears continues to operate as a sub-par retailer and uses excess cash flow to repurchase stock. As the economy has faltered, so has cash flow. Adjusted EBITDA year-to-date has fallen to $700 million, from $1.5 billion last year. The only positive has been the reduction in share count. Sears earned
$1.5 billion in 2006, or $9.58 per share. If it somehow is able to earn that much again when the retail environment improves, earnings per share would be nearly $12 per share because of the lower share count. With the stock at $31today, you can see that the stock would trade back above $100 in that scenario.  

But how will that happen anytime soon if Sears continues as it has? It won’t, which is why Peridot Capital has been steadily selling Sears stock over the last year. It used to be a very large holding, but is now one of our smallest. Eddie Lampert evidently was convinced he could do more with the retailer’s operations even after the low hanging fruit had been picked. That was a bad
decision.”

“To me, Sears is in the same exact position as General Motors (GM) right now. It is operationally inferior to its competitors, but refuses to dramatically alter its business plans to adapt to the market. Yesterday the Big 3 CEOs testified in front of Congress,
explaining that the economy is the source of their problems. They need annual auto sales of 13 million units to earn a profit, far from the 10 to 11 million run rate we are now facing.”  

“I don’t need to tell you that GM’s business model is the problem, not the economy. If the U.S. auto market shrinks due to higher job losses and tighter credit standards, managers need to make changes to ensure they can survive in such an environment. In that case, a stronger economy would mean higher profits, not just survival.”

“The bottom line is, if your company adapts you will likely be a

survivor. When times are bad the weak die out and the strong not only survive, but they come out of the downturn even stronger than they were before.

In today’s market, when nearly every stock is down remendously, there are fewer reasons to invest in Sears or GM when you can buy a stronger company like Target or Toyota (TM) on sale. When Target fetched a 20 P/E I preferred to buy the more undervalued Sears. Combine disappointing execution by Sears and a 50% drop in Target stock, and given the same choice I
will take Target at a 10 P/E, which is what I plan to do.”

So, I will finish by suggesting that you Mr. Retailer re-think how you know and plan to grow far more than your immediate customer base.

Be a WINNER and get ahead of the curve, retail has been far too reactive for far too long.

Now you need to get proactive if you want to survive.

If you are still in business in 2009, we can continue these conversations.

Merry Christmas