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Archive for February, 2010

Bank of America Shows Trends in Retail Store Layout

I have banked with Bank of America for a long time for my business. The branch I opened the account at was always friendly and efficient.  In preparing pictures for my new book, the Retail Doctor’s Guide to Growing Your Business, I revisited these pictures which show how the banking sector is learning from the best retail and hospitality businesses.  I thought a blog based on these would illustrate where I think retail is going:

1) The first thing you notice is the space to move.  You can quickly see the organization of the space and won’t feel squeezed by people or tables.

Open floorplan

2) Realizing not everyone wants to stand and knowing boomers are aging, they’ve added seating at various places. Smart retailers would do the same, not just at the woman’s dressing room for the husbands but for everyone.

Ample seating

3) The information tables are at optimum height, small, circular so as not to poke unsuspecting passersby. Smart retailers will realize that the optimum height of a table isn’t 24″-30″ but 32″-36″; displays lower than this are not nearly as effective and those below the knees virtually worthless for anything other than cheap commodities people will stoop to pickup.

Small circular 36" tables

4) When waiting for other customers or a bank agent, they have a lobby with HGTV.  So many retailers add plasma TVs with mindless news programs belching out bad things.  Smart retailers will realize we want to be insulated from the real world, not made fearful when spending our hard-earned cash at their establishment.

Lobby area

These are by no means all the ways store design trends are changing the way we navigate a shop, hotel lobby, restaurant, but Bank of America clearly understands how to differentiate themselves at this location.  Tomorow: dealing with the castle. Stay tuned.

Small Business: The World Needs What You Have To Sell

I recently read a blog post that the world doesn’t need what you have to sell; that the world can get by without it. And if they do, they’ll get it with or without you.

Well yes, I guess that is true to some extent.  But I think the world needs what you have to sell.

I was selling when I was 3

Take coffee for example; everyone knows it.  If they were to blind taste-test it, I’m sure 90 out of 90 people could tell you, “that’s coffee.”  But is it good coffee? Is it bad? Is it old? Is it to their liking?  All of that comes about by educating customers as you sell them.

For example, as a coffee drinker, do you know why the coffee you make at home doesn’t taste as good as the coffee you like at the big chains like Starbucks or Peets?  Here are a few facts:

Since coffee is 98% water, they use a reverse osmosis system which removes microorganisms, organic chemicals, and inorganic chemicals, producing very pure water.  Most people use tap water full of impurities and chemicals.

Since coffee loses 25% of its’ flavor within two weeks of roasting, they only use coffee roasted within days and keep it whole bean until just ready to brew.  They store it in airtight containers.  Many home users store their coffee either whole bean or ground in the refrigerator freezer where it can absorb flavors and the delicate oils can degrade.

Since the true flavor of coffee is produced by the oils which rise to the surface of the bean during roasting, the beans are ground which allows more surface for the oils to mix with the water.  Most home grinders slice and dice the beans which also builds up heat degrading the oils.

Coffee oils are what make it delicious

Since you only have one shot at getting the oils from the beans, they use water just off boil to flood the grounds and drain quickly which releases the oils but leaves the “graininess” of the beans behind.  Home brewers often recirculate the coffee back over the grounds which brings out the grainy flavor.

Since the beans are to be brewed for drip coffee, they grind the beans specifically for that brew method. Many consumers use a generic grind which can be too large letting the water go through too quickly for the oils to release or too small letting the coffee’s more bitter flavor come through.

Since the oils are what makes the coffee, they use a lot of coffee, about two tablespoons per 6 oz of coffee, that’s about a ¼ cup for a 12 oz mug.  Most people use half as much which results in a weak brew.

Most people use a cheap coffee maker which never gets the water hot enough and then keeps applying squirts of coffee over and over to the beans which gives a weak brew, more like dunking a tea bag than brewing the coffee.

Since coffee begins to break down after brewing,  chains throw out unused coffee on a regular schedule (usually within two hours) and they never put on a burner or reheat.  [Except in Canada where consultant Doron Levy posted about Tim Horton’s] Some people actually reheat coffee in the microwave.

Do you need all that information? Do you want all that information?

An Analytical personality probably will want all the nuanced details which make the coffee better.  A Driver personality could probably have a taste test with a cheap Krups $39 machine and a Capresso $219 machine with the salesperson demonstrating how the coffee tastes and let the customer decide.

The problem is 63% of the world, the Expressive personalities and the Amiable personalities, will be overwhelmed by much of that information and even the price tag.  They often settle because no one ever took the time to show and sell them the differences of what it takes to get as close to their favorite coffee house taste as possible.  So they settle for the $39 machine because Macy’s has a coupon, robbing themselves of the experience of a great cup of coffee in their home; especially if they are trying to save money by making it at home in the first place.

I used coffee in this example but it could just as easily be window coverings, flooring, cashmere sweaters, you name it.

Price doesn’t make something a good value – people do – sales people do.

Until you and your crew can understand and model that, you’ll be stuck with a race to the bottom cutting profits and crying the blues.

You want to succeed ? Remember, the world needs what you have to sell!

To learn more about the various personalities and how they play out in your crew and customers, order my book, The Retail Doctor’s Guide to Growing Your Business (Wiley & Sons).

6 Tips For How To Buy At A Trade Show

Information is power. Lew Platt, the former CEO of Hewlett-Packard, once famously said: “If HP knew what HP knows, we would be three times as profitable!” Information is all around us but the trick is, what to do with it.

If you are planning a trip to Toy Fair, PMA, your local merchandise mart or other trade show I have some advice for you:

1) Prepareknow your numbers.  Not your macro numbers like how we did for the month but the micro numbers.  What are your top five categories in gross sales and if you can access it, in terms of profitability.  Some businesses use lots of loss-leaders which may sell a lot but actually cost them money. That’s not what you want.  Look at all of your categories and find your top five to seven.  Then find your bottom five to ten.

2) Analyze. Many independent business owners are chronic over-buyers.  It’s so much fun to go to New York or Chicago and buy things! But if you bring something new in, that means something has to go.  You can’t just keep putting more merch in your store.  If sales were down 5% last year then your inventory level should be down 5% as well.

3) Make a shopping list.  Go to the show looking only to add to your most profitable, best-selling categories.

4) Be liberal.  With your best categories, go ahead, try new things, unproven things, things you have a hunch on.  The marketplace looks to you for such items because those categories are paying off for you.  You’re safe because, you’re “fishing where the fish are” trying new bait.  Even if gosh forbid you buy a stinker, you will be able to move it out quicker because there is more demand in the category. With me?

5) Be conservative. With your bottom categories, STOP. Don’t buy more because those categories aren’t contributing enough to your bottom line. I learned this in the coffee business.  Everyone said, “tea is the next big thing, you need to expand your tea offerings.”  We looked at tea sales which were less than 1%.  Even if we doubled the menu, it still wouldn’t produce the jump needed to support more POP, product and training.  Simply put, customers didn’t look to us for their tea needs. Instead we looked at the blended cold coffee drinks and tried various flavors because they represented 40% of sales – we were safe because people looked to us for those kinds of drinks and would be open to it. In your case, if you must replenish something, make sure it is a proven #1 best-seller or pass. Remember it was the pioneers who got the arrows; be a settler once an item has survived in the marketplace in your lower categories, then bring it in.

6) Use an open-to-buy.  In its most basic form it means you can’t buy unless something else has sold.  This helps keep you from overbuying for your store.

These are by no means all the tips to successful merchandise selection but they should help put money in your jeans, instead of in your vendors.  That’s because merchandise is like milk; it goes bad quickly so you only want to carry what you need, not what you want.

I cover more on this in my new book.

(If you are attending a conference, visit http://www.retaildoc.com/attend-a-conference-article.html to read how to get the most from it.)

Retail Sales Training: Can’t Close Luxury Sales Because You’re A Fraud?

Are you a fraud? Are you asking customers to purchase something you yourself wouldn’t because it is “too expensive?” I was.

While I was finishing college,  I applied for a job at a western wear store. It was actually a growing trend back when Dallas and Dynasty were just beginning their meteoric rise.

I aced the job interview but when they asked if I wore western wear I confided I never had. They had a program where you could buy a pair of defective Tony Lama or Justin boots for $50. It was seen as a good way to get employees into wearing the better merchandise the store sold without breaking the bank. I got a pair of plain brown Justins. They felt good but something was off in the heel so after awhile, my feet actually hurt; working my 9-9 days were murder.

I’d do my best to tell people all the features and benefits of Justin, how they were a hand-pegged 3/4 welt which meant it was stitched 3/4 around but 1/4 had an extra amount of leather removed under the arch, around the shank of the boot with lemon-wood pegs to hold the boot together. Those pegs allowed a better fit and lemon wood swelled and shrank with the moisture in the leather soles so they didn’t fall out.

3/4 hand-pegged welt

I tried my best to get people to buy them for $189 but inside I knew I hadn’t believed in them enough to buy a good pair myself; I settled.  This led to me not pushing through to justify the product but fold my tent and suggest something cheaper or for them to wait until they went on sale.

Could that be you? Are you a window coverings store only able to sell the honeycomb shade because that’s all you’ve put in your own house – at manufacturers cost.  Do you sell Tag Heur watches only to wear a Swatch yourself?  Do you sell Cadillacs and drive a Ford? Do you silently believe your own product is too much? Maybe you feel like a fraud.

One day I realized the market for exotic boots was hot; the more I sold the quicker I’d make my store sales goal so I purchased a pair of Tony Lama pieced ostrich boots. They were not a full skin but for $399, they were still a huge step up.  Since my personal sales went up, I purchased a pair of custom Tony Lama El Rey full quill ostrich with inlays.  When a customer said they “couldn’t afford it,” I could easily sell how much enjoyment I got out of paying more and getting more.

El Rey Tony Lama Ostrich Boots

When a customer can’t decide on whether to take their big old pile of cash in the bank or credit on their card and make the premium or luxury choice, you need to know what it took for them to purchase.  That comes from owning the product yourself.

Then you can empathize with your customer that it seemed like a lot of money to pay but you found x, y, and z once you owned it.  Without that first hand experience, you’re like a priest telling a newlywed couple what the wedding night would be like.

Buy one of your premium products this week, experience the reservations that a customer would, know the joy of breaking through those reservations and enjoying the product – do that and you’ll find you’ll be able to speak from the truth rather than trying to give a snowjob when selling your premium merch.

If you’re ready to sell your merch better, take a look at the opening five minutes of Sales RX at http://www.youtube.com/bobphibbs#p/a/u/0/tEAaExPRlKQ

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