Whenever I look at a business that is not making money I find it usually is from owners or managers thinking like a customer or employee rather than a merchant.
It starts with not pricing correctly. “Oh, I wouldn’t pay that much for this item.” Knowing how much something costs somehow devalues its worth in their eyes. Since most owners or managers have never taken a course on pricing or examined their financials, they may mark it up less than keystone. (One guy at a recent speech sheepishly admitted he purchased an item at $10 and priced it at $15.) But merch should be marked up keystone (that’s double) + a few bucks so the business is profitable.
That’s what merchants do.
You may not be able to do it on every item but you have to consciously choose items you must be priced-competitively on and others you can make up lost margins. Otherwise you probably are dumping money into the business rather than taking it out.
This fuzzy thinking continues with employee flexibility. Instead of a set schedule a manager can knock out in an hour or so, the manger lets employees give them their availability week by week and then try to plug that into a schedule. This results in hours and hours of wasted time with store coverage compromised.
Merchants come up with a set schedule based on demand, then fill it based on ability to sell the merch. That allows the managers much more time to train, monitor and sell on the floor. That tight ship also helps them let go of bad new hires quicker. Continue reading Retail Management Are You Thinking Like A Customer Or Merchant? »