1. Change your displays monthly

You’ve got to keep your customers guessing – a little, anyway. Every couple of weeks move displays around to keep them from getting stale – and certainly move them when new merchandise comes in. Since the fairly new products will still be selling, switch your displays two weeks after their arrival. Move one display from the front to the middle of the store and another display from the middle to the back.

2. Try a little tenderness

In merchandising, as in life, the best things are things you want, not what you need. So give your customer that as well. Put the fanciest, newest, most expensive, dream-worthy items in the most prominent place in your store. Be sure to have several levels of height and enough products so that the customer can pick up and touch these desired items without having to totally dismantle your beautiful display.

3. Never, never, never, EVER build a monochromatic display.

Generally speaking, group items by product use or two or three colors – you’re looking for the one thing that makes it a group. Unless you run a grocery store, your grouping shouldn’t e entirely made up of one product. That’s warehousing, not merchandising. You can create a display by product sue, such as all items related to brewing and drinking tea, for example. Or display but color but make sure you use another strong color to pop out against the one. Think white and red or red and black. Avoid monochrome displays because, although possibly chic, human eyes quickly get the point and move on – frequently without buying.

4. Don’t ever put up a sign that says DO NOT TOUCH.

Don’t even do that in a glass store! Why? Because you might as well be putting up a sign that says DO NOT BUY. Displays are supposed to get messed up. Think of your displays like your kitchen table – nobody’s eating if there are never any crumbs. Don’t fear customer interaction with your goods; just make sure to straighten up constantly.

5. Trust in lagniappes.

Lagniappe – pronounced lon-yop – is the New Orleans term for “little surprise.” A merchandising lagniappe would be a totally unrelated item used as a fun prop, such as a soup bowl with a sweater collection, or a stuffed animal with your kitchenware display. While adding a prop to every display is overkill, the possibilities should always be in the back of your mind.

6. Light up your display like it’s a meteor shower.

You’ll probably have to adjust overhead lighting to do this. But if you have a particularly dark display with no way to highlight it from above, consider moving it to an existing light source or light from below with small portable spot lights. Remember, proper lighting can make your merchandise seem wondrous.

7. Put tags on everything.

You know how much you hate asking how much something is? Your customers are just like you, so make sure all of your stock is priced. No one wants to have to ask a clerk how much something costs.

Bring the Retail Doctor® to your group if you want to know even more secrets about merchandising.

One of the big reasons Five Guys is wildly successful?  “To ensure quality control, Five Guys sends secret shoppers twice a week to all locations. The brothers also are on the road constantly visiting the restaurants.”  Five Guys knows you need to inspect what you expect.

High standards each and every day ensure the right employees do the right things. Training new employees to 100% and then making them work for managers who don’t run the shifts up to high standards is spinning your company’s wheels and lowering the brand perception in customers’ eyes. That means it destroys profits. There’s only one way to avoid that: an ongoing program of mystery shops.

The number one thing business owners tell me is, “I just need more customers.”  Wrong, you need them to return. You can’t attract your whole neighborhood to try you, deliver lousy results and expect just getting “more bodies in the door” will work.  You can burn through a neighborhood with bad word-of-mouth and, without mystery shoppers, never know it.

Five Guys franchise with 436 locations sees the value in nearly 50,000 shops in a year, shouldn’t you? Oh right, the money.

You might not blink at spending $500 per month in advertising, but balk at spending a fraction of that on measuring customers’ experience in your store.  That’s just plain dumb.  The profit comes from the people wanting to return, not the discount promotions you run to entice new shoppers.

And please, get out of the idea that mystery shops are a way to spy on employees for compliance.  That’s what they’ll think if you don’t present it correctly.  It’s also what many lesser services use as their logo. If you want to fire someone, you don’t need a mystery shop to prove it.

Here’s the thing, if you aren’t servicing your customers the way they believe you should, you open the door to competitors eager to take your business.  It’s not what your regulars tell you, its what the new customers tell you that matters most.

Benefits of mystery shops:

• Monitored and measured service performance
• Improves customer retention
• Makes employees aware of what is important in serving customers
• Monitors facility conditions
• Ensures product/service delivery quality.
• Supports promotional programs
• Allows for competitive analyses between locations
• Identifies training needs and sales opportunities
• Ensures positive customer relationships on the front line.
• Enforces employee integrity and knowledge.
• Supports hustle by employees to meet customers. See previous post.

But not all mystery shopping companies are the same. Far from it!  One client of mine told me how he found the shoppers had never even BEEN to his store. Another said she’d tried it but it “didn’t work.”  When I looked at her survey it came screaming off the page why it wasn’t successful because every question was subjective. “Did you feel valued as a guest?” “Did they attempt to meet your needs?” “Did you feel welcomed?” Shoot me.

What would feedback have looked like to the employee who got a low score on her shop? “Gee Sally, the customer didn’t feel valued as a guest. Try harder.”  Reminds me of the old days in chorus when the conductor yelled at us to “sing in tune.” If we knew how to do that, we would have done it.

Questions on a mystery shop need to be black and white. The server either did or didn’t say, “Good morning, good afternoon or good evening.”  ”Did the salesman describe a product using features  (it has) with the benefits (to the customer.)”  In addition, you need a narrative so compelling you can actually see the transaction in your store.

I work with clients to get their mystery shopper surveys just right and actionable. One client with 14 locations is now tops in her franchise; another’s average check continues to rise. Is it a mystery? Nope, a mystery shop.

To succeed in a recession, as competitors cry the blues and leave your market, you need to consistently provide clear expectations and demanding high standards of employees.  After all, your customers deserve, and pay for those.

Cutting another shift or saving ten cents on freight is like a poor marksman looking at the edge of the target.  The real money is on the bull’s eye of selling the customer.

Learn more about the Retail Doctor’s mystery shopping secret weapon by contacting him.

From The Retail Doctor’s Guide To Growing Your Business published by Wiley & Sons
© Bob Phibbs 2010

The Census of Agriculture is conducted by the National Agriculture Statistics Service of the USDA every 5 years and is where I got these figures.  As Joe Friday would say on Dragnet, “just the facts ma’am:”

*63% of VA farms are not profitable. There are a total of 47,000 farms in VA in 2007-farm operators reporting a net loss: 29,616.

*95% of all farms in VA gross less than $250,000 in sales which is the volume necessary to support a “farming family of four above the poverty line.”

*86% of farms gross less than $40,000, the level of sales commonly described as “small farms.”

* Most farms are very small and getting smaller. About three-quarters of the farms in VA in 2007 are less than the average size (171 acres…down from 181 in 2002)

From another USDA publication we find, “Operators of new farms were more likely to be engaged in occupations other than farming and to derive income from non-farm sources.”

From the comments of attendees after my presentations in the last several years and from news stories,  it appears a lot of business owners are in the same boat as Virginia farmers.  Many are small and getting smaller, unable to make a profit and unable to support a family so owners take on other jobs to support their family business.

Of course kids don’t want to pick up a family business making $40,000 a year! Would you? They are looking for prosperity, for profits, for the good life – not a job pulling in less than a Starbucks manager.

The classic way of building wealth has been to find a need ahead of time and then fill it – that is innovation. Think Bill Gates and Steve Jobs creating the personal computer industry. Look at Jeff Bezos at Amazon seeing the future of Internet retailing or eBay’s Pierre Omidyar’s prescient view of customers trading online. But the race to build a better mousetrap has stagnated with the recession.

Entrepreneurs around the world are trying to decide what’s the next “big thing” because nothing on the horizon is that innovative.

In a world where everything from insurance to banking, from real estate to Wall Street seems to have been built as a house of cards, how will we build wealth? The days of expecting a 20% return on anything from our houses to stock may be way in the future.

Stop looking across the fence America!  The opportunity is right here, right now, with your family business.

American family businesses must get back to basics and get smarter about becoming profitable. The endless promotions of low-price and discounting that has eroded the businessman’s reason to invest in America has got to be reversed.

That may mean you need to get outside help with technology, modern management practices of how to get a decent ROI on your investment of time or taking a financial class at your community college.  But it is up to the older generation to fix their businesses if they want to attract the young.

It hurts when I hear people say they don’t take a salary from their family business. That means they have all of the problems but none of the financial rewards. The reason kids don’t want to be a part of most family businesses is because they see all of the work and none of the benefits.  It’s like they’d always have the baby in dirty diapers, never the child going off to college.

The opportunity has dried up in many segments of the economy – the grass isn’t any greener in New York or Seattle than in your community.

You want your family business to provide something for your kids?  Make sure they see the upside – profits, not the downside.

Learn how to make your business more profitable.

© Bob Phibbs 2009

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 in a declining economy, merch should be marked up keystone (that’s double) + a few bucks so the business is profitable. That’s what merchants do.

It 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.

It shows up in marketing and promotions with endless freebies, 2-4-1s or discounts.  One local gift store offered free gift wrapping on Feb. 14. The busiest day of the year for them when people would have paid anything to have someone wrap their gift, they gave it away.

How did they come to that decision? They thought how great it would feel for a customer. As a customer, imagine a florist giving away free same-day delivery on Mother’s Day, a Christmas ornament store offering 2-4-1 on ornaments December 21 or a wine store offering 25% off champagne December 31.  Wouldn’t that be great?  But that intent to “get” like a customer instead of “lose” like a merchant damages profits.

This problem extends into management when we don’t write people up for being late, rudeness or their inability to perform the job.  Thinking like an employee cripples managers from doing their job as a merchant. We want to be “nice,” “liked,” “popular.”  I had a boss one time say, “You’re only as good as your last sale.” Brutal. He was a merchant.

Understanding the different mindset of a merchant versus a customer should help you when a tough decision needs to be made, ask: “Am I thinking like a merchant looking to profitability, or like a customer or employee looking to be nice?”

Be profitable, be a merchant.

Learn how to sell your merch with Sales RX: Five Parts To A Successful Sale

I spotted the CVS with their automatic doors open wide at 8am with their stated hours being 10am-10pm. Were they really open? I walked in.

Now I have to tell you, retail clutter is so prevalent in most CVS stores and their ilk that I usually dislike the experience. From the moment I walked in, this one was different. I could move. There was space. Heck, they even displayed things well.

I moved back to the aisle cleverly signed “Foot” to find Tinactin locked up like it was an expensive digital camera with the words I hate in retail, “Please ask for assistance.” I went back to the counter where Jorge was, “Can you open the Tinactin display for me?” He pleasantly said, “I’ll be right there.”

Shortly we were back and he was unlocking it. I asked, “Do these have a way of disappearing?” He answered, “Yes sir, we stocked it one day and it was stripped in the same day.  They took all the products out of their boxes and left the boxes.”

Wow!  Looking through the store you could see pride of ownership, even in a high theft market.  There was the furniture display that included a host of add-ons including traveling beach chairs, pads, towels and chips.

There was the end cap for Bounty paper towels with cleaner, a bag for holding the cleaner and  disinfectant spray.

Every aisle was well merchandised with plenty of space for the retail displays to make customers pause and consider the picture. Brilliant.

In the cosmetic aisle where you can hardly move in many convenience stores because they are so loaded with product, this store had a simple table with one manufacturer’s sun care products in different heights with coordinated gift bags. Very smart.

Consider the difference between this store in Huntington Beach, CA and the one in Hudson, NY for Lindt chocolates.  On the left is the one in Huntington Beach which features cards, Korbel champagne and  Lindt chocolate.

HB CVS

And this one on the right, same display unit in Hudson low on product with competitors cheaper products at the bottom and beef jerky taped to the side.

Hudson

Which one do you think sells more product?  This is always the dilemma for manufacturers displays – you put this great unit out there but what does it end up looking like in the field? Not to worry in Huntington Beach CVS – these guys and gals should be promoted as great ambassadors for your brand.

The care employees take with you merchandise during a recession can really make a difference in your sales.

Wanna learn more about merchandising your store?

It isn’t easy and during a recession, small business owners are bound to come face-to-face with a critical choice.

This is the same choice franchisees would face within a tough few months after opening when I was COO and CMO of a franchisor.  They would tell me they were in crisis, weren’t making money and were going back to their corporate job “to pay the bills.”

At that point they left their store to an employee or family relation who had no reason to make it work. Those people were placeholders where the owner needed firecrackers.

It was a slippery slope from them on. Quality, guest satisfaction and cleanliness issues quickly cropped up.  Next it became difficult to find the owner at all because they would work nights or Sunday mornings – when it wasn’t busy and couldn’t really manage the crew.  They’d try to justify it to me by saying they were still “in their store.”

Next came  word they were buying their supplies at Sam’s Club or Costco to save a few bucks.  Then staffing levels dropped.

It was  sad to watch yet it happens all the time with businesses, services and franchisees, they couldn’t keep up with the demands to grow business because all they could see was money bleeding out of their bank accounts.

While I attended Glendale High School,  I was in a production of Godspell.  One of the characters made the point, “No man can serve two masters. He will either love the first and hate the second (they jumped into someone’s arms) or hate the first and love the second” (sneers and jumps out of the first person’s arms to the other.)  You can’t be in two places equally.

I know this from experience, I heard the siren call of a corporate job and left my consultant business a distant second for a title and regular paycheck.  I wish I hadn’t done that because it sapped my creativity to further my own business which became, by default more of a hobby. The smartest thing I ever did was give notice and say, “I believe in myself.”

When I was on MSNBC this week, the question was asked, “What would you tell a person who wanted to start a new business, but didn’t want to give up the safety of their day job?”

Here’s my advice: If you have a plan, a talent, the means and the drive – quit and follow your dream. Don’t listen to the siren song any longer.  But don’t think you can just quit without a plan and be successful.

If you’ve jumped away from the safety of a steady job already, don’t go back. While it may seem easier, it will ruin your chances of your own business making it.

Small business owners are by nature optimistic and resilient and worth celebrating every day.  Don’t give into fear – you can do this!

By the way, you can watch the first interview ever given by Karen Mills, the new SBA Administrator on MSNBC’s Your Business this Sunday, May 17 at 7:30am EST/4:30am PST so set your DVR’s. I’m on as well answering your questions.  The program repeats the following Saturday a half hour earlier; check local listings.

The Employee Free Choice Act (HR 1409, S560) is legislation currently pending in Congress that would require the certification of a union if at least 50% of the persons in the bargaining unit sign authorization cards supporting a union.

I’ve heard many retailers and retail workers don’t think this legislation affects them because their stores aren’t unionized. But this card check is a shortcut to forming unions where they haven’t existed before, and this bill is a top priority for organized labor as they try to boost sagging membership.

As I understand it, a person could come into a retail business, promise free education benefits, health care and other things from the union if they just “sign up.”  What employee wouldn’t sign up? If a majority did, the retailer large or small would be forced to demands by the union.

Yeah, we saw how well that worked in the long run for GM and Chrysler, now they want to do to Main Street what they did to Detroit.

Under current law, an employer can request a secret ballot election even if a majority signs authorization cards, commonly referred to as “card check.”   Other changes would be to require civil fines of up to $20,000 per violation against employers who knowingly discriminate against workers, and require the National Labor Relations Board (NLRB) to seek a Federal court injunction against such employers.  Current law has no civil fines, and requires NLRB injunctions only against unions. The U.S. Chamber of Commerce has come out strongly against this legislation. My understanding is that the Obama administration supports this which is a mistake for retailers.  For the first time in my life, I agree with FOX.

This is just bad legislation and needs to be voted down.  Read the facts and tell your congressperson before it’s too late.  Sorry mom.

One of the most interesting was Joe Engalan from VECTORform who took the time to explain how his company took last year’s hit product, the large format, multiple image Microsoft computer table and wrote a new interface for a music store.

Joe Engalan, Head of Development for VECTORform

They also hooked up a wall unit to show the dozens of onlookers. With a “gee whiz” type of attraction, Joe showed how someone could come into the music store and lay down a card that had their personal information (probably evolving to their cell phone.)  The computer would read it instantly and read their personal music like their Ipod playlist, maybe make suggestions. OK, so what Joe, the Genius playlist in Ipod already does that.  

True enough but it also could let you know which of your artists were coming to town and get tix for you, it could show you their new videos and more.

You could also mix your own dj mix using the cool touch interface (which is available now as a free download to your Iphone from the App store – search “Surface DJ”).  If you liked what you created, you could email it to yourself. Or drag it to your address book on the table to the right and email it, or the tix, or the song, to your friends.

 As we talked further, it seemed this would be much better at the  premium  product level where someone could work with the customer and use the table  to interact and guide the customer.  

 Joe smiled and told me about a BMW  dealer in  Germany  using it to show  customers exactly how they could  customize their BMW.  For the dealer,  there are cards with actual samples of  every leather.  Once the  customer  finds the exact shade they want, they  place  the card on the table, it  reads  and stores it. They can do this down to the minutest detail.

 Sure it can generate pictures at various angles but it captures all of the  information, stores  it, can email it and issue another card the customer can  simply take with them to  order online, call or email.  All that time is not wasted and the employee  who helped them gets the credit – brilliant! 

Are you going to see this in a year or two? Definately not in the mass markets but as retailers are looking to differentiate themselves, make shopping fun and technology increases accuracy and choice, you’ll see it in premium brands.

Imagine if you were able to bring in a photo and such a system could read the photo, add it to the table and you could choose your flooring in real time from actual samples in store.  Or do over your kitchen cabinets. Or add your Hunter Douglas window fashions.  Anywhere thousands of dollars are being spent for something customers traditionally have to take on trust should be looking at this now to brainstorm what such technology could do for them!

In coming days I’ll update you also on KeyRingThing, the Microsoft Commerce Server robot, Creative Communications direct mail kiosk and even CEO Lee Scott’s revelation that just last week Wal-Mart had a 25% increase in a very premium product.  Stay tuned!

If you’ve read my book, You Can Compete: Double Sales Without Discounting, you know I used to sell western wear during the 80’s in Los Angeles.  Both the employees and managers were on a fairly generous commission program.  When I was just starting, one employee, let’s call him Grant would always take his customer over to a section of the store that was out of earshot from the rest of us.

Next thing we knew, he’d be ringing up a very big sale, tending to all the details personally. The customer was incredibly loyal and came back again and again – many times bringing his friends. No one else could wait on them – it had to be Grant. It led this guy to become manager. Subsequently his store had the highest sales in the chain – even after they added another fifty stores.

Cowboy Bob

We also had to do polygraphs back then as a way of “deterring theft.” That’s another post. 

Anyways, one of the questions was, “Have you given any unauthorized discounts to anyone?” It always made me nervous – even though I hadn’t. As the manager of a store that competed with Grant for customers and having heard the stories of him giving up to 30% off and more, one time I asked the polygraph guy how Grant did on it.  “They know he’s dirty but it’s none of my business.”

I felt the company was being sabotaged, so I naively went to one of the owners and told him how the rules have to be the same for everyone.  His reply? “High volume covers a wealth of sins Bob.”  In other words, as long as they were making money, how it was accomplished was immaterial.

But the average business only makes 3 to 5 cents on the dollar profit.  So when Grant would give $100 off, the rest of the chain had to offset it with $2000 in sales.  That was a recipe for disaster.  It could have been an easy fix, just stop doing it.

It wasn’t a surprise to me when Howard & Phil’s Western Wear went bankrupt a couple years after I departed.  What was a surprise was what they attributed it to.

We are seeing the same “the ends justify the means” thinking with short sellers on Wall Street. Who could imagine people would profit from destroying our financial institutions?  But it’s happening. 

And someone is getting their cut because “high volume covers a wealth of sins.”  GM, Citibank, Ford, who would ever have thought they would trade at 10% of stock price a year ago? No one.  Forget how inefficient the big 3 car companies have been, they are being sabotaged.

Today’s New York Times notes Citibank was sabotaged from within as well. “Citigroup insiders say the bank’s risk managers never investigated deeply enough. Because of longstanding ties that clouded their judgment, the very people charged with overseeing deal makers eager to increase short-term earnings — and executives’ multimillion-dollar bonuses — failed to rein them in, these insiders say.”

While the company’s behind-the-scene intrigue is interesting, what we really need is full disclosure on who is doing large trades, short selling, driving the price of oil to astronomical levels in one quarter, then driving the price of stocks down to fresh lows the next.  It would seem if someone wanted to harm America, it would wreck Wall Street. 

I picked up Barron’s last week and read their open letter to the president that said in part, “Short-sellers of stocks appear to have been manipulating the CDS market to drive down stocks. This must be stopped immediately, and is easy to do.”

Is it all just people looking for opportunity? And if so, is there a greater need? I think so. Don’t get me wrong, I believe in capitalism but we’re being yanked here folks. 

If you have a practice of looking the other way when it comes to salespeople discounting, here’s my advice: High volume didn’t cover a wealth of sins in the 80’s and it doesn’t in 2008.

When Ms. Palin burst onto the scene in early September, she was presented as a middle-class everywoman.  Images of her hunting moose, holding her babies, shopping at the local store in Wasilla, Alaska all supported that image.  It connected with rural woman and men proud to see “one of their own” on the national stage.

As information was reported last week, the image the RNC wanted her to portray of an ordinary hockey mom conflicted with the reality of clothes from Saks and Neiman Marcus.  A $2500 designer jacket made the everywoman image a mirage – she was every bit a woman out of reach and possibly out of touch with the every woman they wanted her to be.

Michelle Obama was on David Letterman the night of the report and referred to her own outfit from Target. Ouch.

And by anyone’s account those Katie Couric interviews of Ms. Palin did not show she was ready to lead the most powerful country in the world. 

My point to business owners is that while ad agencies large and small are getting more work than ever to come up with powerful messages and branding, it can’t be an image that is in conflict with reality.  You don’t get points for deceiving people, they shut their wallets or close their ears to you.

For example, you can’t show a picture of friendly, helpful employees unless you actually have them.  Marketing can’t do the heavy lifting of the actual experience.

Regulars will look past the dirt, the pieces of leftover Valentine’s decorations, yellowing tape on the windows, broken or cracked counters, etc. and wait for your employee to wait on them.

But new customers will take notice. After all, they were attracted by something – your clever ads, your mailers, your sponsorship of the local charity, etc.

When people are willing to give you a look, make sure it is consistently the real deal – not a mirage. Are you listening Macys, Lord & Taylor, and Brooks Brothers?