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BEING RETAIL FIT: FROM SURVIVING TO THRIVING
The Retail Doctor® Group Pty Ltd
Australian Retail Symposium 2009
AB
OU
TB
RIA
NW
AL
KE
RAbout Brian Walker
The Athletes Foot Pty Ltd - General Manager Retail Business
Cable and Wireless Optus - National Retail and Franchise
Manager
Hutchison Telecommunications –
National Business Development (3G retail)
Angus and Coote Pty Ltd - National Retail Operations
Manager
Whitcoulls Ltd New Zealand - National Retail Operations
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Whitcoulls Ltd New Zealand - National Retail Operations
Manager
Westfield Management - Senior Centre Manager Hurstville and
Miranda
KFC Pty Ltd - National Manufacturing Manager, Retail
Operations Manager,
Purchasing and Supply Manager
Woolworths Pty Ltd - Merchandise Buying Manager
Retail consultancy, teaching, editorials and author
TH
ER
ET
AIL
DO
CT
OR
®G
RO
UP
The Retail Doctor® Group Pty Ltd
Retail Operations Specialist
Retail implementation – Transform strategy to action
Retail, Franchise, Service, Shopping Centres
RO
UP
PT
YL
TD
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Our Business is Your Retail Fitness
TO
DA
Y’S
AP
PO
INT
ME
NT
WIT
HToday’s Appointment with the Retail Doctor
Today’s Appointment with the Retail Doctor
How high performing, fit retailers operate
The key steps in understanding your customer’s business
In the last 3 years:
Over 150 retailers interviewed
32
36
40 WIT
HT
HE
RE
TA
ILD
OC
TO
R
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Today’s Appointment with the Retail Doctor Over 65 companies
Customer surveys
0
4
8
12
16
20
24
28
32
TH
EG
OO
DT
IME
S
14 periods of positive GDP
High consumer confidence
Rising exports
Strong housing growth
Plenty of liquidity
Today’s Appointment with the Retail Doctor
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Retail 10x EBITDA earnings
Retail Growth
The Retail Love In!
TH
EP
ER
FE
CT
ST
OR
MWe are in the midst of a perfect storm:
Slumping consumer confidence
Prospect of rising unemployment
Weakening dollar (costlier imports)
Softening of trading partners
TodThe Cycle turns ay’s Appointment with the Retail Doctor
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Softening of trading partners
Yet
Lowering interest rates
Government stimulus
Commodity prices
Some good retail performance out there
TH
ET
IME
ST
HE
YA
RE
AC
Differentiation
Speed, innovation and
adaptation
The connected apostle
TodaThe times are a changiny’s DoctorC
HA
NG
ING
© Copyright 2009. The Retail Doctor® Group Pty Ltd
The lines are blurry
The Inline retailer
Efficiency of process
Do the basics brilliantly
TH
ET
RE
ND
S
Customers are increasingly challenging
Demassification - the hunter vs. the herd
Technology becomes mission critical
Customer choice has magnified dramatically
Today’s Appointment with the Retail Doctor
© Copyright 2009. The Retail Doctor® Group Pty Ltd
The boundaries are getting fuzzy
Demographics do matter
Demand chain replaces supply chain
Adaptation – smarter
TH
ES
EV
EN
KE
YF
ITN
ES
SS
TE
PS
1. Begin At The End
2. The Unique Branded Difference
(Brand Aid™)
3. Customer connection
4. Productivity Not Panic
TE
PS
FO
RT
OD
AY’S
MA
RK
ET
© Copyright 2009. The Retail Doctor® Group Pty Ltd
4. Productivity Not Panic
5. Fiscal Physical™
6. People and Sales Leadership
(Effective People)
7. Doing The Basics Brilliantly
1.B
EG
INA
TT
HE
EN
D
© Copyright 2009. The Retail Doctor® Group Pty Ltd
1.
BE
GIN
AT
TH
EE
ND
What is Your Desired Destination?
Businesses with clearly defined
exit strategies sell for higher
multiples
Every business is for sale
65% of retailers surveyed did
© Copyright 2009. The Retail Doctor® Group Pty Ltd
65% of retailers surveyed did
not have a concrete plan that
was communicated and aligned
You can’t change the headwind
though you can adjust the sails
1.
BE
GIN
AT
TH
EE
ND
Where Do We Go From Here?
Have you started with the end in mind?
What is the outcome
(what do you want to achieve?)
Some retailers start with the view –
‘If I build it, they will come’
© Copyright 2009. The Retail Doctor® Group Pty Ltd
(what do you want to achieve?)
What is your real point of difference?
Do you have a plan?
What are your competencies?
Which way now?
1.
BE
GIN
AT
TH
EE
ND
What is Your Desired Destination?
Our Findings:
High fitness retailers
define the end game
score, know the present,
© Copyright 2009. The Retail Doctor® Group Pty Ltd
score, know the present,
and adjust to achieve the
planned future value of
their business
2.T
HE
UN
IQU
EB
RA
ND
ED
DIF
FE
RE
NC
EIF
FE
RE
NC
E(B
RA
ND
AID
)
© Copyright 2009. The Retail Doctor® Group Pty Ltd
2.
TH
EU
NIQ
UE
BR
AN
DE
DDevelop the Point of Difference
High performing retailers consistently address:
What is our point of difference and how do we refine this?
How do we communicate this consistently?
How do we keep this fresh and inviting?
DIF
FE
RE
NC
E
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Are we implementing this well?
What is the brand experience?
What are we known for?
Do we have alignment of strategy?
TH
E‘E
ST
’M
OD
EL
Easy‘est’(Service)
Cheap‘est’(Lowest Prices)
Big‘est’(Selection)
Black Hole
K-MartTarget
MyerMany SpecialtyIndependents
(Selection)
Hot‘est’(Fashion)
The Middle
Quick‘est’(Speed)
Specialty
David JonesDan Murphys
McDonald’sKFC
© McMillan Doolittle
© Copyright 2009. The Retail Doctor® Group Pty Ltd
DE
VE
LO
PT
HE
PO
INT
OF
DSpecialist Expertise
Value AddExperience
DiscounterLarge Range
The Right Range
Who is takingthis space?
Competitors
DIF
FE
RE
NC
E
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Experience
Transaction
Large Range Competitors
AD
AP
TA
TIO
NAdaptation
MFI and Adams in the
UK
Woolworths in the UK
Waterford Wedgewood
Herringbone
© Copyright 2009. The Retail Doctor® Group Pty Ltd
EzyDVD
Circuit City
WH
AT
ISY
OU
RR
ET
AIL
PO
SIT
ION
What is Your Retail Position?
75% of retailers cite location, product quality and customer
service as their strategic differentiators
Location alone is not a sustainable competitive advantage
Over 70% of retailers do not measure their customer service
delivery OS
ITIO
N?
© Copyright 2009. The Retail Doctor® Group Pty Ltd
delivery
Over 70% do not have a product development plan or measure
competitor product activity
DE
VE
LO
PT
HE
PO
INT
OF
DDevelop the Point of Difference
What is the point of difference?
How do they manage their brand?
Does their delivery marry to their brand?
Do they actively seek out customers and how do they manage them DIF
FE
RE
NC
E
© Copyright 2009. The Retail Doctor® Group Pty Ltd
(CRM?)
Do they listen to their customers? (MS)
What is that they do better than competitors?
2.
TH
EU
NIQ
UE
BR
AN
DE
DDeliver Point of Difference Seamlessly
Store design and format
Appealing and relevant
Visual merchandising
Your story by categories
Line of sight DIF
FE
RE
NC
E
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Line of sight
Impact
What do you want me to buy?
Take the customer on a journey
Multi channel (web site)
2.
TH
EU
NIQ
UE
BR
AN
DE
DPoint of Difference
Our Findings:
Fit retailers define how they are unique,
consistently offer this uniqueness, DIF
FE
RE
NC
E
© Copyright 2009. The Retail Doctor® Group Pty Ltd
consistently offer this uniqueness,
communicate it, stay tight, refine and measure
(and the customer gets it!)
TH
ET
IME
ST
HE
YA
RE
AC
The Times They are a Changing.
‘When the rate of change outside your company
exceeds the rate of change inside your company,
disaster is imminent.’ CH
AN
GIN
G.
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Lou Pritchet. Senior VP, Procter and Gamble
TH
EL
INE
SA
RE
GE
TT
ING
BThe Lines are Getting Blurry
Manufacturers are becoming retailers:
Nokia is the worlds largest retailer of cameras
Lego produces the equivalent of 306 million tires per year -
world’s largest plastic retail product
BL
UR
RY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
TH
EIN
TE
RN
ET
The Internet
13.6m users
Over 50% of purchases are pre
researched on the web
E-Bay’s $48.3 Billion sales in
2007 (a 30% volume increase!)
© Copyright 2009. The Retail Doctor® Group Pty Ltd
would make it one of the top
ten retailers in the world and it
is redefining what is “retail”
Gen Y, X & Z
3.C
US
TO
ME
RC
ON
NE
CT
ION
ON
NE
CT
ION
© Copyright 2009. The Retail Doctor® Group Pty Ltd
DE
MA
ND
BE
CO
ME
SW
HE
RE
Demand Becomes Where It Is At
Increasingly retailers are understanding that it is not about the
supply chain it is about the demand chain
Customer purchasing patterns become the key to replenishment
& understanding of quantities and items
Collaborative planning where retailers share demand information
HE
RE
ITIS
AT
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Collaborative planning where retailers share demand information
down the entire chain is becoming commonplace
CU
ST
OM
ER
CO
NN
EC
TIO
NCustomer Connection
Personal, Interactive and
engaging experiences that
excite and convey value.
Know me and communicate
with me
Make it about me and give
me plenty of choice in
© Copyright 2009. The Retail Doctor® Group Pty Ltd
me plenty of choice in
channel
Tune in to WIIFM 1
Connect me and make it
real
3.C
US
TO
ME
RC
ON
NE
CT
ION
Customer Connection
Our Findings:
Fit retailers are customer rather
than product centric.
They understand customer trends,
ON
NE
CT
ION
© Copyright 2009. The Retail Doctor® Group Pty Ltd
They understand customer trends,
add greatly to the customer
experience and reap the reward of
customer satisfaction
and loyalty.
4.P
RO
DU
CT
IVIT
YN
OT
PPA
NIC
© Copyright 2009. The Retail Doctor® Group Pty Ltd
4.P
RO
DU
CT
IVIT
YN
OT
PDo You Benchmark Your Performance
As a minimum, focus on:
Sales per square metre
Final gross margin
Stock turns
Store contribution PA
NIC
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Store contribution
What is great performance in your sector?
Benchmarks will vary between retail segments
Performance within a segment will not.
INV
EN
TO
RY
MA
NA
GE
ME
NT
Inventory Management
Consider carefully:
The quantity of inventory
The profile
The aging
The stock turn = Net sales / av stock holding
AN
AG
EM
EN
T
© Copyright 2009. The Retail Doctor® Group Pty Ltd
View retail performance against benchmarks
NOTE:
Inventory position / stock management is a key
determinant of the health of a retail business.
4.P
RO
DU
CT
IVIT
YN
OT
PSales Production
Sales
Where and how do they produce their sales?
Sales to plan
Team sales
Individual sales
PA
NIC
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Items per sale
Average sale
Conversion rate
Sales by space
Sales by product
INV
EN
TO
RY
MA
NA
GE
ME
NT
Inventory Management
It is seldom what
you don’t have
that puts you out
of business –
Don’t BuyDon’t BuyWhat Won’t Sell!What Won’t Sell!
AN
AG
EM
EN
T
© Copyright 2009. The Retail Doctor® Group Pty Ltd
it is what you have
too much of!
TE
CH
NO
LO
GY
Technology
Retailers still spend too little on technology
Average spend as an industry is less than a third of insurance,
banking, transportation and manufacturing
Technology is no longer a nice to have, it is an absolute
requirement for survival.
© Copyright 2009. The Retail Doctor® Group Pty Ltd
requirement for survival.
It is vital to defining the position, connecting with the customer,
reducing expenses, and in increasing productivity and efficiency.
DO
YO
UB
EN
CH
MA
RK
YO
UR
Do You Benchmark Your Performance?
Our Findings:
Fit retailers work with live fast information
providing one version of the truth, through
end to end productive solutions measured
OU
RP
ER
FO
RM
AN
CE?
© Copyright 2009. The Retail Doctor® Group Pty Ltd
against best practice.
5.F
ISC
AL
PH
YS
ICA
L
© Copyright 2009. The Retail Doctor® Group Pty Ltd
TH
ET
OP
5S
IGN
SO
FA
NThe Top 5 Signs Of An Unfit Business
In 2007, every 11 ½ minutes one US
retailer failed due to one of the top 5 retail
killers:
5. Out of control growth
4. Out of control expenses
UN
FIT
BU
SIN
ES
S
© Copyright 2009. The Retail Doctor® Group Pty Ltd
3. Failure to manage gross margin
2. Out of control inventory OR
1. Being out of cash
5.F
ISC
AL
PH
YS
ICA
LUnderstanding The Numbers
Understanding the numbers is important!
P&L, Cash flow and Balance sheet
Understanding the trends is crucial!
In isolation numbers are reasonably pointless
Look at interrelationships
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Ensure retailers understand their numbers and ratios
Margin to sales
Current asset position
Stock / sales turn
Net worth
6.P
EO
PL
EA
ND
SA
LE
SL
(EF
FE
CT
IVE
PE
OP
LE)
LE
AD
ER
SH
IP
© Copyright 2009. The Retail Doctor® Group Pty Ltd
PE
OP
LE
AN
DS
AL
ES
LE
AD
ER
SH
IP
(PE
RF
OR
MA
NC
EC
UL
TU
RE)
The human capital asset
Understand setting and achieving retail sales
goals
Define and understand key retail statistics to set
sales goals and analyse business performance
The Top 5 Signs Of An Unfit BusinessE
AD
ER
SH
IP
© Copyright 2009. The Retail Doctor® Group Pty Ltd
sales goals and analyse business performance
Accurately target retail performance deficits and
take corrective action to improve
Consistency of approach
6.P
EO
PL
EA
ND
SA
LE
SL
(PE
RF
OR
MA
NC
EC
UL
TU
RE
AT, IPT and Conversion Rate
A B C
Weekly Traffic 600 600 600
Conversion Rate 25%(150 Transactions)
28% (168) 28% (168)
Average Sale $45.00 $45.00 $55.00 LE
AD
ER
SH
IP
UL
TU
RE)
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Total Sales $6,750.00 $7,560.00 $9,240.00
Case A One in four customers buy / average sale of $45.00
Case B Improve conversion by 3% for a 12% sales increase
Case C Maintain conversion and increase average sale by $10 (1 extra
item per ticket) = 36% increase on same traffic!
7.D
OT
HE
BA
SIC
SB
RIL
LIA
NT
LY
RIL
LIA
NT
LY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
7.D
OT
HE
BA
SIC
SB
RIL
LIA
NT
LY
Operational Standards
What are some operational and service
standards that a retailer should have?
Non selling
Acknowledgment RIL
LIA
NT
LY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Service levels
Signage
Compliance
7.D
OT
HE
BA
SIC
SB
RIL
LIA
NT
LY
Bringing it all Together
1. Understand your market and product proposition to deliver awinning / sustainable retail concept
2. Build a direct relationship with your customer through multiintegrated delivery channels.
3. Develop / implement good product planning and stockmanagement
RIL
LIA
NT
LY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
management
4. Develop good information / reporting platforms to focus onkey business drivers
7.D
OT
HE
BA
SIC
SB
RIL
LIA
NT
LY
Bringing it all Together
Use your technology platform to
drive
Differentiation
Customer connection RIL
LIA
NT
LY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Speed to market
Performance measurement
Efficiency of all processes
Increased $
7.
DO
TH
EB
AS
ICS
BR
ILL
IAN
TL
Y
Our Findings:
Fit retailers understand and consistently
execute the basic retail disciplines.
RIL
LIA
NT
LY
© Copyright 2009. The Retail Doctor® Group Pty Ltd
execute the basic retail disciplines.
TH
ES
EV
EN
KE
YF
ITN
ES
S
TO
DA
Y’S
MA
RK
ET
1. Begin at the End
2. The Unique Branded Difference
(Brand Aid ™)
3. Customer Connection
4. Productivity Not Panic
ITN
ES
SS
TE
PS
FO
R
© Copyright 2009. The Retail Doctor® Group Pty Ltd
4. Productivity Not Panic
5. Fiscal Physical™
6. People and Sales Leadership
(Effective people)
7. Do the Basics Brilliantly
No one can predict the future
However, we can prepare for it!
“Knowing the other and knowing oneself,
In one hundred battles no danger.
The Top 5 Signs Of An Unfit Business
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Not knowing the other and knowing oneself,
One victory for one loss.
Not knowing the other and not knowing
oneself,
In every battle certain defeat.
Sun Tzu 1300 BC
For more information and to see how The Retail Doctor can help you become ‘Fit for
Business’ please connect with us.
Facebook: www.facebook.com/retaildoctor
Twitter: www.twitter.com/retaildoctor
LinkedIn: www.linkedin.com/in/brianwalkerretaildoctor
Alternatively, you can contact us on the details below:
THE RETAIL DOCTOR® GROUP PTY LTD
© Copyright 2009. The Retail Doctor® Group Pty Ltd
Mailing AddressPO Box 209Milsons Point NSW 2061
Phone | +61 (0)2 9460 2882Fax | +61 (0)2 9460 3883E-mail | [email protected]: | www.retaildoctor.com.au
Alternatively, you can contact us on the details below: