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Simple Questions May Be All Retailers Need to Plan Well
I’m a very big proponent of planning. Know where you’re going, know what your plan is, because every business is different. You can have a fast-growing company that’s two years old opening 20, 30 stores a year; and they’re doubling their size every year, a 50% increase every year. Or you can have a mature business that has 800 stores and is really looking at making the most money on the square footage because investing in new markets isn’t really what’s going to make them successful.
So first, plan your business, understand your business, understand what your growth is going to look like, and then make the plans to do that.
From a systematic perspective, here are some questions to ask. Does your business do 3, 300, or 3,000 transactions a day? We see different retailers throughout that entire gamut, where jewelry resellers can sell one or two pieces, high dollar value, and hit their numbers for their store. A store that’s selling products in the $5-$10 range, on average 2-4 items per transaction. And then you have your grocery store that’s looking at a thousand transactions covering a giant landscape of space they need to pay for. Are you that high-volume, low-margin retailer, or are you going to be that high-margin, low-volume retailer? Everything that goes into the plan depends on making the determination and putting everything in place to support it.
For example, high-volume, low-margin. You need to get people into the stores. You need to get those touches. You need to get customers to really want to come into the store and make a purchase, and then when they’re in that store making that purchase, you need to try to persuade them to make more purchases. Traditionally at the cashier’s rack there’s impulse items, but now we have the ability to reach into their pocket and inform them about other items that they can purchase that aren’t right at the cash rack.
So instead of those low small-square footprint items that are hanging there, your batteries, your magazines, your gum, your candy, you put higher-ticket items out there. You can have someone come into a clothing store and point them to a pair of jeans that they weren’t thinking of buying just because they’re in your store and that’s your most popular item. Or that’s the item you happen to have a promotion on right now.
Once you’re clear on what type of business you are, there are exceptional systems that can be deployed to help optimize the business model.