Canada's business magazine for traditional natural health retailers

Creating accountability

A manager of an independent natural food store, when her store was smaller, met individually with her department managers every week to talk about how things were going in the department. If this GM noted any performance issues in the department, she would bring them up in this meeting. She would ask if the manager wanted any help in strategizing how to address the issues. Sometimes they would go over “talking points” for the manager to use in a conversation with an employee.

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Capital budgeting without the headaches

For entrepreneurs without a strong financial background, the job of capital budgeting can seem overwhelming.  Capital budgeting – essentially the process of deciding how to invest excess cash within a company on items that are not regular “operational” items – covers a wide range of activities, and can include everything from purchasing a new piece of equipment to making a substantial investment in capital assets for a new location. 

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The Core Shopper

I believe the core shoppers of health food stores amount to about 15 per cent of Canadians.  The core shoppers are fully engaged with the natural health food store lifestyle.

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Running an impeccable front-end

Running an impeccable front-end

You can have great merchandising, selection and product knowledge. But customers’ experience checking out through your front-end can make or break your store. How people feel after that interaction determines how they feel about your company.

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Sales. profit, inventory

The three key areas to focus on in order to thrive are sales, profit and inventory.  Sales is generally the first focus of a business because without sales, there is no business. 

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Post-Expansion Burnout

Post-Expansion Burnout

You’ve been working on this project for several years. After overcoming every obstacle, putting up with countless delays, raising hundreds of thousands in financing, moving all your inventory, and staying up all night, you open the doors in your beautiful new store.

While the big push to get the new store open may seem like the hardest work you’ve ever done, a harder job lies ahead of you – getting through the next year or even two years. As a colleague of mine says, “You open the doors and then the hard work really begins.

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The advertising mix

The advertising mix

In the world of retail marketing, there is a huge choice of media, strategies and techniques that a retailer has at his or her disposal to promote their store.  Whether the objective is to create traffic with point-of-sale promotions, build the store brand or promote specific events… no matter the type of promotion, the tools available to reach the desired audience are collectively known as “the advertising mix.”

The concept of the advertising mix was developed in the early 1950’s. It is essentially a toolbox of different media and promotional techniques that a retailer chooses to fit the needs of their specific marketing objectives. For example, a retailer that has identified that their clientele are highly mobile, may decide to invest a portion of their marketing dollars into radio. It’s a great way to reach travellers – particularly to and from work – and it is an ideal media for high frequency and saturation. It is a very good fit for reaching this demographic.

Conversely, retailers drawing from a large geographic area may choose television for its vast coverage and multi-demographic reach. Retailers focused on specific age-groups or demographics may choose media or promotional techniques that are particular to those potential customers.  Trying to reach seniors?  Sponsor the weekly bingo or perhaps place ads in the senior’s newsletter. Promoting all-natural acne cream for teenagers? Try social media or on-line promotions. Over-stocked on protein powders and L-glutamine?  Try a coupon campaign in conjunction with your local fitness club.  Melatonin sales plateauing? Why not run ads after midnight on the local radio station? Trying to boost your cold and flu remedy sales? Perhaps a few well-placed ads on the Weather Channel will do the trick.

Each of these examples utilizes a specific advertising technique (or media) that is best suited to reach the desired audience. And each offers the optimum chance of capturing the attention of that market.

Since its inception, the advertising mix has evolved as the sophistication of the markets has intensified and as the number of promotional ‘tools’ has increased. For many years, newspaper, radio and television advertising were the stalwarts of the mix. Nowadays, a retailer can also utilize direct mail, couponing (with instant gratification via UPC scanning), live and video in-store marketing concepts, outdoor advertising, transit advertising, google ads, facebook, instagram, twitter and the whole realm of social media,  websites, web sales and webinars, guerrilla marketing (flashmobs to promote your new location?), product placements, email campaigns, public relations (a column in your local newspaper is unbeatable), community outreach programs, award, team and event sponsorships, QR codes, branded store promotional items, free samples, and so on and so on.

Your ability to reach your market(s) – those groups of customers that make up the largest percentage of potential customers – will ultimately determine the techniques that will give you the best return on your investment. Choose wisely. But take note, everything you do to promote your store is a really good thing. Just do it, do it well and do it often.  •  by Doug Muldoon

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Mission-driven employees

Mission-driven employees

It’s fair to say that most employees of natural food retailers choose to work there because they believe in what the store does.

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Lead with your heart, manage with your head.

Lead with your heart, manage with your head.

While shopping at my local health food store not so long ago, I struck up a conversation with a fairly shy young woman about what she was demoing. 

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Remember your first time?

Remember your first time?

That first taste of delectable cherries, sugary baby watermelon, or ripe fully flavoured summer tomatoes?

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Choose structured interviews to make better hires

Extensive research on job interviews shows that structured interviews are more accurate than unstructured ones in predicting which applicants will make good employees. By “structured,” researchers mean that the interviewer uses a consistent format with all candidates, asking the same questions in the same order.

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Avril opens new store in Quebec City

Avril opens new store in Quebec City

With great fanfare and many friends and industry colleagues in attendance, Avril Supermarché Santé opened its first store in the Québec City region (Levis, QC) on May 27.

According to Avril, the 20, 000 square foot Levis store becomes the largest of its kind in the region and represents an investment of $4 million. Like its Brossard, Granby and Longueuil locations, it offers organic and natural products, fine grocery, local and gluten-free products, certified organic fruit and vegetables, natural supplements and vitamins, natural and organic cosmetics.

Dining options include the Avril Café with 60 seats, offering breakfast, a daily menu, a sandwich and salad bar, smoothies and a delicious selection of desserts and snacks.  The first Crudessence counter in the Quebec City region offers organic, raw food.

Sylvie Senay and Rolland Tanguay, owners of the other three Avril Supermarché Santé stores, are the initiators of this project. “For a few years now, the people of the Québec region have been requesting
 a store through our website,” says Sylvie. “We noticed during Expo Manger Santé that the people of Quebec are aware of the importance of a healthy lifestyle.”

 “We offer a 100 per cent healthy and natural alternative to traditional supermarkets,” added Rolland.  •

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Disciplinary action should be like a hot stove.

Disciplinary action should be like a hot stove.

1) There is warning. The stove radiates heat. You know what will happen if you touch it.

2) The burn is immediate. It doesn’t take two weeks for the stove to work up the courage to burn you.

3) The burn is consistent. Everyone who touches the stove gets burned every time. If you touch the stove, you can count on getting burned.

4) The stove is impersonal. The disciplinary action was taken against the act, not the person. The stove doesn’t hate you. It burned you because you touched it.

Let’s try this out. Alison is late again. Every day she clocks in three to five minutes after her shift starts. Today she showed up 20 minutes late, full of excuses. But you’ve heard these excuses before when she was 30 minutes late two weeks ago.

Was there warning?

The Employee Handbook states:

“It is extremely important that you arrive at work on time.  On time means that when your scheduled shift begins, you are in the store, punched in on the time clock, with appropriate employee identification on, and ready to work. 

Habitual tardiness, or any single incidence of tardiness of 15 minutes or more, or failure to notify your supervisor or lead person in your department of your tardiness for work, will be subject to corrective action.”

Was the consequence immediate?

You meet with her later that same day, show her the time clock records for the past two weeks, remind her of the verbal warning after her last lateness, and issue a written warning.

Are you being consistent?

Other staff members with similar patterns of lateness have received similar warnings. You are not singling Alison out. You are not turning a blind eye toward others’ tardiness. You did not ignore the previous time she was late by more than 15 minutes, when you gave her a verbal warning.

Is your action impersonal?

You’re not angry with Alison. You hope she’ll succeed and continue working in your store.

Now let’s try another scenario. Zachary is friendly with customers but he gets into long conversations that don’t result in sales.  This leaves co-workers to do his share of the stocking and receiving.

Was there warning?

The performance appraisal form lists these criteria for evaluating efficiency:

a) Keeps focused on task at hand. Keeps busy during slow periods.

b) Balances friendliness with efficiency.  Doesn’t let personal conversations keep customers or co-workers waiting.

c) Conscientious to needs of co-workers and flow of work.

d) Plans ahead and prioritizes the day's work.

Was the consequence immediate?

It can take time to detect a pattern. The first time you observed everyone scrambling to unload a truck while Zachary conversed with a customer, you asked if he realized the impact on others. He apologized, but you haven’t noticed sustained improvement. At his performance review, you rate him “unsatisfactory” on b) and c) and “needs improvement” on a) and d). As a result, you withhold a pay increase with the offer of considering a non-retroactive raise in three months if his performance shows improvement.

Are you being consistent?

No one else on staff is exhibiting the same performance problem as Zachary, but you have recently terminated one new employee during the trial period for “lack of hustle” and co-worker complaints about leaving tasks undone. You aren’t allowing others to slack off while singling out Zachary.

Is your action impersonal?

You’re disappointed in Zachary but your emotional response is moderate. You’re giving him a second chance.

Disciplinary action is never easy. But like a hot stove, at least you’re being fair. •

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Sustainability in human resources

Sustainability in human resources

Sustainability means using resources in a manner that can be continued over the long term—to renew your resources instead of depleting them.

 

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Budget for a new store

Further to previous articles on How to Build a Store, we come to a crucial step: budgeting and business planning.  Whether you plan to self-finance the project or seek financing, it’s always a good idea to create a business plan or at the very least, a budget.

 

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Investing in your richest asset: your employees

Investing in your richest asset:  your employees

It seems that everyone is looking for the magic answer on how to find and keep the next group of superstars for their business.

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How to be more awesome

While I certainly don’t shy away from telling some people in my life how to do things, I don’t for a moment think that I am an expert that should be telling other business people how to run anything. That being said, while I was trying to think of a subject, a recurring thought kept coming to me.

 

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Know how your numbers affect the bottom line

Know how your numbers affect the bottom line

Are you responsible for your store department results? There's knowledge to be gained from knowing how your numbers affect the department's bottom line.

With that knowledge comes the power to create the change you want, by speaking the language in which your manager holds you accountable: the language of margin!

I'm sure some of you have heard statements similar to the following: "According to the latest industry numbers, your department should be doing at least five per cent better with its labour margin." Or, "Your cost of goods is too high – you'll need to get them in line to meet your margin goal of 35 per cent this quarter.”  These concepts may be familiar to some managers, but for many others they are a foreign language.

This is why I’m still doing yearly seminars and in-store trainings to teach department managers the importance of knowing the difference between margin and markup, and how to successfully introduce a strong knowledge of department financials into their department's daily routine.

Once a manager has gained the confidence to introduce their department to this exciting and empowering way of understanding its numbers, a whole new world of possibilities opens up. If you want to buy a new orange juice machine for the department or give your staff a raise, you can actually have the conversation - because now you speak the same language.

Training and accountability

Finding losses and gains is often easier on paper than out on the floor. Let's take a look at some areas where margin can be lost or gained.  Is your crew properly trained in all aspects of the job? One of the surest ways to lose or gain margin points is in this area. Improper training eats up labour dollars through lost productivity, due to poor work habits that require crew members to redo other's work – as well as poor use of time in general.

Another major area is job accountability – or more accurately, lack thereof. Department accountability is essential to maintaining good numbers and growing a department. Lack of accountability in a department is one of the biggest morale busters around. When crew members don't hold up their end of the work bargain and aren't made to do so, other crew members who do their jobs will feel taken advantage of and will see little hope for change. This leads to turnover or burnout – and margin loss.

Quality control

Consistent product quality standards are absolutely essential to maintaining a strong margin. Everyone on the crew needs to know what quality is from season to season. Slicing tomatoes and heirloom tomatoes in the summer are going to have different softness standards within the same season - while the flavour and colour of off-season winter tomatoes are going to be judged by yet another set of quality standards.

Your customers can buy mediocre produce anywhere; your quality standards are your calling card to consistent sales. A word to the wise: don't have your quality policy simply be, "If you wouldn't buy it, then pull it." That doesn't teach the uneducated worker, or even the veteran you just hired, what your standards actually are. Even if you have to establish improved standards one product at a time, one day at a time, it will be time well spent and will pay in margin dividends for years to come.

Receiving is another area where margin can be compromised. If everyone isn't on the same page, a poor product received at the back door potentially means a poor product being displayed and, even worse, being bought and taken home.

  Other areas to review during receiving:

• Make sure products are counted as they are received. Note shorts on the invoice.

• Make sure product matches what is invoiced.

• Make sure invoice is for your department and store.

• Check date, and initial invoice after receiving product.

• Compare invoiced prices with prices quoted.

• Request credit on damaged or missing product. Record your request and whom you talked to in your credit log, and check on a weekly basis to make sure the credit has been given.

All of these take time to teach and implement, but the investment of this type of financial knowledge is always going to maximize your most solid return for your staff’s morale, performance, and yes – your company's bottom line. •

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Location is key to opening a new store

Location is key to opening a new store

Further to my last article, I thought I’d expand upon each point in the brief ‘How To’ open a store.  If you’ve ever opened a new store, you’ll know how important location is.  If only we could ‘build it and they will come’ – that is a retailer’s dream!

If you are trying to expand or relocate, staying close by will aid in keeping existing traffic. Watch traffic flows. It could be very hard to attract new business if turns are limited to one direction, etc. Check out city plans to see if any major route changes could either positively or negatively affect traffic patterns in the future.

Locations with large pylon signs or great frontage could be ideal but watch for extra costs that could be forced upon tenants in the lease.  Generally, the better the visibility, the less advertising is needed. The best way is though a fantastic store front that is seen by many.

If it’s a new area you’d like to explore – take a drive.  Physically going to the area you’re considering can be eye opening.  What kind of businesses already exist? Is there much foot traffic or public transit? Graffiti or litter?  What type of homes are near by? Using Canada Post Precision Targeter tools (free software online), will allow you to determine your ideal demographic (by education or income) and build a radius of distance or driving distance to your proposed location. This will give you a better idea of the consumer base you’ll be trying to get into your doors. Are there only 10,000 consumers in your new market or 80,000? 

If there are other like-minded retailers or those who target your same demographic (Starbucks, an organic café, yoga studio, etc), then you’re likely to pick up some of that traffic as well. Pay them a visit to see how busy they are and what type of clientele are shopping. Not all traffic is alike: opening next to a dollar store most likely won’t benefit your business. Search out compatible businesses that share your demographic to capitalize on traffic. 

Don’t overextend yourself for the ‘perfect’ property.  Know your minimum and maximum square footage you require before you go searching.  Often times the landlord could be willing to divide the space if it’s too large, or if you have a business plan for a tenant, you could sublet to a complimentary business.  If it’s too small from day one, how could you ever plan to grow?

Lastly, speak to your current landlord or spread word thought the realtor network that you’re interested in more space.  Quite often you could be privy to upcoming lease space before it is advertised. By reaching the network, you may receive many calls/emails about property but at least you’re “in the know.”  You can always say no. Having the first right of refusal or the knowledge of where potential competition could open is invaluable.

Some other things to consider in selecting a location are the number of parking spaces nearby, loading dock or truck access, etc.  In the end, there are many factors involved in selecting a new location but don’t ever discount your gut feeling.  Good luck! •

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Be the Oz effect

Be the Oz effect

Hearing the ‘Oz’ effect has slowed which has had some impact on overall sales. The Federal Trade Commission (FTC) put him in his place!

So where did the Ozites go? Back to the land of OZ? Not quite…they went back to their cozy homes in your community, the eight miles around your store where 80 per cent of your business comes from. (One retailer said he walked the eight mile radius to get a real perspective of his business community.  Good idea!)

The Oz effect is based on basic marketing of natural health products 101 – sell the solution, NOT the product. He was able to do it on the strongest branding media - TV.

I have heard Oz does not bring in ‘our kind of customers.’ However, with a potential of purchasing $50,000 in their lifetime of natural products, I’d sure be trying everything to get them into ‘our kind’ of lifestyle.

As a retailer, I always included in the budget to run a monthly ‘advertorial’ style, solution-based article in the local community paper.  Print still works to bring in new customers while the advertorial positions your store as a solution-based resource for their health.

Other retailers have had success with their own radio show, with some retailers having become local celebrities with their shows.

TV is often not in the budget but if possible, it may be a good place to run ads during the Oz show.

Remember when using your co-op dollars to not spend it all on discount price flyers.  Make sure to build your brand on solutions as well.  No one complained about the price of raspberry ketones. They were just upset if we did not have stock.

Natural health resource center…

Quite a few people have told me recently how customers come in for answers to their health questions, then leave to buy product elsewhere.  I know this is tough.  However, it does show that you are seen as ‘the’ natural health resource in your community.  Do not take that position lightly.  Play it up.  Make sure they leave with solution literature on a product or service only you sell. 

Be the Oz.

The recommenders – it never ceases to amaze me the dedication, care and quality of people who work in the health food stores. Many of you have worked in the same store serving customers for 10, 15, 20 or more years. Think of all the lives you have changed…think of how many more in your community could benefit from the solutions you sell…be the Oz.

The two ads included are an example of the kind of advertising that built multi-billion dollar corporations.  These would be highly illegal today, yet the billions made on deceptive advertising created an epidemic of diabetes, heart disease and obesity.   Now, some of these mega corporations control most of the organic packaged goods business.  Sorry, but I always find this stuff interesting, although twisted.

What is a BILLION DOLLARS?

If a million dollars weighed 20 pounds, a billion dollars would weigh 20,000 pounds.   Let’s say a supplier to health stores does $10 million/year or 200 pounds of business, statin drugs ALONE do over $20 billion in business or 400,000 pounds of business!  One company that makes statins and other suspect remedies does four million pounds of business!!

With that kind of poundage, you can create major Oz effects to the point medical doctors think everyone should be on statins from birth, …like COLA…and do it in a VERY convincing manner.  Take them or you will die…and they believe it, as the doctors also thought cigarettes were healthy…why?...because a sales rep told them.  The College of Physicians needs a wakeup call!

 Margin of error

Instead of only finding ways to increase sales, make sure you are always looking for ways to increase margin. One per cent on a million dollars is $10,000, which goes a long way to covering expenses.  I understand price is being driven down as NHPs are sold everywhere and becoming more commoditized.  I suggest you brain storm with each department on how to raise margins while maintaining sustainable sales growth.  Perhaps have a contest between departments on who can raise margin the most while maintaining sales. Your margin is vital to the sustainability of your business.  Keep the focus on raising and maintaining margin as much as you do on sales!   Happy sales…• 

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CNHR News Podcast

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News, Views and Happenings in the world of Canadian Natural Health.

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Coming Up in the Next Issue...

CHFA West :  February 22-25

Reach your key retail customers in CNHR’s Show Preview Issue.

An early show requires early messaging. Get your Spring sales message out early with an ad in CNHR. Reach the key retailers well before CHFA West. Here’s what your ad can do for you:

• share your spring promotional plan with all retailers

• help your sales team reach sales targets

• introduce your new products BEFORE the show

• tell retailers about your show specials early

• help open doors for your sales team

• create traffic at your booth

• solidify brand loyalty

• tell retailers about your new services, too!

• support all of your in-store, digital and consumer marketing efforts

Advertisers: FREE value-added features As an advertiser, you’ll be in one of our biggest issues of the year. (There will be loads of bonus circulation during CHFA West.) Along with your ad being viewed by more than 10,000 owners, managers, buyers, product recommenders and floor sales staff, you also get some great free editorial opportunities, including Trade Talk, Product Profiles and Pre-Show Buzz. Here are the details: Trade Talk is one of the highest read sections of CNHR and your vital link with retailers. Keep current and potential new customers updated on your new products, new staff, new website, new promotions, etc. Deadline for Trade Talk: November 7

We have lots of advertising options at many price points. Tell me what ad size you’re considering or what your budget is, and I will personally customize a proposal just for you. I’ll explain all of the value-added features CNHR has to offer your company!

Please contact:     donna@cnhr.ca, candace@cnhr.ca, katherine@cnhr.ca

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