Sustainability means using resources in a manner that can be continued over the long term—to renew your resources instead of depleting them.
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.
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.
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.
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.
• 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. •
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! •
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.
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.
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.
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!
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…•
“Live Rust” album was, “It’s better to burn out than it is to rust.” For many, it could be a call to burn bright and passionately rather than resign ourselves to a complacent life of dull routine. I wonder, though, if many department managers across the country haven’t misread Neil’s message or the unwritten message known throughout your store. I encounter managers in many stores who have lost their vision and motivation.
At my store, we have been very fortunate in more ways than one. We have enjoyed being a small, family-owned and operated business for a long time. Outside of one part-time employee who has been with us for 10 years, we have not had to work with anyone other than immediate family in four years. We also haven’t hired anyone new in over seven years. In the retail world, I think this is quite abnormal and even unheard of. However, this all came to a crashing halt this past spring. We were given a year of notice, but it was still not enough. My brother decided to move on, and we were faced with only one option. We had to hire new staff.
Employees have a right to know where they stand. Simply taking the time to meet one-on-one with an employee says, “You matter to me.” Although business literature is full of stories about how people hate performance appraisals, the employee surveys my colleagues and I have conducted at 200 natural food stores paint a different picture.
Consider hosting a BBQ, pancake breakfast or even a ladies night. The themes really are endless and no matter what you think of – I’m sure you’ll have a vendor to support you. Be creative; come up with catchy names for the event and fun ads to promote it. Most importantly, get your staff excited about it. For as many staff as you have on payroll – that is the number of ambassadors you have for your store – you get them talking about it and the event is sure to be a success! Here are a few steps to start planning your first event:
Plan your theme. This could tie in with the time of year (summer BBQ) or events topical in your community (if there is a local summer fair, host a summer fair showcasing your local suppliers during that time). You can really pick any theme and dates you like. Test which days of the week work best for your store, ideally your busiest hours of the week so you can impress the most people in the shortest amount of time. Your event should be a finite period of time, two to three hours maximum.
Think of vendors to partner with. Your theme will decide which items you’re promoting, which can help you narrow down which vendors to partner with. Consider also asking a charity to participate with a portion of the event’s proceeds donated. You’ll want to pick vendors who have dynamic people to provide demos as well as great literature and samples to hand out. Vendors and charities can help to promote your event through their social media channels and with additional word-of-mouth advertising.
Create promotional materials. You’ll need to advertise your event in a variety of mediums. Create in-store handouts so your regular customers are informed. Consider mailing or emailing your best customers so they get a personal invitation from you. Utilize your website, e-news and social media to spread the word. Be sure to let people know it’s ok to bring a friend to the event – referral customers could be made! Lastly, post notices on community boards like Kijiji, your local TV station website and local newspaper – they often advertise community events free of charge. Remember, you want to not only thank your existing customers but create new ones, too.
Theme: Ladies Night
When: Thurs, May 11, 7-9 pm (near Mother’s Day)
Feature Products: Natural skin care: supplements for skin, nail polish, local body care, organic chocolate, strawberries
Vendor/Items to demo/Contact List: list all you’ve invited based on the space you have to work with in your store
Charity: Local women’s shelter, contact is Jane, will set up table/signage and attend event
Special items for event: Single rose for each attendee, assemble swag-bags with vendor samples, order balloon bouquets for decorations, print coupons and rain checks.
Staff to work event: Mary, John, Bruce, Sue, Carla
Develop a checklist. If you keep a checklist of all vital information, you’re much more likely to produce a quality event with little-to-no stress for everyone involved. Verify the items you’d like demonstrated with your vendors, what they’re bringing for supplies (table, sample cups, etc.) and the time you like them in-store for set up. If you need samples for goodie bags in advance, specify that early enough so you’re not scrambling on the day of the event. Also verify that your inventory of the items that will be featured is sufficient and calculate your special price for the event. Stock lots of the feature items and print rain checks in case you run out.
Ensure your best staff are working and the store is looking its best. Program your special pricing, have any decorations up and a plan where each vendor will be positioned to demo. The owner or manager can walk the floor and personally thank the customers for coming to the event and for their support all year long. Offer up goodie bags as you walk around or have it marketed as ‘free gift with purchase’ and have them at the tills. (FYI: women love swag – offer a free gift and we’re there!)
Most importantly – have fun, it is an event after all.
Once you’ve done this a few times, you’ll have a checklist created for future events so nothing gets forgotten and the event really becomes ‘routine’ for you and you’ll be amazed at the reception you receive from your customers. They’ll be so appreciative. A little effort really does go a long way. •
In times of conflict, it’s incredibly important to keep a bright, smiley face.
Nobody wants them, but we all have them – customers who are on a mission to bring a stormy cloud into your day, regardless of whether or not you are personally responsible for their bad mood.
Sound familiar? Back To The Future? I am sure we have all seen the movie and enjoyed the silly possibilities and scenarios featured in it. I picked this title for my column because just like the movie, sometimes we need to put ourselves in a position where we think ahead of time and then look back. Is that a bit weird? Not really.
It happens all the time. Co-workers get attracted to each other and next thing you know…. Workplace romances can impact the productivity and morale of the protagonists and their co-workers. That impact is greater still when a supervisor and subordinate are involved.
A conversation I often have with owners, general managers and produce managers these days concerns how to take their produce to the next level. My usual answer to the question is multi-layered, depending on where the department is at that moment.
The floods that hit Alberta in June of last year were the costliest natural disaster in our nation’s history, according to the Insurance Bureau of Canada—$1.7 billion and counting. And as one IBC official said, “While the monetary cost of the floods is huge, the emotional toll on Albertans is incalculable.”
Do you remember those old Western movies where the settlers moving west would have to circle the wagons to better protect themselves from the arrows that seemed to be coming from all directions? Some stores may be feeling that way, as their once-safe marketplace now seems to field competition coming at them from all sides.
• The natural and traditional grocery stores will experience ongoing consumer demand for organic foods. Mainstream grocery and drug will continue to create more space for natural health products. Natural health products may reach the tipping point over the next five years.
• In 2015, 65 year olds will outnumber all other ages, so in 15 years, the 80’s will be the predominant age in Canada…
• Boomers will want a better quality of life than is currently being experienced by 75’ers. The majority are unhealthy, with brain disorders, bodily functions out of control, in pain or have a serious illness, and on 10 or more prescription drugs. I believe at least 20 per cent of boomers will look to natural health products to ease their way through the aging process.
• Every day for the next 17 years, 10,000 people will turn 65 in North America.
• Home delivery for food and medicine will increase in coming years due to seniors unable to get out and about.
• Urban population is expected to grow dramatically as aging boomers move closer to amenities.
• How do you market to a nine second attention-span audience? Who has time to read an email over one paragraph long without their mind wandering? We live in an ADD techno- illogical society. Holding a consumer’s attention will be an ongoing challenge for marketers.
• The ability to stay connected to customers and remain relevant will be a major challenge as brand loyalty is becoming a thing of the past.
• Natural medicine is safer and proven as effective, in many cases, as pharmaceutical OTC drugs and prescription drugs. Though a slow process, I see more MDs, integrative clinics and hospitals using natural health products as the first choice of medicine and prevention.
• Next to boomers, there are more early 20 year olds. Over the next 15 years, they will be mid-30’s, have families and become the next major influencer of market trends. How do you message to them? They are a major reason sports nutrition is so big, with so much future growth!
• Facebook is the best retail promotion for some stores and this should continue to grow as we live in the time of connection. Connecting with your most loyal customers and communicating messages that assist their overall well-being, not just your bottom line, will resonate best with consumers of natural health products. Give recipes, exercises, health tips. A sales pitch is okay, but should only be in every four to five communications you send out.
• Stories will be the best form of promotion/communication as they keep a person’s attention and appeal to their emotions.
• Think – how can I best communicate with my community, the homes and businesses around your store where your customers work or live? How can you make their lives better, easier, happier through the products and services you provide?
• I have no idea what will happen to traditional media as it becomes more difficult to hold a person’s attention, especially young people who are averaging seven hours a day on their handheld. Perhaps one day we will truly position ourselves in the consumers mind with neurotransmitter billboard apps.
• Did you find 2013 growth not as expected? Was it due to less Dr. Oz motivated sales?
• Natural health products will be sold everywhere - convenience stores, vending machines, hospitals…I can dream, can’t I?
• Your database is golden…so, treat it like that.
• Will you please text me when my product comes into your store?
We are all in a business well-positioned for generations of careers to come…
‘I love what I do!’ is a statement I hear from pretty much everyone I meet in the industry.
Sure, work has its dramas. However, to work in a job where you help make a positive difference in people’s lives is a reward without compare.
Happy Sales! •
News, Views and Happenings in the world of Canadian Natural Health.
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