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.
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. •