Retail Shops: How To Increase Profitability

[PaulSimister]

In the UK, a number of very well known retail shopping chains have gone bust in recent weeks including Woolworths after 99 years so I thought that retail shops was a very good place to start to see if these threads were popular.

You may not own a retail shop, you might never have worked in a retail shop but you have experienced shopping as all profit has to come from the customer, you are in a great position to share why some shops win your regular business and why others don't.

So what attracts you to a shop - is it the big sign in red writing that shouts SALE or is it the friendly welcome you receive and the care the staff show in making sure that what you buy is right for you.

What drives you crazy about a shop? What stops you going in? What causes you to abandon your shopping trolley in disgust half way around?

You see making profit is about doing more things right and doing them even better.

But also about doing less things wrong or not making the experience quite so painful.

[PaulSimister]

Bad location

Little you can do about it while you are there but there was a saying about the three golden rules of retailing - location, location and location.

If you are in a bad location, move as soon as you can.

Lack of convenient car parking spaces

Connected to location but if you only have three car parking spaces at your shop and you have heavy products, do you and your two staff need to park there?

A shopping centre near me is very popular and if you didn't go early, it was always difficult to park.

A natural constraint to the shops you would think but what did the shopping centre management do? They built a KFC in the middle of the car park which must have lost about 200 spaces and has restricted traffic flow so that when you are in a queue, you crawl around even slower.

So unless I can get there early, I go to another shopping centre.

I could write about plenty of other things but the big advantage of a forum is that it allows other people to contribute, so come on, what encourages you to buy or stops your buying from a retail shop?

Or if you would rather think about other types of business, start your own thread. You just have to become a member and it is free.

[Rob]

These days successful retailers (or any business for that matter) have to be serving a very clear niche market. That was the problem with Woolworths - being 'all things to all men'. I accept that there is a place for that type of retail outlet but it should not be a main high street store.

So I want a retailer that specialises, and so knows that particular niche inside out and can advise accordinlgy if I need it.

Another attraction for me has to be the employees. I really don't care about paying a bit more when staff are actually pleased to see me and talk! A good business owner will realise that 90% of his business is in the hands of their employees; most products or services you can get anywhere - a great employee is rare.

You can have a fantastic product but poor employes - poor business

You can have a poor product but fantastic employees - a reasonable business

[Andrew Ludlam]

The customer experience is critical, and should never be underestimated.

Think about this for a minute...

You may have invested time, effort and money in building a brand, in building a corporate profile. However, ultimately your customer’s experience of your company is the brand.

If you stand for ‘great customer service’, ‘reliability’ etc, that’s great. But... If, as a customer, my first experience of dealing with your company is to have been greeted by a surly shop staff, then that now becomes your brand. Your image will forever be associated with this kind of customer service.

Your brand, your image is always in the eye of the beholder, and in my view, it’s always established by your customer.

I think many, many retailers underestimate how important this is. And those that get it right i.e. those that give their customers more than they need – and more than they expect, will have them for life. (I think this is something we must all work at).

Unfortunately many retailers are just concerned about the transaction at that point in time, and don’t build any ‘value’ into the process.

[PaulSimister]

I agree completely that retail staff are absolutely essential and set the tone for the shop.

It drives me crazy if I walk into a shop and the three shop assistants are chatting away about last night's Coronation Street episode while I am waiting to be served.

Almost as bad is if there is a long queue and you have one server and other staff doing busy work - stacking shelves and paperwork.

Nothing should get in the way of serving the customer - either taking their money (and I have put things down and walked out in the past) or answering questions.

Staff should also be polite, pleased to see you, friendly (one server at the sandwich shop I go to won't look me in the eye or smile), helpful and as knowledgeable as possible about:

a) what is stocked
b) where thing are in the shop
c) what things do / what will help them perform better.

For example if I was buying a new business suit and wanted to branch out from dark blue and grey to something more adventurous, I would appreciate advice on what shirts and ties go with the suit.

[Rob]

This discussion on poor staff reminds me of an experience I had when I was hiring a car once. As I live abroad I use hire cars a few times a year if returning to the UK. On one of those ocassions when collecting a car a poster caught my eye which was featuring their “regular users” or loyalty scheme.

I asked the assistant for more information about how it worked and she said, in a conspiratorial manner, “Well you’re supposed to ring up and get immediate service and a better choice of cars, that sort of thing. It works well in America but not here.”

Umm, Ok I thought, but I asked for a brochure anyway to see if that would do a better job of selling the scheme that she did, but the answer I got was,

“I don’t think we’ve got any.”

No attempt was made to look for one! She just sat on her chair and carried on typing my details in.

I thought that after having made 2 attempts to get at least some basic information about the scheme and getting nothing, a third was clearly going to be a waste of both my time and hers, so I gave up!

So what are the lessons from this sorry experience?

Firstly, train your staff to know the benefits and features of your products. Don’t let your staff show you up by perhaps covering up their ignorance with some smart comment. By clearly making everyone understand at least they can pass on the information even if they don’t try and get a sale!

Next, if your staff criticise your products, as this lady effectively did, get rid of them (by this I mean the staff!) Having someone on board who is not “with” you can spell disaster. Immediately remove these internal terrorists.

Lastly, ensure that you have plenty of leaflets or brochures on display and in stock to hand out just in case a customer has the audacity to ask for one!!

[chuck83]

Customer service can make or break a store. I'm more likely to spend more at a store with good customer service because I am in a good mood. I am less likely to spend in a store with poor customer service because I feel disrespected and angry.

[Sheraz]

One of the best technique use by well know companies is " Target to mass market with low prices", ultimately the profit will be higher.

[Rob]

One of the best technique use by well know companies is " Target to mass market with low prices", ultimately the profit will be higher.

I agree to a point but this approach is all about volumes and being against the 'big boys' in terms of marketing budget and visibility is the problem.

The way for small businesses to succeed is the retail area is to find a very focused niche and be the best.

[PaulSimister]

Even targeting the mass market with low prices is fraught with risks.

Fine is you have a massive buying cost advantage but I expect a backlash from these sheds at some stage.

the shopping experience is poor.

[hosting]

# Marketing: Don’t advertise -- until you’ve maximized use of free or inexpensive promotion. Market test every new product/service before investing in production or marketing. Evaluate your marketing efforts. Do more of what’s working, discontinue what’s not.

# Customers: Customers don’t want money back guarantees. They want the product or service to be right. Get it right and customers become your best sales people. Get to know your customers and what’s important to them.

[PaulSimister]

Let me disagree with the last comment in part.

Customers do want money back guarantees because they don't know who they can trust. A guarantee say two things:

1 - any business that can give a guarantee is committed to doing things right

2 - if things do go wrong, there is some recompense. The guarantee puts the risk on the supplier and not on the customer.

But I agree with the sentiment.

Customers don't want to have to claim under guarantees since it means they've gone through a disappointing experience and they have to accept that they made the wrong decision.

A guarantee gives an uncertain customer confidence to buy when he or she would otherwise decide to buy elsewhere or not even buy at all.

[PaulSimister]

I have reviewed an excellent book packed with ideas for increasing profits in a retail store

Guerrilla Retailing (http://businesscoaching.typepad.com/business_books/2009/10/guerrilla-retailing-elly-valas-orvel-ray-wilson-jay-levinson.html) - it's on my Business Books blog

[salmanak]

There are many ways through which we can increases our profit which are given as follow:

• Cut down the extra expanses of the company
• Optimum use of material
• Good relations with customers
• Search new markets