Leveraging Data for Retail Success: Strategies to Transform Stagnant Sales

A Strategy to Grow Sales (along with some tough love)

There are many reasons why some stores experience strong growth year over year while others struggle to maintain what they did the previous year. The stores that do find ways to grow typically have traits in common. These might include better vendors or possibly better buyers. Their sales associates could be more motivated. They might even have better locations. On the other hand many stores that don’t grow oftentimes share similar characteristics as well.

There is however one difference that I regularly see that separates the growth group from the non-growth group of retailers. The stores that experience the greatest growth rates year after year are the ones that use their data to help drive buying decisions.

Identifying Slow-Growing Retailers

Retailers that grow at a very slow rate if at all are easy to spot. You can recognize them at market by being undecisive when in showrooms and by buying the same vendors season after season regardless of profitability.

Common Justifications for Stagnant Buying Practices

• Protecting long-standing relationships
• Concern that a competitor may end up with the line if they fail to buy

Performance is seldom if ever evaluated using a vendor scorecard. True to form these retailers are most likely over assorted carrying too many vendors and/or too many SKU’s. The result of which leads to duplication resulting in higher markdowns than normal.

They are unable or unwilling to fill in fast sellers due to lack of cash lack of time or simply not paying attention and are slow to deal with poor sellers. This pattern of performance continues season after season year after year with very little change.

Consistent Year-End Results

• Flat sales
• Inconsistent margins
• Below average turnover and GMROI

When asked about business the excuses are predictable. They often cite slow traffic difficult economy rising prices lack of good salespeople no parking late shipments weather etc. The list is endless but generally the same.

What is seldom if ever heard is that the selection was poor key sizes were absent markdowns weren’t addressed quickly enough or that too little time was devoted to sales training. In other words the real issues are being skirted and the tough questions are not being addressed.

Breaking the Non-Profit Cycle

These store owners are stuck in what is called the non-profit cycle which is very difficult to break out of without seeking out some sort of professional mentorship. Most likely these stores don’t plan their purchases by location and classification. This process does take more effort and it does take more time—hence the word work. The results of following a well-managed merchandise plan are always better than having no plan at all.

Strategy for Growth

One of the strategies that I use with retailers to help them grow sales volume profitably is to focus on keeping BOM (beginning of month) inventory levels close to plan. It is virtually impossible to maximize upside sales potential if stock levels are below plan month after month.

Clicking on this link will take you to an interview I participated in a few months back showing exactly why sales are missed when beginning stock levels are too low. Interview Link. I encourage you to watch the interview if you find yourself missing business in key classes.

Apply the Strategy

• The strategy works with any category of merchandise and any retail vertical.
• Try it in your seasonal categories like sandals or boots.
• Then apply it to dress or casual footwear athletic shoes and even socks.

You will be surprised at what you might be missing.

The Strategy for Inventory Management

The strategy described in the link above involves the use of inventory targets and stock-to-sales ratios found in a well-constructed merchandise plan (aka. open-to-buy plan). The good news however is that all the data needed should be available through your POS system. You already have it so why not put it to use?

Maximizing POS System Capabilities

Point-of-sale systems can be real timesavers but you must put the effort in to learn what they are capable of. You can’t just buy a new system turn it on and expect knowledge to come flowing out of it. POS systems can generate all sorts of data; some is nice to know and some is need to know. For this exercise we are only focused on the need-to-know data.

Common Mistakes

Too many merchants end up using their POS systems as not much more than expensive cash registers or price tag printers which is unfortunate in this data-driven world.

Action Plan

Make this year the year that you strive to use the data you are already creating to help you make better buying decisions and keep inventory levels in balance and on plan. Trust me if you do this your sales will increase.

Ritchie Sayner
Nov-Dec 2007 SRT-Breaking the Non-profit Cycle.pdf
(Sandra you should be able to lift an … of the non-profit cycle from this link. Jennifer might also have this as she put it in my book)

Ritchie Sayner

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