Merchandise Management

Customers Look For Product Lines That Are 100% Current and Relevant

As 2010 marches on, customers will still focus on a needs-based buying pattern over previous wants-based mentalities. Above this current trend, customers are becoming obsessed with product lines that are a reflection of the latest global issues, technological improvements or design styles.

Gone are the days where consumers were dazzled by sheer selection and massive SKU lists. Smaller, more focused product lines that keep up with the times are what customers prefer. It’s now expected that progressive retailers will continually scrutinize products and clean out those that are at the end of their life cycle or are not reflective of current trends and priorities.

Not surprisingly, consumers still demonstrate a high interest in the latest technological gadgets like Cell Phones, Televisions, Ipods and other high-tech devices. However, current issues like our environment and energy are affecting the consumer’s attitude towards selection. A less energy efficient appliance designed even just a couple of years ago will take a back seat to leading edge models that cost less to operate.

As a matter of fact, consumers will frown upon retailers who offer older products that appear obsolete just to pad out their selection.

What types of product do consumers regard as current and relevant based on global trends?

-Products that offer the latest in energy efficiency

-Products that required less energy to produce

-Products that require less energy to distribute

-Products that will have minimal environmental impact upon disposal

-Products that have proven reliability and longevity as customers keep making quality a high priority over previous disposable product lines

-Products that are current in design but can be upgraded easily in the future. Consumers expect longer life cycles from their computers, for example and will expect to upgrade their platforms at least once before buying completely new systems

-Products that offer the latest designs in safety. Products from power tools, to tires to baby seats continually offer leading edge refinements in safety, that is especially relevant to the family oriented consumer.

Does your product line reflect the current trends and issues that are top of mind with your consumers? In their eyes, is your product line current, relevant and focused? Do consumers believe that you conduct ongoing research and continually refine your product line as discussed and weed out older and less relevant products?

The days are over where big-box broad SKU merchandising just for the sake of sheer selection will impress today’s consumer. Today, relevance to current global issues is the consumers acid test.

Take Action Today:

1) Scrutinize your product line and phase out products that are not current and may be perceived as tired and obsolete in the eyes of the consumer.

2) Refine your product line and be the authority in the eyes of your customers on what’s hot and relevant. Demonstrate that you are well informed in regards to current global issues that they see as critical.

3) Add new and leading edge products to your merchandise line and prove to the consumers that you’ve done your homework.

4) Schedule your team to review your product line monthly and make product focus and refinement and ongoing process.

retail, retailer, leadership, operations, sales, merchandise, global trends, global issues
customers, consumers, merchandise, selection

Retailers Can Build New Relationships with Consignment Agreements

If you’ve operated your stores for more than a month or so, it’s inevitable that you’ll be approached by fledgling manufacturers, vendors and suppliers.

There are good ones and bad ones out there. Small and new can reveal an organization that is honest and passionate about what they sell, or a group of real fly-by-night operators. All suppliers had to start somewhere and many of today’s large ones started out in their garage or even in the trunk of their car.

You’ll need to do your homework and check out these suppliers thoroughly. Google their names on the internet and ask for three references that they already supply and call them, even if they are your competitors. You need to determine how reliable they are. You’ll also need to contact any appropriate government agencies if they are supplying foreign products that may have issues with safety, lead paint or may have other tainted features. Always investigate any foreign products from any supplier to make sure they comply with our standards.

If you’ve determined that this fledgling supplier is on the level, why not suggest for a test period of a few months, that you take the goods on consignment into your stores? This gives both of you an opportunity to evaluate one another with low risk to your stores. While large and established suppliers may balk at consignment shipments, a new and smaller supplier may jump at the opportunity to prove themselves.

Over this test period you can evaluate consistency of product, reliability of the supplier and if the new products appeal to your customers. If they don’t the consigned goods can be returned to he supplier without you getting stuck with them.

If the goods are selling well, you’ll also want to see quickly your new supplier can replenish stock as well. A consignment agreement can be a win-win situation for both parties and create the foundation for a long term relationship. The fledgling supplier can grow as you do!

You’ll need a Consignment Agreement to document your relationship. If you do not have one, please email me at ronp@retailinstitute.ca and we’ll send you our free agreement form. This is a simple one page document that covers all the issues of consignment relationships, including regional exclusivity.

Take Action Today:

1. Always do your homework and research new suppliers. Call current retailers and get their opinions on how these suppliers operate. Ask about their honesty, reliability and track record for replenishment.
2. Are you their potential first client? You’ll have no one to contact for references. Consider visiting their premises, even if it’s just a garage to see how they operate and ask about their expansion plans for the future. Consider their stability and honesty over the scope of their existing facility. We all have to start somewhere. Then go with your intuition and gut feeling. It’s all part of being an entrepreneur.
3. Evaluate the relationship for at least 30 days and determine how the new merchandise appeals to your customers.
4. Always have a written consignment agreement signed by both parties before you accept any merchandise.
5. Determine how suppliers will handle warranties if applicable. Will they reliably repair or replace goods purchased by your customers? You should include an Over The Counter (OTC) warranty in your consignment agreement. Suppliers can pick up merchandise at your store for warranty work and customers can simply drop of the merchandise at your in need of service or repair during the warranty period.

retailers, suppliers, vendors, merchandise, relationships, consignments, agreements, warranties, operations

retail, retailer, leadership, operations, shoplifting, theft, merchandise,
service, selection, employees, loss, prevention

Professional Thieves Prefer EAS Stores with Indifferent Employees

I often speak about the effect of challenging times on shoplifting levels.
A tough economy escalates theft for obvious reasons that I have covered
in the past. Many retailers have implemented expensive EAS systems to
address this trend, yet unless staff are properly trained, EAS systems can
actually confuse employees when professional shoplifters use these systems
to their actual advantage.

It all starts when a seasoned professional team of thieves cases your store.
They’re looking for passive and indifferent staff that seldom wander away
from the cash desk. Employees who live on the phone and have little
control of the sales floor. Ultimately, they look for employees who handle
activated gates improperly. If they establish your employees as poorly
trained and do not understand the role of an EAS system as part of a total
comprehensive Loss Prevention program, your store will be labeled as
a viable target.

Once you are targeted by the professionals, calculated visits to relieve your
store of its most precious items will become a daily event. They’ll likely
take advantage of weaknesses in your schedule as well, and ply their trade
when management or seasoned employees may be absent.

Here are two methods of confusion that work with EAS systems that all
employees must be aware of:

1) Thieves walk in with a “HOT” bag and intentionally trigger the gates. They’ll
make a big deal out of it and make sure employees see them trigger the gates as
they enter. The thieves will comment that there must be something from another
store in their bag that triggered the gates. This plants the notion in the employees’
minds that if they trigger the gates on the way out, that is was just the bag they
walked in with, nothing to worry about. They may even ask you to keep their bag
at cash and pick it up as they are prepared to leave. When they trigger the gates
again, they’ll shrug their shoulders and give you a wave as your employees
smile and motion them to carry on out of the store. If they wandered around the
store with the bag, new stolen goods from your store are in there. If they asked you
to keep the bag, they’ve got something concealed on them. Either way, they used
your EAS system, your poorly trained staff and confusion to lift your store of
merchandise.

2) Two thieves walk in as a team but about five minutes apart and do not appear to
know one another. One thief lifts the merchandise and slowly heads for the exit. The
other thief gets directly behind the first one and they pass through the EAS gates
together. As the gates activate, the first thief with the goods discreetly progresses out
of the store while the second one stops and draws all the attention to himself. Employees
never even notice the leading person leave the store with all the confusion and attention
created by the second thief. The second thief is very co-operative and happily opens all his
packages yet nothing he has triggers the gates again. He’ll even volunteer an
explanation for the “false alarm”. The zipper in his jacket has done this before, maybe
faulty gates, maybe some cell phone radio interference, anything to confuse the
employees further. He progresses on his merry way and then hooks up with his
accomplice to split up the spoils of their trade.

Lastly, environmentally friendly re-useable bags are now very popular with both
grocery and general merchandise shoppers. These are sold for a nominal amount
by many retailers now, and some offer foil/cloth  lined insulated ones as well. For years,
seasoned thieves have lined bags with foil to defeat EAS systems with equi-potential
surfaces around the merchandise. Get a sample of these insulated bags from a
handful of other retailers, place a tagged item in one and test them in your gates.
Does the bag defeat your system? It will depend on how much foil is in the liner.

It’s critical that employees are well trained on how to deal with any gate activation
and are cognizant of the tricks seasoned thieves use to their advantage with EAS
systems.
 

Take Action Today:

1) Review these tricks of confusion with employees and increase
vigilance as shoplifting escalates.

2) Retrain staff every few months and make sure that all gate activations
are addressed by employees systematically to catch thieves who use these
tactics. If employees examine customers who activate gates when they enter
this trick can be defeated. Similarly, make sure that all customers are examined
when a gate is activated, not just the one drawing the attention to themselves.

3) Check out various lined bags to determine if they defeat your system.

4) Train employees every few months to keep Loss Prevention top of mind
with everyone. Continually share tricks used by professional thieves in
stores with and without EAS systems.

retail, retailer, leadership, operations, shoplifting, theft, merchandise,
service, selection, employees, loss, prevention

Recent Studies Indicate Short Shipping is Prevalent

Retailers in these challenging times face razor thin profits,
escalating expenses and leaner customer traffic. We all
agree that 2009 will be a stormy year for the smaller retailer.
One aspect of your business that can devastate profits is in the
area of inbound shipments. One organization assumed that
vendor shipments were accurate and store employees simply
did a cursory review of larger items that came in.

After conducting a detailed audit of all shipments and all
items for all stores, the retailer determined that shipments
were shorted by as much as 4 percent. Over the long run,
paying a vendor 4% for goods never received can put a
retailer into bankruptcy in our new economy. Most retailers
are so pressed to get goods out on the floor, that scrutiny of
shipments is at best a haphazard exercise. Junior employees
may not appreciate the critical importance of close examination
of waybills to the smallest of items in a shipment if the store
manager has not voiced concerns over shipment accuracy.

Studies conducted on internal warehouse to store shipments
fared a little better with an average 1% to 2% error rate. Lower
volumes and a vested interest to make sure the shipments are
accurate are likely factors that create better accuracy.

How accurate are the shipments that YOU receive? When was
the last time you really scrutinized your shipments for accuracy?
What would short shipments as high as 4% do to your organization?

Too many retailers assume that shipments are accurate, however
in these tight times, everyone is trimming costs including employees,
double checking, failsafe stations and more, within the distribution
system. The retailer ultimately faces the loss if vigilance is not
exercised at a high level in our new economy.

It’s likely that the higher the volume, the higher the errors as well.
Short shipments will really hurt retailers over the long run in an
era where we can ill afford these devastating losses.

Step back and look at all your shipments under a microscope!

Take Action Today:

1) Discuss short shipments with all employees and introduce
tighter receiving procedures for all stores.

2) Consider having staff double check shipment receiving
procedures. One employee receives and the other audits
the paperwork and unit count.

3) Get management to periodically spot check shipments.

4) Audit inter-store transfers as well. Large stock balancing
exercises have proven to also be largely inaccurate.

retail, retailer, leadership, operations, merchandise, shipments, transfers, vendors employees

Slower Turns can make Merchandise Lose Its Luster

Recently, I’ve been in a few stores that have faced lower
levels of traffic in this new era of retail. Traffic is down
and so of course are sales. Employees in the store
have accepted things the way they are. The store lacks
energy and there is a feeling of resignation when you
talk to the sales people.

This is where the store manager and the quality of their
leadership can make a real difference. In many cases,
complacency and indifference of the store manager
affects the employees very quickly. Staff lose their
proactive attitude and the store’s presentation can
subtly deteriorate over a period of days or weeks.

Customers see the same old merchandise at the same
old prices in the same place. Nothing is looking new or
fresh, and merchandise is gathering dust as well. The
value perception of course, that customers experience
diminishes and so do sales. The store can get into a
downward spiral.

Step back and take a critical look at your store every week.
If  YOU were a customer, what impression would you have?
Merchandise presentation and maintenance must be 100%
during these challenging times. All goods must look crisp,
clean and perfect. Merchandise, lighting and fixtures should
be clean and dust free, and the cash desk must be totally free
of debris and clutter.

Customer buying decisions are made with more hesitation these
days and lower levels of confidence. Merchandise that is not
displayed to perfection can tip the scales in the minds of the
customers and defer a buying decision. Keep merchandise looking
fresh and make sure that displays are changed more frequently to
prevent lighting or sunlight damage to merchandise colors.

Take Action Today:

1) Discuss with staff how critical store and merchandise presentation
is during the New Economy. Make the connection between lower
buying confidence and perception of merchandise.

2) Systematically walk the store daily and consider assigning every
employee a section to maintain as their personal area of responsibility.

3) Rotate merchandise at least every two weeks or weekly if possible.
Change all displays weekly, including display windows.

4) Dust everything daily. Ask staff to dust  every spare moment.

5) Be proud of your store and strive for perfection every day, and sales
will follow!