Retail and wholesale in Australia are getting increasingly difficult with more International brands entering the market and a slow retail environment. This is putting pressure on sales and margins and in turn is triggering shareholders and banks to demand tighter controls to mitigate their risks.
Businesses are coming under pressure to increase ROI through increased sales, controlled expenses and properly managed cash flow. For most retailers and wholesalers, inventory is one of the key assets (if not THE key asset) that directly impacts all three levers – sales, expenses and cash.
Retail going through a tough time
In general, Retail throughout the world is going through a rough patch. The U.S. is on pace to have more store closures this year than any year in recent times. The list of brands / retailers who have experienced hard times (often attributed to poor inventory management) is staggering. Some of the big names in the US include JC Penney, The Limited, Circuit City, American Apparel, Payless, Sears and Radio Shack. Even Macy’s is having to shut stores.
In Australia, we have seen too many retailers struggle and often succumb to the difficulties of running a successful retail business. Dick Smith and Retail Adventures (Crazy Clark and Sam’s Warehouse) were two high profile failures that had inventory issues that contributed to the businesses being liquidated. To name a few in an ever-growing list, other Australian retailers that have seen some rough times recently include Herringbone, Howards Storage, Payless Shoes, Laura Ashley, Perfume Empire, Robin’s Kitchen, Marcs, Pumpkin Patch, Borders (a while ago), David Lawrence and Rhodes and Beckett. Many of these could have been / could be saved with better inventory controls.
Early warning signs
There are simple warning signs of a company that has potential inventory issues. These signs can develop on their own or more often as a group of signals.
Causes of Inventory Problems
There are three main areas of interest when looking at the reasons behind the problems:
How to fix the Problem
Unfortunately, there is no silver bullet when tackling inventory problems. It is necessary to address several areas to get the wheel moving in the right direction. Typically, a process will tackle a handful of issues from the list below:
Benefits of Strong Inventory Management
The impact of well managed inventory is wide reaching and highly beneficial to all aspects of the business:
If you would like to learn more about how you could improve your inventory management to benefit your business, please contact us at firstname.lastname@example.org
Mike Holtzer – Owner, The Retail COO Group
Challenging, questioning, confronting! Experienced Retail / Wholesale CEO, COO and CFO with over 25 years of International Executive Management experience in public and private companies spanning over four continents: Australia, North America, Asia and Europe.
His proven leadership and operational management skills have assisted multiple wholesalers and retailers around the globe. His no-nonsense approach gets things accomplished quickly and efficiently. With his experience and pragmatic approach, Mike is able to identify the source of an issue and develop clear and concise solutions.
I know what you’re thinking. Surely we have enough great retail leaders on our home turf, right? Well, not according to the facts and figures. The people behind the large supermarkets and major retail stores in Australia seem to prefer the idea of been led by the British. In fact, more and more UK retail executives are being called upon for their services.
Now, I don’t know about you, but it bugs me a little bit. More than a little actually! That said, we wouldn’t have to look further afield for worthy talent if we had it on our own doorstep. Even Woolworths is believed to be getting in on the poaching action. So, why is this happening?
The reason is that some of the leading UK trained executives have the ability to take an average, or even good, retail store and turn it into a bloody great one. That isn’t to say that Australian leaders can’t do the same, but let’s take a look at why international retail talent is so desirable.
New blood = significant change
According to some of the big retail players, they experience less positive changes when hiring Aussies. However, management and leaders from abroad know how to make the right changes to stay competitive. It’s like a breath of fresh air for retailers that have struggled with strategic foresight and innovation. Many believe that foreign talent also have the edge because they have new unencumbered views.
So – what does that say about us? We’re afraid of change. I don’t understand why, though. Consistency and less change are not going to make you stay ahead of the game. In fact, it will do your organisation more harm than good. I’ve lost count of the times I’ve seen businesses stay in the shade while others are moving forward in the right direction.
The longer you avoid change, the more expensive change will become. That means you’ll spend more investing in things your competitors have already done. If you ask me, there’s no point in investing in change at all when you’re already too far behind everyone else. You should constantly be investing in change as your business grows.
Think back to 2008 when UK retail executive, Ian McLeod took up the reigns at Coles. His no-nonsense, low-cost strategy was a winner from the get-go. In 2015, David Jones headhunted John Dixon for the CEO role. John Dixon played a huge part in turning around the Marks & Spencer food business, which is an area David Jones were desperate to get into at the time. These are only two out of a countless number of UK leaders who have made their way to Australia.
Take a leaf out of some of the British-trained executive’s books and start delivering global standards and experience. If you don’t, an overseas leader might end up being your replacement.
You’ve landed the management gig. Let me start by saying congratulations. But before you get too carried away, it’s important to remember that (at this time) you’re nothing more than an outsider. That means you’ve got a lot of impressing and learning to do.
It’s also worth pointing out that resignations can follow structural changes, so you might find a few unwanted letters on your desk when you walk into your new office. Combine that with figuring out what’s what, and you’ve got one hell of a challenging road ahead.
In any event, there are some things you can do to bring yourself up-to-speed quickly and ensure your team accepts the recent change.
Start by gathering information
You can’t just walk into your new role and act like you know everything because we all know that isn’t possible. Plus, that fancy title you’ve just been awarded isn’t going to be enough to win over an existing crowd. If you want respect, you need to earn it.
The one thing you can do is gather as much information as possible and start teaching yourself about your organisation and team. You should learn:
It’s crucial to start off on the right foot and be prepared to ease the transition period for everyone involved.
Make a great first impression
Management changes in any company can make existing members of staff feel uncertain and apprehensive. When you first walk through the door, you can’t blame your new team for questioning whether or not you’re going to be a great person to work with. There’s only one person that can prove you are worthy of the role and their approval – and that’s you.
It’s likely that your personality and management style will differ from the person’s shoes you’re filling. That’s perfectly fine. Having said that, you need to show everyone that you’re happy to be there. Make sure your body language reflects that of a leader who genuinely wants to learn the ropes. You also need to keep your eyes and ears open and your mouth shut in terms of making important decisions early on.
Establish rapport one-on-one
Getting to know each employee as a person will help to form some trust and enable you to learn the fundamentals of his or her job. It also helps to put your new team members at ease with you as a person. Meet one-on-one and start by asking questions about their current tasks and responsibilities within the company. You can even ask about what they’d like you to bring to the table as a manager and any issues that have been hindering them before you arrived.
Once you’ve established a bit more about their role, ask them about their family and hobbies. You can also share some of your own stories and personal interests. It will show that you care about getting to know them, which in term, can lead to staff members being more open with you. Just make sure you make the time to meet up often with every person, especially in the first few months.
Hold team meetings
It’s a great way to grow your team and bring in fresh thinking, which are two things everyone in your organisation can benefit from. Holding regular team meetings also gives your team the opportunity to speak off the record and in front of each other. You can encourage interaction with some simple questions, such as:
These are all important questions to ask when taking over an existing team. You can add to them and ask your staff whether there are any other things they’d like to discuss in your meetings. As time goes on, your brainstorming sessions will change – but always ensure your meetings are about work only and not the personal traits of any employee.
I should also point out that you absolutely must take notes during group meetings. You might find that certain individuals make comments that would be good main topics for future meetings or valuable points that you’d like to follow up on in one-on-one sessions.
It’s a lot of work, isn’t it? However, you’ll be amazed at how quickly you can build a strong and loyal team when you manage your staff well from the get-go. Good luck.
Recently, I came across this article about the Leadership Lessons You Can Learn From Clemson’s Dabo Swinney. Some of you may not know this but I graduated from Clemson University so I was interested to see how the coach of Clemson’s football team applied the principles of Good to Great to achieve success.
There are great leaders and there are bloody awful leaders. As for the rest, they’re merely inbetweeners. Now, I don’t know about you, but I know which part of the bench I’d want to sit on. Not the left or the in the middle. I’d only want to be on the right side of that leadership bench.
While you can’t get a degree in great leadership, you can learn valuable lessons through experience. Even better, you can learn the fundamentals of leadership very early on in your career. And – quite frankly, the earlier you learn, the more likely you are to have a better and more successful future.
Did you know that when he became Clemson’s permanent head coach, it was Dabo Swinney’s first head coaching job? Obviously, the man had a lot to learn and that’s what he did. In his first three seasons coaching the Tigers, Swinney lost 16 games. In the following five years he’s only lost nine games. And in the last two years he has only lost one game each year and has vied for the championship one year and won it the next.
A great leader will continuously develop and improve in many ways throughout their professional career. However, you need to have a real desire for constant self-improvement. As a COO or Director, there will always be new things to learn that will help you mature and evolve. But that’s not all. You also need to challenge every member of your team to keep improving.
I mean – how else do see your company reaching new levels of success when you don’t allow room for growth? When you push yourself and your team, you’ll also notice a boost in positive energy, which will motivate everyone to keep reaching for excellence.
Surround yourself with star players
One thing that Swinney is famous for is accepting a lower starting salary so that Clemson could afford top coordinators. Here’s a man who was willing to sacrifice his own paycheck to ensure that he surrounded himself by the best and brightest minds. The best part though is that Swinney took advantage of those minds. He didn’t micromanage or try to tell them what to do; he just let them do what they did best.
The same rules apply to your business. Surrounding yourself with the best tech, marketing and operations experts means that you won’t need to constantly worry that everyone is doing their job. You can trust that everything is running as it should.
That doesn’t mean you should have favourites by the way. The moment you make it obvious that you prefer your top performers and start to ignore everyone else, you are going to land yourself in tricky territory. It’s perfectly fine for your employees to make mistakes and slip up every now and then. You just need to help these lower achieving individuals become star players.
Set expectations for your team and offer guidance to anyone who struggles. A great leader will know how to bring out the best in every member of their organisation. Plus, it shows that you care about them being happy in their work. Yes, surround yourself with star players, but don’t ever be put off by helping others to get their bums on that bench too.
Always be positive
Unless you’re a Vince Lombardi, Nick Saban or Bill Parcells, it’s unlikely that you can inspire and lead your team with fear and intimidation. If you can, that’s great, but otherwise, keeping a positive attitude like Swinney is the best approach.
Even when your company is going through a rough patch, kick the bad times in the teeth with some fighting spirit. If everyone else around you can feel your negative vibes or see that certain obstacles are getting to you, then they’re likely to behave in the same way.
Think about it. Can you picture a great leader who is well-known for being negative and fearful? Would you want to hire or work with someone like that? Always be unfailingly positive, regardless of how good or bad the situation. Of course, you need to be realistic and understand the brutal facts – the tough times are there to challenge you, but when you smile in the face of your troubles, you’ll learn how to navigate the bad times, and in turn, become a stronger leader.
Leave the ego at home
As Theodore Roosevelt once said; “Nobody cares how much you know until they know how much you care.” This statement is absolutely true. If you’re only concerned with getting credit when things go right, then you are never going to be a great leader. And anyway – no one expects you to be perfect. Nor should you expect your team to be the same.
Make sure you always put your self-interest at the back of your mind and show your people some support. This is especially important when your team has achieved success, even without your help. The same can be said for when something goes wrong. Have a little compassion and take responsibility for any bad decisions and anyone affected by them.
In a time where there are countless retailers competing for consumers’ attention – it’s a no-brainer that you need to find ways to make your business stand out. That means you should be doing more to not only optimise your marketing strategy but also to engage with your prospects and existing customers.
But how? Social media – that’s how. With the number of worldwide social media users expected to reach 2.95 billion by 2020, you have a huge audience at your fingertips. Furthermore, if you don’t evolve and increase your visibility with social content, then you risk losing out on a lot of business.
Using social media can help you to build awareness about your retail store and attract new customers. Platforms like Facebook, Twitter and Instagram, etc. also provide you with a wealth of information about consumers and which of your products are favoured by buyers.
The bottom line? Social media is a critical tool for converting prospects into repeat customers, offering you more than any other form of traditional marketing.
Photos and videos
Today’s customers live in a fast-paced world and they don’t always have time to read a lengthy article. Photos and videos are simple ways to captivate your target customers and grab their attention. It could be that you have a new product about to hit the market. Maybe you just gave your stores a redesign. Don’t just write about it. Share visuals. Consumers can’t get enough of them and they encourage interaction.
Social media for retailers is about personalising the seller to consumer experience and influencing customers’ behaviours. As long as your photos and videos are relevant to your business, they’ll help you to build trust between you and the people you want to reach much quicker, as well as humanise your retail brand.
Social media platforms let your customer service representatives respond to your followers’ comments and feedback in real time. This is gold for retailers, as it helps you nurture and maintain your relationships with your customers. You’d be surprised how many people turn to retailers’ social media pages to ask questions, comment on products or post any concerns rather than visiting the store or contacting customer care teams.
You’re lucky to have the opportunity to stay engaged with your customers online, so don’t ever waste it. And let’s not forget about Facebook Live. It allows your team or brand advocates to have a live conversation with your audience. That’s brilliant news, especially as people prefer to connect with you in real time for a more intimate experience and to get direct replies to their questions and comments immediately.
Believe it or not, you can actually get your customers to generate content for your retail brand. As long as you give them a worthwhile incentive, they’ll jump on board in no time. You could ask your social media followers to share or tweet a photo of a product they bought in your store to win a prize. Whether you only award the best entry or offer multiple prizes to make people feel they have more chances to win something, just be sure to pick a prize that’s relevant to your business.
When you ask your audience to contribute to your content creation, it’s basically free advertising. Plus, people are more interested in hearing about the things their peers like than your sales messages. But that’s not all. You will have created a way to continually engage with your customers, build and maintain relationships that truly connect and widen your reach.
Time to get social
In light of everything I’ve said, there has never been a better time to start embracing the use of social media to boost awareness about your retail business. Shoppers appreciate retailers who care about engaging with their online community, meaning they’ll be more inclined to buy your products.
Have you ever thought about the stories behind the great retail businesses you see? Many people think great organisations are often overnight successes with outstanding facilities and teams to make it happen. I can assure you that very few great retail businesses get to where they are now without persistence. Their transformations come from persistently and consistently building their retail empires for many years.
With so many Australian retail companies clueless to the fact that fads and gimmicks rarely work to jump-start their success, it’s no wonder they fail miserably in business. If you aren’t prepared to put in the time and effort it takes to go from good to great, then you’ll just end up in a cul-de-sac.
Don’t be a doom loop fool
Author on the subject of company growth, Jim Collins discovered during research that good to great transformations never happen in one fell swoop. So why are an alarming number of retail companies taking all kinds of detours in the hope of reaching their desired destination? It makes no sense to me. However, there are a few things that you need to look at.
The doom loop is a concept created by Collins that involves reaction without understanding, new direction, no build-up of momentum, and disappointing results that lead back to reaction without understanding. Think of it as a vicious cycle. You frequently attempt to launch new promotions with great fanfare to motivate your team and fail to produce sustained results because of the underlying problems. Waste of time, right? You bet your last dollar it is – and there’s your doom loop.
When you combine superficial solutions (such as promotions) with no understanding of your underlying issues, the doom loop occurs. Often, short-term solutions that have a temporary impact just end up making the primary problem worse. Don’t be a doom loop fool.
Be a persistent flywheel
Collins uses the metaphor of a flywheel to represent great companies that have momentum. A flywheel requires many small pushes to get it running in the beginning, and with every push, it gradually increases in speed. The breakthrough moment is when the speed begins to work for the organisation. No significant push can be identified as the one big push that makes a good company launch into greatness. Instead, it takes daily persistence and discipline.
The flywheel will only continue to move when your retail company:
It’s all about every member of your organisation wanting to be on a winning team while contributing to producing sustainable results that keep them motivated and excited because their hard efforts pay off. When your co-workers see that you have a plan developed from understanding, they’re more likely to want to be involved and help you achieve great things over time.
Companies that fall into the doom loop try and skip all the key steps to achieving the breakthrough moment and jump in blind. All quick fixes result in is a forward and backward movement that can’t deliver and last. Ultimately, you need the right people on your bus to begin with and the discipline to follow the flywheel approach to set a path for greatness – and stay on the right track.
Never Succumb To the Technology Trap
The experience most consumers will have with a digital retail service is a self-service check-out (like many major supermarkets); however, over the past couple of years, there have been a number of amazing technologies for retail businesses. This could include anything from the collaboration of Myer and eBay to launch the first virtual reality department store, Neiman Marcus’ “Memory Mirror”, Afterpay’s online payment instalments or Temando’s intelligent fulfilment solutions.
That said, when you hear about a new technology that claims to be the latest and greatest ever made, do you rush out and invest in it in the hope that it may add value to your retail business? If you’re the type of company with a habit of investing in technology for the sake of it, then you need a reality check. It’s time to turn your back on the technology trap and start using your common sense.
In his book Good to Great, Jim Collins it wasn’t a surprise that more than 80% of great companies do not rank technology as one of their top five reasons for making a great company. So, unless a technology fits squarely in with your Hedgehog Concept, you should ignore it.
Does the technology you use fit in with your Hedgehog concept?
Good retail companies often look to technologies to help take them to the next level, whereas great companies always use technologies as an accelerator to enhance their Hedgehog Concept. When a technology aligns with your Hedgehog Concept, you need to act like a great company and become a pioneer of it. If your Hedgehog Concept doesn’t drive the use of a technology, you either have to settle for parity or ignore it completely.
I’ve seen leading edge technologies that have been pioneered by great companies. However, I’ve also seen the same technologies in “comparison organisations” and witnessed them fail to produce the same results.
Before jumping on the technology bandwagon, you need to ask yourself:
If you answered no to both questions, just forget the bloody technology and move on. It’s so easy to panic in fear of being left behind, but you need to stop worrying about what technologies your competitors may or may not be using, as they will never be the answer to making you great.
The bottom line
Technology should only be used as an accelerator, rather than a creator of momentum. While I understand that it can be hard to dismiss the hype of current technologies, you need to have absolute discipline and steer clear of any technology trends that don’t support your Hedgehog Concept.
As Norwegian politician, Christian Lous Lange once said, “Technology is a useful servant, but a dangerous master.” Never use technology as a primary means of igniting transformation – but if you can, always become a pioneer in the application of carefully selected technologies.