Q. Mike writes, 

I’m a regional manager for a well-known retailer. A couple of months ago, a powerful competitor opened a new mega store in my region, which has resulted in a noticeable dent in our sales. As a result, head office recently cut my payroll by 35%, forcing us to reduce our manpower by 15%.  Despite these efforts, our bottom line is still suffering immensely. Any advice? 

A. Dear Mike, 

Too often, organizations who are looking to make cuts start with payroll.  Most experts agree however that doing so actually achieves the opposite effect.  Manpower has a direct link to customer service levels, which has a direct link to profit; where one suffers, so does the other. There are many other ways that organizations can make their supply chain and operations leaner that do not have such drastic and negative impact on profit.  Below are some places that waste often hides: 

• Suppliers; it is likely that the same suppliers that are supplying you are also supplying your rivals. Renegotiating your contracts with them will likely save you a great deal of money in the long run. One thing that could strengthen your negotiating position would be to have other regional managers within your company join you at the negotiating table. Many retailers have different suppliers in different regions. A supply strategy of this kind weakens your company against your rivals who are buying their entire product in bulk from the same supplier and are therefore able to negotiate a lower price per item.  
• Inventory; excess inventory is one of the most debilitating factors for an organization’s bottom-line and therefore it must be monitored continually. In order to properly address the issue, we need to understand its possible origin. Excess inventory indicates a misunderstanding of the local demographics. It typically comes down to two things: a greater quantity of unnecessary products than required or the wrong products altogether. Hence, understanding your local needs is the first and crucial step in eliminating wasted inventory and in increasing your bottom-line.  

Inventory specifics such as, size, style quantity, quality, price etc., is determined at various stages throughout the supply chain and therefore the door of communication needs to be open between yourself, your store manager, the regional sales manager and the regional/national buyer. Your store manager’s role is to communicate his or her customers’ needs, which should be based on the needs of the local people. For example, if your store is surrounded by schools, theaters and pubs, catering to seniors might not be a wise move.  Areas and communities evolve as should the market, and that’s what your team needs to look into. A one-size-fits-all plan is not what the market calls for nowadays.  Lastly getting your employees involved in the process of eliminating wasteful products is of a paramount importance. Your store managers should live and breathe the products their stores are selling so that their customers’ preferences are identified, properly communicated and acted upon. One of the fastest and most effective ways for your employees to get connected to their products is to implement a regional educational program based on The Fun Factor. If you are interested in investigating this option further, we suggest you take a look at The Brand Champion Program.

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Q. Lily writes, 

Until recently, I worked for an online home furnishing business, and after extensively researching a particular line of furniture we carried, I decided to focus solely on this particular line and to sell it in person as opposed to online. Strangely, now that I have moved from an online business to brick and mortar, this line of furniture doesn’t seem to be as attractive to customers. Any advice?

A. Dear Lily, 

There is quite a significant difference between buying a product online and buying it in person.  Shifting from online to traditional retail is like swimming against the current. In some cases, the two approaches have two different segments of customers. That said, my first suggestion is to maintain your business online and utilize it as a marketing tool for your store, (or what I would call, the showroom). People who shop online have better access to a plethora of product information prior to hitting the purchase button and given that there is no human element to the sale, where products are similar or identical, the sale will come down to price point.  Someone shopping in a store however, even if they have researched the purchase well in advance, is still persuadable via the provision of a good shopping experience and accessible/adequate information (including good customer service, a pleasing physical environment, etc.). Given this, what I should suggest you do in your store is focus more attention on merchandising making sure that all the features of the products are clearly presented and that each item is purposely priced.  This will help to maximize the physical shopping experience to make it as efficient and customer-centric as possible.

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Q. John writes, 

I have been running my own gift shop for two and a half years now and despite my best efforts, I simply cannot afford to hire any staff and I am literally not seeing my children during the week because of it.  If this doesn’t change, I’ll have to give up my entrepreneurial dream and go back to a 9-5 job to support my family.  Any advice you can offer would be helpful.

A. Dear John,

If your business has survived for two and a half years, I would say that you’re selling the right product in the right place, however, there are a few things I would suggest you look into in order to increase revenue.  Consider renegotiating your lease with your landlord to reduce your monthly expenditures. For example, your landlord maybe open to consolidating some of your utilities with the rent. You could also look at increasing the prices of some of your more exotic products.  Visit your competitors and confirm which items you stock that they don’t.  Those “hard to find” items can potentially fetch a higher price.  Finding an investor/partner to share your business can also be a wise endeavor. Lastly, many college/university students are required to complete work experience that is related to their field of study, and in many cases, their efforts would come at no cost to you with the various government grants supporting the programs.  I would advise you to contact the post-secondary institutions in your area for further information on such programs.