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High Performance Retail - Attention to Detail
by Rick Sidorowicz

 
   
 
   

I find it absolutely amazing to see what focusing on the details can reveal. Retail is detail they say, and although we all love to get into the big picture, the proof seems to always be found in the detail.

I am a big picture guy most often. I love dealing with strategy and architectures and systems and processes. Let's talk about the bold strokes, the challenges and the adventures - the vision of where we need to be. Let's get aligned to the strategy and make it real. But attention to detail is … execution, and execution is business. It's one great thing to know what you want to do - but it's another to actually 'make it so' and bring it to life for your customers. And there are so many missed opportunities out there that I often wonder what most executives really believe is really important.

A former associate in specialty retailing once showed me how everything in a store is revealed from the detail. As an area manager charged with execution of the strategy and standards Dan could tell all from a very detailed examination of only one fixture. He would walk up to any fixture and observe - the product - was it appropriate, the folds - were they crisp, the sizing - was it easy for customers to find, the cleanliness - did anyone care, the inventory - was it replenished or in the back. From one fixture he could tell if the manager and staff were 'with the program' and cared and took pride in their work and their store, or didn't. And from that he knew what to expect with shrink results, store standards, training, selling skills, paperwork and almost everything else. All from one fixture - any fixture, as any one reflected the commitment, pride and attention to the detail of execution.

And so several days a week I frequent a little deli for a great breakfast. When I do I like to read a newspaper. Not just any newspaper - I want the Globe and Mail. It's "well written and well read" and it's the best business paper we have up here. Outside the little deli are four paper boxes (wow - yes there are four dailies!) - The Globe (the one I want), The National Post (second best for business,) The Sun (maybe on a Sunday) and The Star (the heavyweight in terms of actual weight, number of ads and the number of trees killed.)

I want the Globe and Mail. It costs 75 cents daily and $1.50 on the weekend (and no I don't want a $%^# subscription). The also ran National Post costs 50 cents daily and $1.00 on the weekend (also no I don't want a ^$&$ subscription - listen slowly - I only want a paper when I want it!) I look at the boxes and it occurs to me that the Globe is a 50% premium over The National Post. That is a serious 'positioning' issue and advantage. Imagine … being the number 1 brand and charging a 50% premium over your next major competitor! Wow! Proof that positioning is important for the bottom line. And to boot - because I seem to never have any quarters I end up paying a "loonie" (that's our Canadian dollar coin) for whatever paper I can get out the box. I suppose that's the price I have to pay to get a paper (any paper) only when I want it.

So on my breakfast days I look for the Globe first, but more often than not I have to settle for The National Post. I think 'attention to detail' and do a little interesting research. I arrive earlier - the earliest - and find that the little paper box for the Globe is stocked with only two papers in the morning. The National Post starts with 8. I check out the boxes later in the day. The Globe is empty (usually by 8:15 am) and The National Post has 1 or 2 left by 5:00pm.

OK - so let's review this business case.

The Globe starts with 2 and ends with 0 - 100% sell through - that is a very good thing. Their gross revenue is $1.50 per day. They must be pleased with their ROI and logistical brilliance. The world is unfolding as it should and low and behold … they're selling everything they produce!

The National Post starts with 8 and ends with 2 - a 75% sell through. Their gross revenue is $3.00 per day out of the box, except they throw 2 away. The National Post is outselling the Globe by a factor of 3 to 1 in unit sales. That appears significant. The National Post is grossing 2 times the Globe in dollar sales. That is also very significant.

A little speculation:

I can imagine the little 'execs' at the Globe reviewing their sales performance vs. production and feeling very good about life in general. They must feel very 'efficient.' But should they be satisfied with their performance?

I can also imagine the little marketing types at the Globe examining their sales performance vs. their competition and wondering how the upstart National Post can out sell them 3 to 1. Are they nervous? Maybe they should be.

It must be the price differential. Let's not talk about unit sales - it's the bottom line that's important. With the Globe we command a 50% premium and have no waste - we are indeed the leading brand and must preserve our margin. Let the Post have the bottom feeders. Is that an accurate assessment?

The little marketing wiz-kids at The National Post are also pleased with their success in developing unit volumes. It's the price advantage! Let's keep hammering and we'll get there once we build our volumes. Shades of dot com doom!

The Head Office geniuses at the Globe conclude to hold their course, continue to charge the premium and spend a fortune more in advertising to promote their brand.

The Head Office geniuses at The National Post conclude their strategy is working, continue with their low price positioning, and decide to spend a fortune more in advertising to promote their brand.

The office bound execs at the Globe and Mail and The National Post are also preoccupied with developing subscriptions for daily delivery - that's where the money is - they say. But what about the boxes? Aren't there people out there who only want a paper when they want it!

And what about this very basic logistical stuff of not having any quarters anyway? So if the boxes are for those folks who only want a paper when they want it (and don't want a subscription,) why not make it a buck!

A little common sense attention to detail leaves me with a conclusion that the gurus at both the Globe and Mail and The National Post are very 'misguided.' Their assessments are incorrect. Their conclusions are inaccurate. And their resulting actions are wasteful and mindless.

Let's try a little attention to detail.

I want the Globe and Mail - why? It's better, and I don't care about the premium. They really do have the best product and it's worth the premium, (given the alternatives.) No need to advertise any more for me - I get it and I want it.

I don't want a subscription. I want the &$^$ paper only when I want it. And I am willing to pay (and usually do pay) a buck just to have it when I want it.

It looks like the minimum sales for a business paper out of these boxes is 8 daily - the 2 Globes and about 6 for the Post. That's the minimum, because it's happening. I wonder how many Globes could be sold if they were there.

I only buy The National Post because the Globe is not there. I am grateful that the Post is there for me but I still want the Globe. I am grateful but they are not my choice.

I want the Globe but I am disappointed almost everyday that they are not there for me - when I want them. I would love to punish them and cut them off but permanently but … the alternative is still … just the substitute - not the real thing.

Why does the Globe only start with 2 papers in the morning? I suppose a few years ago when this little industrial plaza was empty they did a study and found that to be the demand. Trouble is the little plaza is now full and they are disappointing many people every day.

So I ask the lady in the deli if my disappointment with the Globe is common. Guess what - almost every business type that comes in in the morning says the same thing. She thinks she should call to get the Globe to put more papers in the box.

So the Globe is preoccupied with selling subscriptions and advertising to promote their brand, and feels comfortable leaving the initiative to the lady at the deli to ask for more papers for the box. (Tells you something about where their heads are at!)

I conclude that the exalted ones at the Globe are misguided.

The National Post obviously has to get a little of the Globe's logistics gurus - if they sell 6 a day cut down on the waste, and take the pulse frequently to see if you should start with 8 or 7 or 6.

Why is the Post selling at 50% below the brand leader when they have stock when the leader does not? I would pay the price - because I need a paper in the morning and the Globe isn't there!

Do the marketing wiz-kids at the Post think their increasing unit volume trend is sustainable?

I conclude that the exalted ones at The National Post are also misguided.

So in a small way you can tell so very much about an enterprise from one fixture, or in this case one little paper box.

If you were a strategist with The National Post what would you do? Raise your prices as you have stock when number 1 does not? Raising your price just for the availability would generate a 50% increase in gross revenue on the same unit sales. This short term strategy could work as long as #1 is preoccupied with the 'big picture' and if you put the additional money into content - and developed your business as a credible and unique offering in it's own right and not merely as the alternative and 'substitute." You could use 'in-stock' as a short term advantage while you build a new and unique product. You're good, but still second best in this market. What do you need to do to be the best? Find out fast - and do it! Otherwise you will eventually be … history.

Do you think they will? I doubt it. Too many genuises caught up with unit volumes and give-a-ways and feeling good about spending mega advertising dollars. Hey - units are increasing! We're outselling the Globe 3 to 1. Let's keep hammering and one day we may make it - until number one wakes up.

If you were a strategist at the Globe, why not start with 8 papers in the morning and see what happens. Chances are you will sell 8. That would be a gross of $6.00 or an increase of 4 times your current gross revenue! And in the process you will annihilate The National Post, or at least see the real degree of pricing vs. brand and perceived value.

Do you think they will? I doubt it. Too many geniuses caught up with net margins and 100% sell throughs and feeling good about being efficient. In a way I think they have created the opportunity for their main competitor. They just don't seem to have … the attention to detail to see what drives their sales and profits.

So I wonder … even without me paying a buck most of the time … the number one brand could generate 4 times their gross revenue today if they cared about the details and executed effectively, and the also-ran could increase sales by 50% if they took advantage of their immediate opportunity. And this could be achieved with no increase in traffic or investment or marketing. But they don't get it and, unfortunately I don't think they ever will. They have lost site of the details - in this case … the little paper box outside the little deli.

The power of retail … an additional 6 papers x how many boxes x 365 days x 75 cents equals = a significant opportunity. And it's out there. It's left on the table.

I'd love to be a fly on the wall in the boardroom … no correction, I'd love to be the CEO in the boardroom … when the marketing geniuses either from the Globe or the National Post come in to whine about how it's the economy that's affecting business and their performance. I would just love to hear them externalize about all of the valid reasons they can't deliver results.

My first thoughts would be … you're misguided and you're fired … but then being a seasoned professional and realizing that I am the one doing the 'guiding' I would of course temper my reaction and say "check the boxes … I think we have opportunity out there."

It is really all in the details … to make it so … and to bring it to life for customers. And there really is so much that is left on the table.

When times are tough - you have to get it all.

Over.


       
   
 
       
   

The Author

 

Rick Sidorowicz is the Publisher and Editor of The CEO Refresher and
the Minister of Culture of High Performance Retail.

 
       
   
 
       
   
Many more articles in High Performance Retail in The CEO Refresher Archives
 
       
   
 
       
   
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Copyright 2001 by Rick Sidorowicz. All rights reserved.

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