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Ready To Rethink And Refocus?

Thursday, October 30, 2008

Ready To Rethink And Refocus?(GIFTBEAT)It's enough to disillusion even the most confident of retailers: Not only has the structure of the business world changed with today's global market, but the sagging economy is being blamed for causing store traffic counts and sales receipts to freefall. Sam Geist, president of Markham, Ontario-based Geist & Associates Inc., entrepreneur, marketing specialist and author of "Execute…or Be Executed," is here to help Giftbeat readers pinpoint sources and solutions to their retailing dilemmas.

Q. What changes in the business world are impacting a retailer's ability to succeed?

A. When you look at the broader picture, you see that we're now living in an altered business world. [In the past,] whether [you were] a big or small company, you ran the company, made product, sold product, tried to get customers and maintained margins. Technology really changed everything. Suddenly the world became a global marketplace. Small business could masquerade as big business. There are no borders. You have competitors that you never knew existed. Yet with all this structural change smaller retailers are still trying to live in yesterday's business model.

Q. Your first career was in retailing. If you could turn the clock back, what would you do differently today?

A. First, I'd look outside my business since research has shown that ninety percent of what we learn is found outside our business environment. It's an owner's responsibility to be externally savvy. Small retailers grab one idea, massage it, execute it and that will drive their business forward. But most retailers don't do that.

Second, I would learn about demographics because 70 cents of every dollar is related to consumer spending. We need to understand who our customers really are, what their needs and wants are.

Third, I would look at the people side of my business and let [my employees] do more. People are better and capable of more than we give them credit for. It's scary but true: In North America, one in five workers is actively disengaged. They've resigned but forgot to tell you. The cost to businesses is $375 billion a year. I would use the statistic that 18 minutes of more productive work a day will give the economy a boost of over $450 billion per year.

Finally, I would realize the difference between a Macy's and a small retailer: no real difference, [only] a bunch of zeroes.

Q. How can store owners handle today's down economy?

A. It's going to be tough [to succeed] but it's doable. People are still spending although they're being more cautious. Look at your inventory, cash, margins, people and resources. Find ways to maximize your potential in each of these areas. Take charge of your business. Stay on top of your basics. They're the bedrock of your business. Don't let complacency or mediocrity creep in. Be alert, be the best you can be. Don't look backward: Rethink and refocus.

Q. What "tools" can retailers use to rethink and refocus?

A. Rethink and refocus by asking yourself tough questions. Ask the toughest question in business today: Why should someone do business with me? [Don't settle for easy answers such as] quality, service and value, because they're entry-level tools. An American Society for Quality study found that 68% of customers are lost because of [a retailer's] indifference; while 14% are dissatisfied with the product; and 9% move away. The overriding issue is the indifference of your people in the store. That starts with you, the owner, and continues right down to the stock person.

[Store owners] have to move themselves and their companies from "thinking" to "doing." We can't blame a down economy for all our problems. We need to accept some of the responsibility. We spend too much time on strategy (the thinking) and not enough time on execution (the doing). When I ask audiences to rate themselves on execution, I find the average [out of 10 points] often is about 6.2. A 6.2 rating—or even a 7.2 rating—won't cut it today.

You can have a great business plan but if you don't execute it, it's only a dream. Execution trumps strategy. Historically, 80% of [a business owner or management team's] time was spent on strategy, and only 20% on execution. Finally that's changing so 50% of time is spent on strategy and 50% on execution.

Q. Please discuss the issue of business owners who overpromise and under-deliver to customers.

A. "Customer Think 2005," a Web-based study, asked customers why they didn't return [to a store] and also asked companies why they thought they lost customers: 72% of customers said they left because of the customer service (i.e., the store overpromised and under-delivered). When the question was asked of companies, only 21% felt customer attrition was due to overpromising and under-delivering. That's a 52% disconnect.

In the same study, 23% of customers said they left because of price, while 50% of companies thought price was a significant issue in customer erosion. And 31% of customers said they left because of quality, while only 26% of companies thought quality was a factor.

[Retailers] have to live up to their customers' high expectations. Customers are looking for a positive experience [when they shop]. They're busy, and they're time poor. Time is the currency of this decade. If I go into a store but can't find someone to assist me, I'll shop on the Internet. It saves me time, and simplifies the process.

When I go into a store, I don't expect to see the same product on display forever. Show me something different [in your store], and I'll buy it. Customers are looking for new, for exciting. When I go into a store, I don't want to see what I just saw in that last store. I want to see something different. Differentiation is key. If the marketplace goes left, go right. When we opened our store we felt we were unique, different. But along the way we lost that spirit of differentiation and settled for being a "me-too."

Finally, people do business with people they trust. Be what you say you are. Do what you say you'll do. Turn knowing into doing. Customers appreciate that. They come back. They bring their friends.

Note: You can reach Geist at sam@samgeist.com. Log on to www.samgeist.com to order his book "Execute…or Be Executed: Eighteen Ways to Move Strategic Thinking to Strategic Doing" (2008).

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