Retailing Challenges

This case study examines how a small shop retailer has overcome challenges in a competitive market against big brand City retailers & other smaller local suppliers.

Background

The owner manager has a team of shop assistants whose role is to ensure customers leave the shop feeling exclusive. They stock top quality European-made goods. They use a local self-employed accountant for basic financial support. Whilst they have no business plan or marketing strategy they did invest heavily in a local radio advertising campaign 6 months ago and regularly advertise in the local newspaper.

Challenges

Their competitors are bigger city shopping stores, often with cheaper products from Asia and in prime shopping centre locations. Their bulk-buying and national advertising forces 10% of smaller stockists out of business every year. They also have other small retailers in the area who compete for business & who are now also advertising in the same places. Low unemployment in the area makes it difficult for businesses to attract and retain staff. Many local high street retailers are experiencing staff turnover rates of 30-50% per year. This is decreasing shopper loyalty and increasing employment costs.
The challenges for the owner manager include attracting shoppers from the City centre, maintaining margins, stimulating growth, and developing its employees who find it difficult to make time off work for training. The owner cannot predict when shoppers arrive & because they sell clothing items of interest mainly to women the shop has difficulty attracting male customers. Furthermore female shoppers with children makes it more difficult for staff to create time to establish relationships with the shop staff.
The many different types of small items in the shop also have short shelf-lives due to fashion-fads, and most items have to be imported from abroad with higher transport costs from dozens of different suppliers. The health and safety of all products is critical and many products are returned for replacement or repair.
The owner works long hours on her feet, and cannot afford the expensive back-up systems and controls for managing the complex logistics of supply chain management, which larger chain-stores can afford. There is a large warehouse area to manage too but no data systems for stock control or customer information.
Other larger local retailers buy goods & transport at better prices and sell for less. The owner knows of many other smaller retailers who have ceased trading because of bigger competition who also offer a variety of employment benefits, and full-time regional personnel and training specialists.
The staff are reluctant to extend their roles beyond shop assistants. The owner spends much time supervising them day to day as they need directing in a number of areas. There is no clear team leader & no-one wants to develop into that role. The owner still sells more than the rest of the team together. The team are unwilling to stay beyond opening hours 9 am till 6 pm for training as they are females with their own family commitments. The owner would like to open on Sundays but knows this will not be liked by the staff. One of the team is about to leave on maternity herself and she is the best performer. These problems are causing much frustration.

What should the owner-manager do?

Turnaround

The owner recognised she could not compete “head-on” with big brand names, so she turned the problem on its head. Instead of considering the issues from a supplier standpoint, she focused on the customer viewpoint. What mattered most to her customers?

Effective Merchandising At Point Of Sale

She created a stress-free relaxing environment with space to park outside the shop and space to browse inside with colourful merchandising. Several themed rooms were created intact to help shoppers visualise choices, and the wide range of products allowed a “One Stop Shop”. The climate had to be right for them. The owner also wanted to attract more people from the City Centre by being visibly different and to create an environment inducing less stress. This allowed a more relaxing shopping experience, which in turn enabled staff to build stronger relationships with her customers.

Training

A local business contact referred her to an enterprise development consultant who performed a “mystery shop”. This established if external support was needed without any commitment or obligations.
The “mystery shopper” had previous experience benchmarking best practice with other larger successful retailers. He took the role of an enquiring shopper by phone and face-to-face, noting specific processes and behaviours that helped or hindered the transaction from a customer viewpoint. The observations and analysis produced hard evidence that improvements were possible in the way the shop handled telephone enquirers and shop-floor transactions. The product returns were found to be due to customer mis-handling not product defects.
Feedback to the team showed that if they did not support change then the future would be insecure. They agreed to a series of one-hour interactive workshops after closing time to improve their selling skills and help design their own supporting systems to log successes. This included a quarterly bonus scheme & simple manual records to log improvements in their activities & track customer enquiries. The training attracted more telephone enquirers to her shop and helped shoppers make more of the right decisions when they visited.

Management Support

Immediately following the team training events the consultant held one hour reviews with the owner to coach her in managing her assistants and marketing the store to new customers. Increasing transactions by phone and face to face are being logged and customer service standards have been introduced by the team with external guidance tailoring best practice benchmarks from corporate retailers.
Each person began daily diaries of what they learned from the others. They organised additional weekly team reviews of successes and areas to improve, chaired on a rotating basis. “We used to close the shop at 6 pm and go home on Mondays. Our extra weekly training sessions have added fun as well as growing our business”. They are setting up customer focus groups & selling down the supply chain.

Conclusion

They focused on what mattered most – the customer. Building customer and staff relationships has precedence over building systems, although both are important in the long term. As a result they have created quick wins, changed behaviours, saved money and motivated people on both sides of the counter. Their business has grown tenfold and they have just received a prestigious award for service excellence. Further expansion and recruitment is being planned on a more structured basis as they have dealt with the critical day to day problems. They can now build on a foundation of a wider span of happy staff and customers, feeling exclusive and wanting to return.
Posted in Business Growth