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					LEMONADE ANYONE?



INCREASE PROFITS,

 GAIN MARKET                                SHARE,

                          ADD VALUE,

                                &

                CREATE A DYNAMIC CULTURE

                            IN THIS

                    ECONOMIC ENVIRONMENT!




                                By
                           Ric Anderson
LEMONADE ANYONE?
The current retail sales results from many of the major retailers tell the story. We are beginning a
new era of the “purchasing mind set” by the Consumer. The days of easy spending just because
someone wants something are fading quickly. The 4th Quarter will be difficult and 2009 is not
looking too strong for Retail either. There is an applicable adage for these times:



       When given Lemons – make Lemonade!
It may be an overused cliché, but it doesn’t mean that it doesn’t apply to the current Retail
situation. A few astute Retailers will understand how to turn this scenario into a significant
opportunity. What is that “Opportunity”?
   OPPORTUNITY: In the next 24 months achieve the following:

               Increased market share.
               A more profitable business model.
               Growth strategy that is sustainable.
               Improved scalable model.
               More productive Culture through “an engaged Workforce”.
               Dramatically improved “Customer Experience” that has a much stronger relevant/
               value ratio for the consumer.
Already the doubts and mental barriers are going up. Try to keep an open mind and look at the
Retail climate from a different point of view. Maybe – just maybe, the following discussion will not
be entirely appropriate for your business, but it will generate new ideas and thoughts about how
to address the concerns you have today and for the future.
That is the intended purpose!




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NEED FOR IN-DEPTH DEFINED STRATEGIES!
Retailers are not known for their development or execution of in-depth, long-term strategic plans.
To fully realize the OPPORTUNITY on their plate, they are going to have to go outside their comfort
zones. It will require the development of a comprehensive, multi-dimensional analysis to create
the Ideal Brand Position and Financial Business Model strategies. It has to be built from the ground
up, with inclusion of the entire workforce.

Many Retailers and Consumer Brands will not survive through the next few years. We are already
seeing several major retailers going into bankruptcy and many more are becoming questionable.
They are taking a variety of actions; some are well intentioned but have devastating long-term
effects: Reduction of stores, personnel cuts, reduced marketing spend and numerous other cost
reductions all in the name of being more profitable, when in fact it is the under current issues of
product and underperforming CVP, that is eroding the health of their business. The overused
excuse for poor businesses is: It’s the ECONOMY! There is a much more logical and simple
explanation:

         The Products, Services and Customer Value Proposition offered at these
         Retailer’s, no longer have a relevant value in the customer’s mind.

How well do you think the customer is reacting to these reductions in elements that affect their
Customer Experience in a negative manner? The interesting factoid of these companies is that
few have taken the responsibility of developing a Customer Value Proposition that has been
aligned/communicated through-out the company or one that has any merit in the Customer’s
eyes. Their competitors are still in business and because of the loss of competition, they are
stronger than before. Al and Laura Ries discuss this very sequence of events in their book, “The
Origins of Brands”.

THREE FUNDAMENTAL RULES

   1)             BUSINESS 101: Have a “Relevant Value” to the Consumer
        The purpose of a company is to provide products and services desired by the Consumer.
        Without a product or service that has relevance and a perceived value to the customer,
        there IS NOT A BUSINESS! It is the degree of those perceived values, of the product, to the
        customer’s needs that determines the success, growth, sustainability, and profitability of
        the company.



   2)             FOCUS: Better to be strong at one product that weak on several
        Good Better Best is not a strategy that lends itself to the future for many reasons; Need for
        a clear point of view, “Authority” in a Category, changing demographics, and the
        expense of trying to attract multiple types of customers. Create your own herd of “Purple
        Cow” (Seth Godin) categories from your assortments and be meaningful in your market.



   3)                 INCREASE MARKET SHARE: Take from the competition
        Develop a “Take Market Share from the Competition” mentality as part of the internal
        Culture of the Company. Create processes that allow information to flow upward
        unfiltered. Encourage the Organization to bring forward innovative ideas on taking Market
        Share on a focused product category and how to be the “Authority” of that product in
        the customer’s mind. (“Focus” by Al Ries)


                                                                     | LEMONADE ANYONE?       3
STRATEGIC AND CONTROLLED GROWTH:
Most Companies have grown organically and have developed like climbing rose bushes; they
have many different sizes, colors and degrees of health for various reasons. Some have strong
roots in good soil. Others have been trimmed once or twice and come back stronger than the
others. Some have had a tree grow up next to them and block the sun. It was not long before
they withered and died. The issue is that few Retailers understand the need for proper gardening
or see the need for self examination. The results of the previous year have left a distinctive path
both in the Companies Brand Position and the Financial Business Model of the company. Let’s
walk through an example that we have all seen happen in one form or another. It takes no
stretch of imagination to see this example as a true possibility.

EXAMPLE: (For the purposes of this discussion, examples will be centered on a family apparel store. The principles are
applicable to most Consumer Product companies.)

Dresses had an excellent year in both sales and profitability. The buyer was a veteran, both at
the store and in the marketplace. She negotiated special purchases from her best brands, a
Mother’s Day campaign with Marketing, and in-aisle exposure from Store Operations. Take your
hat off to this buyer as she has done an incredible job!

Men’s Casuals, just the opposite happened. The area had performed below normal standards.
The tenured buyer had left at the beginning of the year and 2 months passed before a
replacement was found. The new buyer (also a veteran in the Market) came from a company
that had a different customer profile and internal processes. There was a learning curve as the
acclimation took effect. The interruption to the business affected sales, profit and vendor
relations.

Brand Position: For years the entire store had built an unstated reputation as a great place to go
for “casual wear” for the family. Vendors came to the store to launch new brands and test new
products. The store was “top of mind” when the customer considered a need for Casual
Apparel.

CAUSE AND AFFECT DECISIONS:
         If the decision is to increase the Dress business what affect does that have on the rest of
         the store?
         The selling floor of the Store is finite! There are physical limitations to the amount of
         inventory that can be properly displayed. What areas do you take the space from?
         If the customer comes for a Dress would they not expect to find Dress Shoes, Hosiery, and
         Accessories to match? If they don’t, what does that do to their Customer Experience?
         Dresses do not make the GM% of other categories, but have a better GMROI.
         Dresses have not been a traditional strength in the Brand Position.
         Men’s Casuals have been a destination for the current customer.
         The Market Basket is always larger with a Men’s purchase.
         The Brands in Men’s give a strong, better grade image to the customer.
         Do you give a proportional increase to Men’s Casuals or plan to take it to the level that
         should have been achieved in the prior year?
         If the Women’s business grows out of proportion will the Men’s Shopper become
         disenchanted and reduce frequency?
         Will Vendors that have Casual Apparel be less incline to contribute to Marketing or In-
         store Visuals?




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QUESTIONS TO BE ASKED
The list of questions for the example is endless, but one can start to see the chaotic and risky
paths that can easily occur if there is not a clearly defined Brand Position Strategy”, supported by
a communicated “Customer Value Proposition”, and aligned with a “Financial Business Model”.
Because one product category sold better than another, is not automatically the correct reason
to increase that category in the future. On the other hand it may be the right action. Without
internal reflection judged against a standard, one does not know the effect of those actions.




                              The decisions made in the financial plans for these two separate and
usually isolated areas will dramatically affect the long-term results of the Company through the
changes in Brand Position and Financial Business Model. For every action there is a reaction &
ripple effect in the Customer’s Mind Set and consequently in the business itself. This is a typical
example that takes place every day with little thought to the consequences.


The Company has a “Survival Need” to understand the global effects each decision will have
toward the future, whether customer based, financial or brand position:

        How have the results and developments of the last year affected the longer term
        strategy?
        How has the Marketplace changed;Have there been Social and Economic Shifts?
        What have been the actions of the Competition?
        How have different Revenue Channels affected the Strategies?
        Are the results deviating from the original goals? If so, is it OK or not?
        Do the results reflect changes in the market?
        Do Short-term or Long-term changes need to be made in the Brand Position and the
        Financial Business Model?

These just a few of the types of questions that need to be asked. Few Companies take that “Hard
Ball” (by Lachenauer & Stalk) look in the mirror for internal reflection and make appropriate
strategic decisions from an in-depth analytical review. Those defined Pillars of the Strategy must
continually be reviewed and the proper adjustments made to maintain a healthy, viable
business.

Achievement of the 2 years goals may only be accomplished through “a defined Ideal Brand
Position and a corresponding “Financial Business Model” that has been aligned and
communicated to the organization. These goals should be reviewed as to progress by
predefined time periods, to determine success and necessary adjustments.

GOALS
               Increased Market Share.
               A more profitable business model.
               Growth strategy that is sustainable.
               Improved scalable model.
               More productive Culture through “an engaged employee workforce”.
               Dramatically improved “Customer Experience” that has a much stronger relevant/
               value ratio for the consumer.


                                                                    | LEMONADE ANYONE?       5
TACTICAL PROCESSES FOR STRATEGY DEVELOPMENT
USE OF 4C PROBLEM SOLVING IMPLEMENTATION:
      Critical Thought Process: (see appendix) Set up the problem from “current state to desired
      state.” In a team process, walk through the issues, timelines, actions needed, ramifications
      to actions, etc. The idea is to completely think through and anticipate every issue
      possible:
               Identify current/future roadblocks, their degree of problem and the timeline in
               which they occur.
               Identify every known Sweet Spots and timeline of occurrence in the process.
               What possibilities exist to improve or create new Sweet Spots for the customer?
               Once the current process has been identified with Roadblocks, Customers Sweet
               Spots and a timeline, VALUE is added through the removal or reduction of the
               roadblocks. In doing so you have developed new, innovative competitive
               advantages, as you are out performing your completion that has similar issues but
               without the remedies or solutions. In many cases this will not only be strengthening
               of the brand but will incur financial improvements as well.
      Customer Sweet Spots: Every company or Brand has hundreds of touch points with the
      customer; real or imagined, physical or mental, important or semi-insignificant where the
      customer has to make a decision about the Company or the Brand. Imagine each one,as
                          individual toggle switches, that the customer mentally turns On or Off.
                     When enough switches are one way or the other, purchasing decisions are
                     changed or re-enforced. (“Made to Stick” Chip and Dan Heath) Review
                     by Product Category – Store, On-line and any other channel.


      Competitive Advantages: Companies in similar businesses, have similar situations,
      problems or Roadblocks in their quest to achieving the highest possible productivity.
      Review by Product Category by Revenue Channel.
      Culture Engagement: Reach out to your own teams to find new and innovative ideas or
      solutions that can create significant competitive advantages from originally perceived
      Roadblocks or new positive customer Touchpoints.

FUTURE STATE:
      Build the Ideal Strategic Brand Position and Financial Business Model: The brand position
      that supports your financial plan, creates loyalty, is sustainable, can be scaled to the level
      desired, and builds a culture that can support the strategy?
      Create the Pillars of the Business: Customer Value Proposition, Product Categories,
      Services, Revenue Channels, etc; that the company should be built upon?
      In-Depth Analysis: The IDEAL STRATEGIES have to start with several different types of
      analysis.
      Unique Strategies: Each one has its own traits that affect the customer’s perception and
      the business model. Each project has to be completed, studied, and conclusions
      reached.
      Cross Reference Analysis: In most of the data reviews, there will be a need to cross
      reference between them. The best answer to one analysis might not be the overall best
      conclusion for the company. Which ones create the best overall Business Model? Some
      conclusions will be determined by subjective judgment and with reliance on industry
      experience.


                                                                    | LEMONADE ANYONE?        6
ACCESS CURRENT STATE OF STORE BRAND POSITION AND CVP:
The first step in a Company’s Self Reflection is to understand the current state:
          What is currently deemed to be Brand Position and Customer Value Proposition set by the
          Company Leadership?
          Determine whether the rest of the Organization knows, understands and aligns with these
          proposed core values?
          If the Organization in not in agreement, what is their understanding of the definition of
          these values?
          How large a gap is between the Leadership’s viewpoint and what the Organization
          understands?
          Through an independent study understand what the customer truly perceives about both
          values.
          Are there major differences from “Reality” and what either Leadership or the
          Organization perceives as the truth?




MARKETPLACE EVALUATION:




MARKET ADVANTAGES: Unlock the true values and opportunities of the Company! What is the
Company’s niche in the marketplace? What are the Purple Cow products, services or attributes
that allows the Company to stand out in the herd of today’s proliferation of competition? What
comes to mind for the customer when the stores name or product is called out in some manner?
Is this “Authority” level suitable for the Brand Position desired? Does it fit with the Financial Business
Model?

What is the correct Brand Position for the Store, to build a Financial Retail Model that is both
acceptable and achievable? A Model that is profitable, has sustainable growth, scalable, and
most important achieves a strong emotional connection with the Customer? (“Lovemarks” by
Kevin Roberts)




                                                                         | LEMONADE ANYONE?       7
MULTI-DIMENSIONAL ANALYSIS PROJECTS
Missing in most Retail Analysis are the comprehensive comparison and integrated cause/effect of
the additional projects listed below. Each of the Projects plays a significant role in the Brand
Position, Financial Model, and will show different variations by time period.


       Category Productivity Projects: (Sales Sq. Ft., GM$ Sq. Ft., GMROI by Sq. Ft.) This is the
       typical starting point on any retail productivity analysis. Understanding the productivity
       being achieved by product category is the beginning. What is not typically added to this
       review is some type of grading scale to the location of the floor space; Ex. The front of the
       store by the door should by reason have higher productivity than the back corner. There
       needs to be a qualifier for those categories that have the worst locations.

       Affinity Reports: The definition of this review is to determine the probability of purchase
       behavior when a customer buys one particular category; what is the next most likely
       category to be purchased.

       Category Penetrations to Total Company: (Sales, Inventory $ at cost, GM$, Sq. Ft.)
       Compare Penetration totals of each to see where there adjustments need to be made to
       increase productivity and build the desired Brand position; Ex. What does the customer
       physically see in a visit to the store? Does it support the Brand Position? This is particularly
       revealing as to the allocation of assets and contribution by a category. Factors such as
       Price per item, competitive elements, and location in the store should be noted.

       Category Breakdown: Which Departments and SKU’s produce the most Sales, GM$, Units,
       and Frequency? How do they vary by time? Can models be created that would give
       predictions with changes in purchasing behavior?

       Market Basket: Which categories produce the highest sales and profitability per Market
       Basket? This factor is particularly important as it has to be considered in building the
       financial as well as the category models. Cross reference with Frequency results.

       Frequency: Critical elements for the best business model are which product categories
       create the most frequent visits. Find acceptable methodologies to cross reference Affinity
       and Market Basket to generate most footsteps, strong brand image and highest profits.

       Marketing Spend: What is the Marketing Spend by product category and penetration to
       the total? Each category has marketing in different types of channels. Does there need to
       be some weighting for the expense by channel? Cross reference with Profit, Market
       Basket and Frequency.
       Emotional Connections:
              How many touchpoints both physical and mental can be contributed to a
              particular category or individual product?
              Do they change by time period?
              What is the result of these touchpoints – positive or negative?
              What are the solutions to negative touchpoints?
              Where can additional positive touchpoints be added to the CVP- Store, Website,
              Customer Service, etc?




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       Time Period: Each of the reviews need to be broken down to weekly time periods and
       sub-totaled to months, quarters, seasons, and yearly. Major Holiday periods such as
       Christmas, Mother’s Day and Father’s day need an individual collective time period.

       Pricing and Exit Strategy: Define the pricing strategy for all product categories vs. the
       competition and internally. Do all the categories follow the same path? If so, should they?

       Alternative Revenue Channels: Most Retailers today have a Commercial Website. Others
       will have Direct Mail, Catalog, and B2B revenue channels.
               The sales, GM$ and expenses must be taken out of the totals to give a 4 Wall
               analysis.
               Alternatively, the use of these channels has many opportunities. How do they
               affect the Brand Position and Business Financial Model?
               What is the overall potential for each Revenue Channel? Which Product
               Categories can best take advantage of these Revenue Channels?
               Can they fit into the entire Strategy?
       Questions that have subjective conclusions:
              Products with low GMROI but drive frequency to the store?
              Which Products create your Purple Cow? Are they competitive advantages?
              What is the Penetration by Product Category? By Time Period?
              Which products or brands create the Brand image desired, the frequency
              needed, the volume required? What is the correct size of each of these businesses
              to the Strategy Model?

Develop acceptable standards aligned by the organization, when combining statistical data with
subjective data. It is the combined interaction of the two that will allow the Strategies to become
significant competitive advantages in the Marketplace. These are not the only Reviews to be
analyzed, each company will have additional reviews to add that will be particular to their
company and Marketplace.



PRODUCT ASSORTMENTS




Which Categories are strong pillars for the CVP and Brand Position needed for the Strategic
Business Model.
       Categories to be increased or decreased?
       Amount of Space given to each Category?
       Assortment adjustments by department within Categories.
                Wider but no depth?
                Narrower with depth
                Eliminate Departments- add assortment and depth to other departments?
       Styles to be increased by depth models? Colors? Sizes?
       Penetration by Time Period of Product Categories?
                Would adjustments allow more productivity and profit?
                Could adjustments improve Customer Experience?
                Can adjustments be made easily?
                If deemed necessary what actions need to be taken?
       Vendor Focus

                                                                    | LEMONADE ANYONE?      9
PHYSICAL STORE ATTRIBUTES
What is the logical transition and navigation of the customer throughout the store to achieve the
best Customer Experience and largest Market Basket?
       What are physical barriers?
       How do you turn that to an advantage?
       What physical changes in space, inventory, marketing and personnel need to be made
       by time periods?
       Focus Areas
               Which Vendors or Brands to be called out?
               What Products or images should be on the end caps?

CORE PRODUCTS AS A BRAND STRATEGY

        Win their “Heart and Soul” (Married to the Brand – McEwen) through meaningful products
and services. The Brand should strive to become a cultural icon. Categories that have high
margin, fast turn and develop the most intense customer loyalty are the DNA and foundation of
the merchandise assortment. Product Shops and Vendor Concepts are built around the Core
Products. Use these Categories to branch out to the importance of additional products, services,
and marketing. “Sell their Mind” before they ever leave their home (Positioning by Al Ries and
Jack Trout). Create product categories that the customer sees as destination products. Develop
a Brand with multiple products that are relevant to their lives and serve as “must haves” or
“always great items”. It is not possible to win a Price War, so win the Mind War.

UNIQUE ITEM BRAND STRATEGY
 Each item will stand alone and be able to be sold as a unique product! Create an emporium
atmosphere of items directly related to a congruent customer base. It is the era of “being
unique” not one of conformity. The Brand should strive to develop a reputation as a destination
of “always finding something special”; a Brand that the customer perceives as the authority for
the newest updates of each product category. Create an emporium of individual items and
product categories, relevant to the customer’s lifestyle that has new treasures for each shopping
experience.

COMPETITION
An honest, realistic understanding of the company’s competition attributes is vital to the
development of the Brand Position. If a company was first and already holds the position desired;
obtaining that position will be difficult.
       Who are your major Competitors?
               Local or National?
       What is their Brand Position?
               Is there crossover with your company’s BP?
       What is their CVP?
               Do they actually fulfill their CVP or is it one of their weaknesses?
       Where do you go head to head?
               Product Category?
               Pricing Strategy?
               Locations?
               Service?
       Where are they strong and what are their weaknesses?
               Which ones can you easily attack for Market Share?
       In what manner can they fight back and would they?
       Develop strategies to” TAKE MARKET SHARE” profitably?

                                                                   | LEMONADE ANYONE?     10
               What is going to be their reaction?
ONLINE STRATEGY




The use of the Internet as a commercial site and as a means to emotionally connect with the
customer will be a vital tool in development of the Brand Position and creation of a CVP that is
fully accepted by the customer. Essential to the emotional bond with the customer is a complete
“Internet Customer Connection Strategy” that engages the customer and creates “Authority” for
the Brand:
        Economic Commerce Website: Categories the company can have “Authority”, highly
        profitable, defendable, and high growth.
        B2B: Ability of local businesses to use and obtain Corporate Discounts that drive the
        customer to the store frequently.
        Surveys:
                Customer insights to store, services, future product
                Store: What do they need? What is missing? Competition? New Innovations and
                ideas! Best Practices!
        Social Media:
                Blogs: What is going on in this Customer’s life: Health, Children, Managing Work
                and Home? Best of Everything in a City: “Hotels, Trips, Restaurants etc.
                Personal Networks: Face Book type site
                         Profile – birthdays, politics, favorite foods,
                You Tube Contest of Ads for the Store by College Students
                Photo program that allow a person to see themselves in many different garments
                or colors
                Tutorial on quality of products, how best to use them
        Loyalty Programs: Built on Relevant Services
                Easy to understand
                Simple to use
                Emotional Connections to the customers’ needs
        Online Magazine with congruent marketing:
                Relevant and timely articles
                Recipes of the month
                How to Do tips, Decorating ideas
                Home tips Online Closet- how to put things together.
        Registry Strategy: Registry is more than just gift giving, it is list of everything she every
        wanted, needs or didn’t know that she wanted:
                Birthdays, Anniversary’s, Graduations
                “if you are looking this is what I want”
        E-mail strategy:
                Clearance opportunities, new product, or Services
                Personal congratulations – birthdays, graduations, births.
                Time and use based emails: product has worn out, product use is over, out of
                product, improved product
                New Products
                Community Events
                Seasonal: Winter Merchandise, Swim
                Virtual Mailers by Product Category
        Store Operations:
                Training for Management and Sales staff,
                Best Practices, Innovative Ideas.

                                                                     | LEMONADE ANYONE?       11
               Vendor information
               Product Information

MARKETING: LASER FOCUS TOWARD THE CUSTOMER




The Customer Marketing Strategy is the combination of all print advertising, in-house collateral,
product mix, store décor, profile of average associate and service levels offered by category. All
merchandise and marketing elements must be within the laser focus of the “Customer Profile”
and “The Vision”. No deviation can be allowed if the customer is to be emotionally connected
with the Brand. All Marketing no matter the type must reflect the overall CVP.
        Develop multi-media plans for both short term and long term.
        Co- Marketing with Congruent Companies of the customer
        OWN all Personal Celebrations: Births, Graduation, Promotion, Birthdays, Mother’s Day,
        Fathers Day, Halloween,
        Use of “BIG” GWP’s to drive sales, increase brand awareness, create image, and build
        community interaction: DVDs, Roses in the Spring, Chocolate, T-Shirts, Golf Balls

COMMUNITY
Each store should be an extension of the community in which it is located. Marketing funds have
to be available to allow each store manager to able to make investments in areas such as local
charities, schools, etc.

MERCHANDISING ROUNDTABLE
Core team of Merchants, Inventory, Marketing and Operations meet monthly to discuss Brand in
terms of Product, Services, Stores and personnel as on- going review of the best fit.
       Does product fit into Profile?
       Does it hit quality, fashion, value and emotional standards?
       Does it add to the overall Value Proposition?
       Do the stores continue to represent the customer?
       Does the website offer more value?
       Etc.

DEFINE THE DESIRED CULTURE: CREATE AN INTERNAL CULTURE THAT IS ALIGNED AND ENGAGED IN
THE COMPANY’S STRATEGIES.
BUILD CULTURE- MAXIMIZE PRODUCTIVITY OF PEOPLE
       Build a team that understands, knows how and wants to “THINK” about a Strategy that
       evolves builds the brand, sustainable and profitable.
       Culture of Test/Learn, Innovation, and an open mentally to new ideas.
       Empower employees to participate in all strategies, processes, and policy:
           Open discussion
           Exchange of ideas
           Tests of Innovation
           Reward insightfulness, passion, innovation, engagement
           Cut all those that cannot accept or participate
       Use a “Best Practices” methodology of competitor’s practices as a means to improve the
       brand and increase profitability. What can be used, borrowed, changed etc?
       Independently, have each employee list 10 factors that are common to each of their
       customers. The answers may reveal some illuminating unknown facts of the customer.
       Make sure that each employee knows who its current customer really is and the traits that
       are common to each of them.


                                                                   | LEMONADE ANYONE?      12
        Having and using this knowledge will be in instrumental in creating the proper
        merchandise mix and marketing strategy.




 YEAR 1




Semi-radical changes in terms of traditional merchandising, marketing and HR
thought process need to be made for the first round of the journey.

BACKGROUND AND EXPERIENCE
Those that are true merchants have been through this before and have the experience to fall
back on to create at-once plans to compete in these economic times. They will be able to
navigate in these waters for the short term without destroying the creditability of the store or
brand.

SHORT TERM GOALS
       Survival
       Maintain or increase footsteps in the door.
       Increase Market Share by taking Market Share from Competition.

TRAFFIC TO THE STORE
If you can accept the fact the there are going to simply be less purchases by the customer then
the goal is to make sure that the customer and those purchases are in your store!

MAINTAIN A PROFIT PERIOD WHILE BUILDING THE BRAND
Staying Profitable and building the Brand while going through this difficult time period will not be
easy. This is where innovative thinking is needed. It requires collective cooperation and for release
of individual agendas from the ivory towers all companies have.

NEW PARAMETERS FOR PURCHASING
Going forward every customer will create a different set of purchasing decision parameters than
were used in the past. Value, Need, Convenience, and Customer Experience are going to be
more prominent in making buying decisions. Customer purchasing is going to come under
incredible scrutiny as Competitors have Sales, Bonus Items, proactive markdowns and even
“Going out of Business” clearances to get customers in the door.

COMPETITORS
Review Competitor’s History during this time period. With the mindset of “Taking Market Share”,
what can be done to shift purchasing decisions during each time period?

HUMAN RESOURCES
Essential to the success of this change in direction will be initiatives that will properly reward all
sectors of the Organization. Yearly plans have already been made with purchases by the

                                                                        | LEMONADE ANYONE?        13
merchant group. Some will have larger increases and some lost sales. There has to be a reward
system in place that will create a desire to cooperate.




STORE OPERATIONS
Enlist the Front Line! The store personnel have best idea of the mood of the customer as they
have direct contact on a daily basis. Create a Store Survey that through the wording of the
questions allows them to focus on the elements that need changed, new ideas that will generate
traffic, and how to increase frequency & size of market basket.

USE NATURAL CUSTOMER PRODUCT SELECTION BY TIME PERIOD
For every month and sometimes by week there is a changing ebb and flow to the penetration of
sales and profit by product category. Chart those changes by product along with the GM$, unit
sales, transactions, and marketing spend.
         Determine those categories that will drive the most traffic into the store.
         Which ones can you use as price promotions that still allow the store to make a strong
         profit?
         Use the Frequency and Market Basket data to help determine the correct products to use
         as traffic builders.
         Immediately make adjustments to Sales Plans, OTB, space allocation in the stores, and
         marketing spend.
         Go into the market with specific goals that can be shared with the vendors. Engage the
         Vendor community in your quest. They can be extremely helpful if they are allowed to be
         included in the strategy.

MARKETING
      What are the most logical, easiest, and least costly marketing channels to reach your
      current customers?
      Is the next 6 months the time to concentrate on them vs. trying to build new ones? Get
      them in the store with incentives to tell friends and family.


REVIEW BEFORE EXECUTION
As new plans and strategies are being put into place, create a safety check that while they may
not be the most direct path they are pushing you forward to your ideal Brand Position and
Financial Business Model.




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TACTICAL ACTIONS

EXPENSES
Reduction of expenses intelligently is a given for the purposes of this discussion. Those reductions
will ease some profit pain, but they WILL NOT drive store traffic, increase sales, or produce long-
term loyalty. Each reduction has to be given strong consideration, as to need for survival VS. short
term profit & effect of long term goals.

INVENTORY ANALYSIS:
Profitability will be determined as much by the distribution of merchandise to the Stores, in stock
ration, penetration of Product, Sizes, Widths, Color and Store Profile. Tools and Manpower have to
be in place for proper analysis of merchandise distribution down to the Store Level.

FLOW OF MERCHANDISE:
      Determine the most productive Product Category by time window to arrive in stores and
      to exit.
      Exit Strategies for EVERY product – even Basics.

CLEARANCE STRATEGY:
Automatic Turns and exit strategies by product are essential elements of the Financial Strategy.
      Surgical and proper depth of markdowns must be taken on problem items quickly. Within
      30-45 days make determination of the degree of the problem.
      Graduated markdown schedule based on rate of best return and check out rate needed
      for exit date. The first markdown can be anywhere from 20% to 40 % but must increase
      rate of sell to the timetable of the products exit date.
      Establishment of a Permanent Clearance area that becomes a destination path within
      the store for the Customer.

SPECIAL INTEREST AREAS:
Create new limited life special interest product areas that are related to the customer profile. I.e.
a magazine rack, stocked with related topics to the customer, fun gifts for Women executives or
for the office, Seasonal Foods or Home products.

MANAGEMENT AND ASSOCIATE ACCOUNTABILITY:
Development, retention and training of Key personnel in the stores will be a major element in the
success of the Strategic Plan.
       Develop effective “Management Reward System”
       Train associates from top down!
       Training methods developed on Internet, from Vendors and in-Store Supervisors.
       Development of a test/survey that exposes the correct mind set for a Sales person in this
       Brand Concept. Consideration for salary and bonus arrangements important to the
       success of the concept.

STORE EMPLOYEES:
Create "Best in Class” profile of Sales Employee needed
       Develop questionnaire and interview template to screen prospective employees.
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       On-line Training tests and updates




 YEAR 2
The next phase in the 24 month plan is to determine what has changed both Positive and
Negative as the initial strategies were implemented.

ASSESSMENT OF GOALS
Are the Ideal Brand Position and Financial Business Models still viable as they stand or do they
need adjustments? Make those determinations and recalibrate the Ideal.

REVIEW AND JUDGE PRIOR YEAR RESULTS




       Sales and Profitability: By Product Category
               How affective was the drive for footsteps and Market Share?
               How far from the ideal Brand Position and Financial Business Model has the
               company gone from dead center?
               What changes need to be corrected in terms of focus by each Product
               Category? By departments within the Categories?
       Economy: What state is it in at this time period?
               Has there been any improvement to the Economy?
               What time periods can be determined as to more changes?
               Are there any Global issues that will affect retail business? Price increases from
               China? Developing countries for new sourcing etc.
       Competition: Past and Present
               How did the competitors fare during the prior year?
               Are there new competitors?
               What tactics did they take that may have affected the company’s results and
               future strategies?
               Are there best practices to be learned?
       Hardball Decisions: What “Elements of the Business” can be radically changed to take the
       strategies much closer to the Ideal Strategies?
               Merchandise Categories?
                       Increased, decreased, or eliminated?
               Store layouts?
                       Space allocations by Product Category?
                       Navigation and product location through the store.

ENGAGEMENT OF THE ORGANIZATION
This process could also be executed at the beginning of Year 1- it was left out for speed to market
of new strategy. Use this time period and assessment to re-enforce and help build the
collaborative desired culture. Develop processes to obtain the highest degree of innovative
ideas and suggestions from the entire organization
(The Elegant Solution- Matthew May).

       Reverse Retreat: Create Reverse Retreat Organizational meetings that start at the stores
       and the lowest levels of the Corporate Organization. Create a shared pool of knowledge
       (Crucial Conversations by Kerry Patterson)
              Communicate the goals of the Retreat to the organization.
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               Pick leaders that will facilitate not direct the discussions and ideas.
               Build a process that has a very short time window that gets ALL results from the
               meetings communicated upward with safety valves that will not filter the dialog as
               it goes up the ladder.




GIVE MEANING TO THE WORD “PARTNERSHIP”!




USE OF VENDOR COMMUNITY
One of the most under used assets and resources available to the Retailer is the Vendor
community. Every Vendor; Merchandise, Real Estate, Shipping, Communications, IT, etc. has a
broader frame of reference to individual issues than the company, as they work with multiple
customers with the same issues. They understand that if they help the company, that they are
helping themselves in the long run. They are more than willing to suggest new solutions. There is an
article by Booz, Allen, and Hamilton – “Partners at the Point of Sale” that addresses this
opportunity to some degree.

VENDOR SEMINAR WEEKS:
     Create a Working Vendor Engagement Week. Have the major suppliers for each
     category in round robin discussions on a variety of topics ranging from types of products
     to how to connect emotionally with the customer.
     Invite the Vendor community to become involved and offer solutions to improve the
     productivity of the company. Ask their help in building the Ideal Strategies.
     Communication of the goals of the meetings has to come from the President of the
     Company.
     Open the Meetings
              Goals of the company
              Solutions desired from all points
              Open discussion with assurances of no repercussions.
              Lunches with agenda and assigned seating.


This system is called “THE CRITICAL THOUGHT PROCESS”. The point of using this strategy is to
minimize or solve the problem by development of an action plan that creates the least amount
of distractions and accomplishes the task in the shortest time frame. The process simply boils
down the problems into specific mile markers, deterrents and cause/effect points; those can be
addressed in a logical and neutral point of view. In most scenarios the answers will come forth in
forms ranging from simple common sense, to innovative solutions that would not have surfaced
had the “Critical Thought Process” not been put into action.


                                                                    | LEMONADE ANYONE?      17
SENIOR LEADERSHIP RETREAT




From the assessment of the Categories, the input from the Organization and the Vendor Seminars
has to be an extremely short window. The learning’s from each of these events has to be
organized and brought forward in a manner that is un-bias and not filtered. It is imperative that
the Senior Management receive the true picture of the organization as it is with a clear picture of
the thoughts, ideas and suggestions of the Company’s two most important assets: the workforce
and the vendor community.

Tactical Execution:
       An outside facilitator should be brought in to lead the various discussions
       The process should be a combination of full attendance summary meetings, and small
       private round table discussion consisting of members from all parts of the organization.
       Pairs of Executives should be given specific projects to review and develop conclusions.
       Each project should have multiple teams assigned to it with no contact between the
       teams. The goal is to have the most important issues be reviewed from multiple points of
       view without the hindrance of the MOB mentality.
       The ability for individual executives to have “one on one” meetings with any member of
       the Executive Committee has to be a condition of the overall Retreat process.

Outcome of Retreat:
      Redefined Brand Position and Financial Business Model written in terminology that can
      easily be communicated throughout the organization and the vendor community.
      An executable set of initiatives with responsibilities and timelines for every functioning
      group of the organization.
              Those initiatives have significant impact on the development of the Ideal
              Strategies.
              Set Review Times will be calendared and adhered.

Communication:
     Formal Vendor Dinner: Communication of Strategies with acknowledgements of major
     contributions. Affirmation of the Vendor Community as an intricate element of the
     company’s strategy.

                                                                    | LEMONADE ANYONE?       18
        Formal announcement and communication to the organization with acknowledgements
        where major contributions came. Re-affirm that the ability of the Company’s Ideal
        Strategies to come to fruition is linked directly to the degree of ability to engage the
        entire Organization in the building and execution of the Company’s Ideal Strategies.




SUMMARY

The purpose of this article was to generate new ideas on how to contact business in the present
circumstances. It is a broad combination of many different objectives that were to generate
“New Thought”. Most of the time the business results being achieved are directly related to the
strategy and processes in place (See page 2). The multiple references to other authors were
purposely placed to show that many accepted experts in the field of Retailing, Branding and
Customer Behavior are saying the same thing. There are simple answers, opportunities, ideas, and
innovative solutions available if one will simply understand what the right questions are to ask. If
you take nothing else away from this article remember these few bullet points.

       To have a growing, profitable and sustainable business you have to have a product that is
       relevant and with exceptional value to the customer.
       Find at least one category of a product or products that you can be exceptional. Find
       your Purple Cow.

       Have a mindset to take Market Share
       Every decision affects the whole – what are the cause/effect relationships?
       What are the most important questions to ask in about the results?
       Look at a problem from beginning to end with milestones and deterrents.
       How do you turn deterrents into competitive advantages?
       How is your competition positioned in the market?
       Look inside – up and down the organization for answers.
       Define your CVP and make sure that it supports your Profit Model.
       Clearly define all Brand, Customer, and Financial Strategies.

       Communicate is vital to success. Create processes that allow information to flow up and
       down the organization.
       The Vendor community is an untapped resource for knowledge.
       Strategies are living documents that need to be reviewed and refined.




                                                                    | LEMONADE ANYONE?      19
APPENDIX


CRITICAL THOUGHT PROCESS
Within every Problem, there are common elements that allow one to approach an issue from a
big picture, practical and strategic point of view. In doing so, one can disburse that
overwhelming cloud that surrounds many problems. At the same time one might eliminate or
reduce the issues that are deterrents in solving the issue. Once those elements are determined,
each Road Block and Mile Marker within the process timeline may be addressed in advance. As
those elements come to light, they must be shared with the team, ask for their involvement and
encourage new ideas. Innovative solutions are usually forth coming.


TACTICAL OUTLINE: CRITICAL THOUGHT PROCESS


       Players: Identify the people that are involved in the situation. Who is affected by the
       situation? Who will benefit most from a resolution? Which person needs to be or should be
       involved in the process?

       Starting Point: Identifying the issue from everyone’s point of view and agree on the true
       nature of the Problem.

       Goal: Agree on the primary Goal that will solve the issue and what value is to be added
       and the benefits obtained.

       Mile Markers: Identify those elements that are sure to occur during the progression of the
       issue.

       Identification of Road Blocks: Each deterrent will have one or more identifying features
       that will help understand the nature of the issue at hand. It could be a time line, a person,
       level of responsibility, financial in nature or a multitude of issues.

       Cause and Effect: Once the features of the deterrent are surfaced, the team needs to
       weigh possible solutions. Each solution will have a cause and effect to the problem.
       Which are the most acceptable to the situation?

       Assignment of Responsibility and Timeline: As solutions are determined and accepted,
       assignment of responsibility of those solutions should be given to individuals or groups. With
       that responsibility is the expected outcome and timeline of resolution.

       Review: Once all mile markers are resolved and the complete path to resolution is
       determined, a complete review of the process should go through a check list of
       questions.
              Was the issue truly resolved?
                                                                     | LEMONADE ANYONE?      20
               Is it the best solution for all involved?
               Is each solution logical, feasible and within an acceptable time element?

               Are there elements that should be refined or eliminated?

               Is this a long term solution or a short term?

               What elements is there that could affect the solutions over time or changes in the
               situation?

               Can those elements be addressed or is it better to wait?

       Flexibility: As the solutions are addressed have an open mind to changes in the process.
       Many times new facts surface from events that were not visual upon first glance. Add
       these elements to the Critical Thought Process and understand how they may or may not
       affect the remaining path.




REFERENCES




The thoughts and processes that I have combined into this journal come from the reading of
books from these authors and ones similar but not remembered.
Ric Anderson



The Pursuit of WOW!                                    Tom Peters
A Clear Eye for Branding                               Tom Asacker
Mavericks at Work                                      William Taylor and Polly LaBarre
Hardball: Are you playing to play or playing to win?   Rob Lachenauer and George Stalk
Married to the Brand                                   William McEwen
Permission Marketing                                   Seth Godin
Purple Cow                                             Seth Godin
Made to Stick                                          Chip Heath and Dan Heath
The Tipping Point                                      Malcolm Gladwell
Positioning:The battle for your Mind                   Al Ries and Jack Trout
The 22 Immutable Laws of Marketing                     Al Ries and Jack Trout
Marketing Warfare                                      Al Ries and Jack Trout
Bottom Up Marketing                                    Al Ries and Jack Trout
Focus                                                  Al Ries
The Origin of Brands                                   Al Ries and Laura Ries
Good to Great                                          Jim Collins
Built to Last                                          Jim Collins and Jerry Porras
Blue Ocean Strategy                                    W. Chan Kim and Renee Mauborgne
Zag                                                    Marty Neumeier
How the Cadillac Got Its Fins                          Jack Mingo
The Elegant Solution                                   Matthew May
                                                                   | LEMONADE ANYONE?      21
Riding the Blue Train   Bart Sayle and Surinder Kumar
Leadership is an Art    Max De Pree
Lovemarks               Kevin Roberts
Crucial Conversations   Patterson, Grenny, McMillian, Switzler




                                      | LEMONADE ANYONE?         22

				
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