Australian Retail Symposium 2009 Business Fitness

BEING RETAIL FIT: FROM SURVIVING TO THRIVING

The Retail Doctor® Group Pty Ltd

Australian Retail Symposium 2009

AB

OU

TB

RIA

NW

AL

KE

RAbout Brian Walker

The Athletes Foot Pty Ltd - General Manager Retail Business

Cable and Wireless Optus - National Retail and Franchise

Manager

Hutchison Telecommunications –

National Business Development (3G retail)

Angus and Coote Pty Ltd - National Retail Operations

Manager

Whitcoulls Ltd New Zealand - National Retail Operations

© Copyright 2009. The Retail Doctor® Group Pty Ltd

Whitcoulls Ltd New Zealand - National Retail Operations

Manager

Westfield Management - Senior Centre Manager Hurstville and

Miranda

KFC Pty Ltd - National Manufacturing Manager, Retail

Operations Manager,

Purchasing and Supply Manager

Woolworths Pty Ltd - Merchandise Buying Manager

Retail consultancy, teaching, editorials and author

TH

ER

ET

AIL

DO

CT

OR

®G

RO

UP

The Retail Doctor® Group Pty Ltd

Retail Operations Specialist

Retail implementation – Transform strategy to action

Retail, Franchise, Service, Shopping Centres

RO

UP

PT

YL

TD


Our Business is Your Retail Fitness

TO

DA

Y’S

AP

PO

INT

ME

NT

WIT

HToday’s Appointment with the Retail Doctor

Today’s Appointment with the Retail Doctor

How high performing, fit retailers operate

The key steps in understanding your customer’s business

In the last 3 years:

Over 150 retailers interviewed

32

36

40 WIT

HT

HE

RE

TA

ILD

OC

TO

R


Today’s Appointment with the Retail Doctor Over 65 companies

Customer surveys

0

4

8

12

16

20

24

28

32

TH

EG

OO

DT

IME

S

14 periods of positive GDP

High consumer confidence

Rising exports

Strong housing growth

Plenty of liquidity



Retail 10x EBITDA earnings

Retail Growth

The Retail Love In!

TH

EP

ER

FE

CT

ST

OR

MWe are in the midst of a perfect storm:

Slumping consumer confidence

Prospect of rising unemployment

Weakening dollar (costlier imports)

Softening of trading partners

TodThe Cycle turns ay’s Appointment with the Retail Doctor


Softening of trading partners

Yet

Lowering interest rates

Government stimulus

Commodity prices

Some good retail performance out there

TH

ET

IME

ST

HE

YA

RE

AC

Differentiation

Speed, innovation and

adaptation

The connected apostle

TodaThe times are a changiny’s DoctorC

HA

NG

ING


The lines are blurry

The Inline retailer

Efficiency of process

Do the basics brilliantly

TH

ET

RE

ND

S

Customers are increasingly challenging

Demassification - the hunter vs. the herd

Technology becomes mission critical

Customer choice has magnified dramatically



The boundaries are getting fuzzy

Demographics do matter

Demand chain replaces supply chain

Adaptation – smarter

TH

ES

EV

EN

KE

YF

ITN

ES

SS

TE

PS

1. Begin At The End

2. The Unique Branded Difference

(Brand Aid™)

3. Customer connection

4. Productivity Not Panic

TE

PS

FO

RT

OD

AY’S

MA

RK

ET



5. Fiscal Physical™

6. People and Sales Leadership

(Effective People)

7. Doing The Basics Brilliantly

1.B

EG

INA

TT

HE

EN

D


1.

BE

GIN

AT

TH

EE

ND

What is Your Desired Destination?

Businesses with clearly defined

exit strategies sell for higher

multiples

Every business is for sale

65% of retailers surveyed did


65% of retailers surveyed did

not have a concrete plan that

was communicated and aligned

You can’t change the headwind

though you can adjust the sails

1.

BE

GIN

AT

TH

EE

ND

Where Do We Go From Here?

Have you started with the end in mind?

What is the outcome

(what do you want to achieve?)

Some retailers start with the view –

‘If I build it, they will come’


(what do you want to achieve?)

What is your real point of difference?

Do you have a plan?

What are your competencies?

Which way now?

1.

BE

GIN

AT

TH

EE

ND

What is Your Desired Destination?

Our Findings:

High fitness retailers

define the end game

score, know the present,


score, know the present,

and adjust to achieve the

planned future value of

their business

2.T

HE

UN

IQU

EB

RA

ND

ED

DIF

FE

RE

NC

EIF

FE

RE

NC

E(B

RA

ND

AID

)


2.

TH

EU

NIQ

UE

BR

AN

DE

DDevelop the Point of Difference

High performing retailers consistently address:

What is our point of difference and how do we refine this?

How do we communicate this consistently?

How do we keep this fresh and inviting?

DIF

FE

RE

NC

E


Are we implementing this well?

What is the brand experience?

What are we known for?

Do we have alignment of strategy?

TH

E‘E

ST

’M

OD

EL

Easy‘est’(Service)

Cheap‘est’(Lowest Prices)

Big‘est’(Selection)

Black Hole

K-MartTarget

MyerMany SpecialtyIndependents

(Selection)

Hot‘est’(Fashion)

The Middle

Quick‘est’(Speed)

Specialty

David JonesDan Murphys

McDonald’sKFC

© McMillan Doolittle


DE

VE

LO

PT

HE

PO

INT

OF

DSpecialist Expertise

Value AddExperience

DiscounterLarge Range

The Right Range

Who is takingthis space?

Competitors

DIF

FE

RE

NC

E


Experience

Transaction

Large Range Competitors

AD

AP

TA

TIO

NAdaptation

MFI and Adams in the

UK

Woolworths in the UK

Waterford Wedgewood

Herringbone


EzyDVD

Circuit City

WH

AT

ISY

OU

RR

ET

AIL

PO

SIT

ION

What is Your Retail Position?

75% of retailers cite location, product quality and customer

service as their strategic differentiators

Location alone is not a sustainable competitive advantage

Over 70% of retailers do not measure their customer service

delivery OS

ITIO

N?


delivery

Over 70% do not have a product development plan or measure

competitor product activity

DE

VE

LO

PT

HE

PO

INT

OF

DDevelop the Point of Difference

What is the point of difference?

How do they manage their brand?

Does their delivery marry to their brand?

Do they actively seek out customers and how do they manage them DIF

FE

RE

NC

E


(CRM?)

Do they listen to their customers? (MS)

What is that they do better than competitors?

2.

TH

EU

NIQ

UE

BR

AN

DE

DDeliver Point of Difference Seamlessly

Store design and format

Appealing and relevant

Visual merchandising

Your story by categories

Line of sight DIF

FE

RE

NC

E


Line of sight

Impact

What do you want me to buy?

Take the customer on a journey

Multi channel (web site)

2.

TH

EU

NIQ

UE

BR

AN

DE

DPoint of Difference

Our Findings:

Fit retailers define how they are unique,

consistently offer this uniqueness, DIF

FE

RE

NC

E


consistently offer this uniqueness,

communicate it, stay tight, refine and measure

(and the customer gets it!)

TH

ET

IME

ST

HE

YA

RE

AC

The Times They are a Changing.

‘When the rate of change outside your company

exceeds the rate of change inside your company,

disaster is imminent.’ CH

AN

GIN

G.


Lou Pritchet. Senior VP, Procter and Gamble

TH

EL

INE

SA

RE

GE

TT

ING

BThe Lines are Getting Blurry

Manufacturers are becoming retailers:

Nokia is the worlds largest retailer of cameras

Lego produces the equivalent of 306 million tires per year -

world’s largest plastic retail product

BL

UR

RY


TH

EIN

TE

RN

ET

The Internet

13.6m users

Over 50% of purchases are pre

researched on the web

E-Bay’s $48.3 Billion sales in

2007 (a 30% volume increase!)


would make it one of the top

ten retailers in the world and it

is redefining what is “retail”

Gen Y, X & Z

3.C

US

TO

ME

RC

ON

NE

CT

ION

ON

NE

CT

ION


DE

MA

ND

BE

CO

ME

SW

HE

RE

Demand Becomes Where It Is At

Increasingly retailers are understanding that it is not about the

supply chain it is about the demand chain

Customer purchasing patterns become the key to replenishment

& understanding of quantities and items

Collaborative planning where retailers share demand information

HE

RE

ITIS

AT


Collaborative planning where retailers share demand information

down the entire chain is becoming commonplace

CU

ST

OM

ER

CO

NN

EC

TIO

NCustomer Connection

Personal, Interactive and

engaging experiences that

excite and convey value.

Know me and communicate

with me

Make it about me and give

me plenty of choice in


me plenty of choice in

channel

Tune in to WIIFM 1

Connect me and make it

real

3.C

US

TO

ME

RC

ON

NE

CT

ION

Customer Connection

Our Findings:

Fit retailers are customer rather

than product centric.

They understand customer trends,

ON

NE

CT

ION


They understand customer trends,

add greatly to the customer

experience and reap the reward of

customer satisfaction

and loyalty.

4.P

RO

DU

CT

IVIT

YN

OT

PPA

NIC


4.P

RO

DU

CT

IVIT

YN

OT

PDo You Benchmark Your Performance

As a minimum, focus on:

Sales per square metre

Final gross margin

Stock turns

Store contribution PA

NIC


Store contribution

What is great performance in your sector?

Benchmarks will vary between retail segments

Performance within a segment will not.

INV

EN

TO

RY

MA

NA

GE

ME

NT

Inventory Management

Consider carefully:

The quantity of inventory

The profile

The aging

The stock turn = Net sales / av stock holding

AN

AG

EM

EN

T


View retail performance against benchmarks

NOTE:

Inventory position / stock management is a key

determinant of the health of a retail business.

4.P

RO

DU

CT

IVIT

YN

OT

PSales Production

Sales

Where and how do they produce their sales?

Sales to plan

Team sales

Individual sales

PA

NIC


Items per sale

Average sale

Conversion rate

Sales by space

Sales by product

INV

EN

TO

RY

MA

NA

GE

ME

NT

Inventory Management

It is seldom what

you don’t have

that puts you out

of business –

Don’t BuyDon’t BuyWhat Won’t Sell!What Won’t Sell!

AN

AG

EM

EN

T


it is what you have

too much of!

TE

CH

NO

LO

GY

Technology

Retailers still spend too little on technology

Average spend as an industry is less than a third of insurance,

banking, transportation and manufacturing

Technology is no longer a nice to have, it is an absolute

requirement for survival.


requirement for survival.

It is vital to defining the position, connecting with the customer,

reducing expenses, and in increasing productivity and efficiency.

DO

YO

UB

EN

CH

MA

RK

YO

UR

Do You Benchmark Your Performance?

Our Findings:

Fit retailers work with live fast information

providing one version of the truth, through

end to end productive solutions measured

OU

RP

ER

FO

RM

AN

CE?


against best practice.

5.F

ISC

AL

PH

YS

ICA

L


TH

ET

OP

5S

IGN

SO

FA

NThe Top 5 Signs Of An Unfit Business

In 2007, every 11 ½ minutes one US

retailer failed due to one of the top 5 retail

killers:

5. Out of control growth

4. Out of control expenses

UN

FIT

BU

SIN

ES

S


3. Failure to manage gross margin

2. Out of control inventory OR

1. Being out of cash

5.F

ISC

AL

PH

YS

ICA

LUnderstanding The Numbers

Understanding the numbers is important!

P&L, Cash flow and Balance sheet

Understanding the trends is crucial!

In isolation numbers are reasonably pointless

Look at interrelationships


Ensure retailers understand their numbers and ratios

Margin to sales

Current asset position

Stock / sales turn

Net worth

6.P

EO

PL

EA

ND

SA

LE

SL

(EF

FE

CT

IVE

PE

OP

LE)

LE

AD

ER

SH

IP


PE

OP

LE

AN

DS

AL

ES

LE

AD

ER

SH

IP

(PE

RF

OR

MA

NC

EC

UL

TU

RE)

The human capital asset

Understand setting and achieving retail sales

goals

Define and understand key retail statistics to set

sales goals and analyse business performance

The Top 5 Signs Of An Unfit BusinessE

AD

ER

SH

IP


sales goals and analyse business performance

Accurately target retail performance deficits and

take corrective action to improve

Consistency of approach

6.P

EO

PL

EA

ND

SA

LE

SL

(PE

RF

OR

MA

NC

EC

UL

TU

RE

AT, IPT and Conversion Rate

A B C

Weekly Traffic 600 600 600

Conversion Rate 25%(150 Transactions)

28% (168) 28% (168)

Average Sale $45.00 $45.00 $55.00 LE

AD

ER

SH

IP

UL

TU

RE)


Total Sales $6,750.00 $7,560.00 $9,240.00

Case A One in four customers buy / average sale of $45.00

Case B Improve conversion by 3% for a 12% sales increase

Case C Maintain conversion and increase average sale by $10 (1 extra

item per ticket) = 36% increase on same traffic!

7.D

OT

HE

BA

SIC

SB

RIL

LIA

NT

LY

RIL

LIA

NT

LY


7.D

OT

HE

BA

SIC

SB

RIL

LIA

NT

LY

Operational Standards

What are some operational and service

standards that a retailer should have?

Non selling

Acknowledgment RIL

LIA

NT

LY


Service levels

Signage

Compliance

7.D

OT

HE

BA

SIC

SB

RIL

LIA

NT

LY

Bringing it all Together

1. Understand your market and product proposition to deliver awinning / sustainable retail concept

2. Build a direct relationship with your customer through multiintegrated delivery channels.

3. Develop / implement good product planning and stockmanagement

RIL

LIA

NT

LY


management

4. Develop good information / reporting platforms to focus onkey business drivers

7.D

OT

HE

BA

SIC

SB

RIL

LIA

NT

LY

Bringing it all Together

Use your technology platform to

drive

Differentiation

Customer connection RIL

LIA

NT

LY


Speed to market

Performance measurement

Efficiency of all processes

Increased $

7.

DO

TH

EB

AS

ICS

BR

ILL

IAN

TL

Y

Our Findings:

Fit retailers understand and consistently

execute the basic retail disciplines.

RIL

LIA

NT

LY


execute the basic retail disciplines.

TH

ES

EV

EN

KE

YF

ITN

ES

S

TO

DA

Y’S

MA

RK

ET

1. Begin at the End

2. The Unique Branded Difference

(Brand Aid ™)

3. Customer Connection


ITN

ES

SS

TE

PS

FO

R



5. Fiscal Physical™

6. People and Sales Leadership

(Effective people)

7. Do the Basics Brilliantly

No one can predict the future

However, we can prepare for it!

“Knowing the other and knowing oneself,

In one hundred battles no danger.

The Top 5 Signs Of An Unfit Business


Not knowing the other and knowing oneself,

One victory for one loss.

Not knowing the other and not knowing

oneself,

In every battle certain defeat.

Sun Tzu 1300 BC

For more information and to see how The Retail Doctor can help you become ‘Fit for

Business’ please connect with us.

Facebook: www.facebook.com/retaildoctor

Twitter: www.twitter.com/retaildoctor

LinkedIn: www.linkedin.com/in/brianwalkerretaildoctor

Alternatively, you can contact us on the details below:

THE RETAIL DOCTOR® GROUP PTY LTD


Mailing AddressPO Box 209Milsons Point NSW 2061

Phone | +61 (0)2 9460 2882Fax | +61 (0)2 9460 3883E-mail | [email protected]: | www.retaildoctor.com.au

Alternatively, you can contact us on the details below: