Back to basics in uncertain times

 

By Peter Sheppard
Head of Implementation, Retail Doctor Group


Why being a business “fit” retailer will never be obsolete?

Whilst the vast majority of commentary is currently taking up with the deserved importance of online retail, especially in times of COVID-19, we see most retailing activities are still being done in physical stores and this blog is to remind us that this is where the money is mostly made.

So what are the basics of retail? And what does “good”, “better” and “best” look like ?

A great place to start is to understand what your key metrics are, relative to the broader market. For most bricks-and-mortar retailers, the key benchmarks include:

• Sales per sq. metre for my category vs. what I am achieving
• Final Gross Margins being achieved by my competitors relative to my business
• Occupancy Cost percentage to sales. Am I paying too much rent?
• Wage cost percentage to sales. Are my staffing costs in line?
• Are we achieving benchmarks or better stock turns, maximining cash flow and profitability?
• Online sales growth vs. industry’s. Am I achieving an Omnichannel mix of business ratios?

Your measures against these key metrics will indicate where and how your retail business is doing in these fast-moving times. We refer to this as a “Fit” retailer and certainly well positioned to achieve replicable organic and transactional growth.

As an example, if your sales per sq. metre are below the industry standard, this alerts you to potential issues such as:

• Is my merchandise assortment well suited to my customers mix?
• Is my store location still where I want to be?
• Is the customer experience in my business as good as it could be?
• What is my point of difference?
• Why should shoppers choose me?

As you can see, just this one measure opens up a host of questions that will define if you are doing the basics well. It should be the basis of your strategy and goal setting, along with the factors that drive motivation to build the business, to ensure that you are not losing ground within your industry.

Should you need to know what your key benchmark numbers are, please contact me, have a free conversation on your category and the major trends you should be targeting. We have a rich database across many retail models and categories to help you achieve your goals.

Peter Sheppard is Head of Implementation at Retail Doctor Group and can be reached on 0414321545

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