Australian Retail Symposium 2009 Business Fitness

BEING RETAIL FIT: FROM SURVIVING TO THRIVING The Retail Doctor® Group Pty Ltd Australian Retail Symposium 2009

ABOUT BRIAN WALKER About 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 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 © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE RETAIL DOCTOR® GROUP PTY LTD The Retail Doctor® Group Pty Ltd  Retail Operations Specialist  Retail implementation – Transform strategy to action  Retail, Franchise, Service, Shopping Centres Our Business is Your Retail Fitness © Copyright 2009. The Retail Doctor® Group Pty Ltd

TODAY’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: 40  Over 150 retailers interviewed WITH 36 32 Today’s Appointment with the Retail Doctor  Over 65 companies 28 24  Customer surveys 20 16 12 8 4 0 © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE GOOD TIMES Today’s Appointment with the Retail Doctor  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! © Copyright 2009. The Retail Doctor® Group Pty Ltd

TodThe Cycle turns ay’s Appointment with the Retail Doctor THE PERFECT STORM We are in the midst of a perfect storm:  Slumping consumer confidence  Prospect of rising unemployment  Weakening dollar (costlier imports)  Softening of trading partners Yet  Lowering interest rates  Government stimulus  Commodity prices  Some good retail performance out there © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE TIMES THEY ARE A CHANGING TodaThe times are a changiny’s Doctor  Differentiation  Speed, innovation and adaptation  The connected apostle C  The lines are blurry  The Inline retailer  Efficiency of process  Do the basics brilliantly © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE TRENDS Today’s Appointment with the Retail Doctor  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 © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE SEVEN KEY FITNESS STEPS FOR TODAY’S MARKET 1. Begin At The End 2. The Unique Branded Difference (Brand Aid™) 3. Customer connection TEPS 4. Productivity Not Panic 5. Fiscal Physical™ 6. People and Sales Leadership (Effective People) 7. Doing The Basics Brilliantly © Copyright 2009. The Retail Doctor® Group Pty Ltd

What is Your Desired Destination? 1. BEGIN AT THE END  Businesses with clearly defined exit strategies sell for higher multiples  Every business is for sale  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 © Copyright 2009. The Retail Doctor® Group Pty Ltd

Where Do We Go From Here? 1. BEGIN AT THE END Some retailers start with the view – ‘If I build it, they will come’  Have you started with the end in mind?  What is the outcome (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? © Copyright 2009. The Retail Doctor® Group Pty Ltd

What is Your Desired Destination? 1. BEGIN AT THE END Our Findings: High fitness retailers define the end game score, know the present, and adjust to achieve the planned future value of their business © Copyright 2009. The Retail Doctor® Group Pty Ltd

2. THE UNIQUE BRANDED DIFFERENCE Develop 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?  Are we implementing this well?  What is the brand experience?  What are we known for?  Do we have alignment of strategy? © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE ‘EST’ MODEL Cheap‘est’ (Lowest Prices) K-Mart Easy‘est’ Target (Service) Black Hole Myer Many Specialty Independents Big‘est’ (Selection) The Middle David Jones Quick‘est’ Dan Murphys (Speed) McDonald’s KFC Hot‘est’ (Fashion) Specialty © McMillan Doolittle © Copyright 2009. The Retail Doctor® Group Pty Ltd

DEVELOP THE POINT OF DIFFERENCE Specialist Expertise The Right Range Who is taking this space? Discounter Value Add D Large Range Competitors Experience Transaction © Copyright 2009. The Retail Doctor® Group Pty Ltd

WHAT IS YOUR RETAIL POSITION? 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  Over 70% do not have a product development plan or measure competitor product activity © Copyright 2009. The Retail Doctor® Group Pty Ltd

DEVELOP THE POINT OF DIFFERENCE Develop 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 D (CRM?)  Do they listen to their customers? (MS)  What is that they do better than competitors? © Copyright 2009. The Retail Doctor® Group Pty Ltd

2. THE UNIQUE BRANDED DIFFERENCE Deliver Point of Difference Seamlessly  Store design and format  Appealing and relevant  Visual merchandising  Your story by categories  Line of sight  Impact  What do you want me to buy?  Take the customer on a journey  Multi channel (web site) © Copyright 2009. The Retail Doctor® Group Pty Ltd

2. THE UNIQUE BRANDED DIFFERENCE Point of Difference Our Findings: Fit retailers define how they are unique, consistently offer this uniqueness, communicate it, stay tight, refine and measure (and the customer gets it!) © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE TIMES THEY ARE A CHANGING. 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.’ C Lou Pritchet. Senior VP, Procter and Gamble © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE LINES ARE GETTING BLURRY The 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 B © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE INTERNET 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 © Copyright 2009. The Retail Doctor® Group Pty Ltd

DEMAND BECOMES WHERE IT IS AT 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 down the entire chain is becoming commonplace © Copyright 2009. The Retail Doctor® Group Pty Ltd

CUSTOMER CONNECTION Customer 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 channel  Tune in to WIIFM 1  Connect me and make it real © Copyright 2009. The Retail Doctor® Group Pty Ltd

3. CUSTOMER CONNECTION Customer Connection Our Findings: Fit retailers are customer rather than product centric. ONNECTION They understand customer trends, add greatly to the customer experience and reap the reward of customer satisfaction and loyalty. © Copyright 2009. The Retail Doctor® Group Pty Ltd

4. PRODUCTIVITY NOT PANIC Do You Benchmark Your Performance As a minimum, focus on:  Sales per square metre  Final gross margin  Stock turns  Store contribution P  What is great performance in your sector? Benchmarks will vary between retail segments Performance within a segment will not. © Copyright 2009. The Retail Doctor® Group Pty Ltd

INVENTORY MANAGEMENT Inventory Management Consider carefully:  The quantity of inventory  The profile  The aging  The stock turn = Net sales / av stock holding  View retail performance against benchmarks NOTE:  Inventory position / stock management is a key determinant of the health of a retail business. © Copyright 2009. The Retail Doctor® Group Pty Ltd

4. PRODUCTIVITY NOT PANIC Sales Production Sales Where and how do they produce their sales?  Sales to plan  Team sales  Individual sales P  Items per sale  Average sale  Conversion rate  Sales by space  Sales by product © Copyright 2009. The Retail Doctor® Group Pty Ltd

INVENTORY MANAGEMENT Inventory Management It is seldom what Don’t Buy What Won’t Sell! you don’t have that puts you out of business – it is what you have too much of! © Copyright 2009. The Retail Doctor® Group Pty Ltd

TECHNOLOGY 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.  It is vital to defining the position, connecting with the customer, reducing expenses, and in increasing productivity and efficiency. © Copyright 2009. The Retail Doctor® Group Pty Ltd

Do You Benchmark Your Performance? 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 against best practice. © Copyright 2009. The Retail Doctor® Group Pty Ltd

THE TOP 5 SIGNS OF AN UNFIT BUSINESS The 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 3. Failure to manage gross margin 2. Out of control inventory OR 1. Being out of cash © Copyright 2009. The Retail Doctor® Group Pty Ltd

5. FISCAL PHYSICAL Understanding 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 © Copyright 2009. The Retail Doctor® Group Pty Ltd

(PERFORMANCE CULTURE) PEOPLE AND SALES LEADERSHIP The Top 5 Signs Of An Unfit Business  The human capital asset  Understand setting and achieving retail sales goals  Define and understand key retail statistics to set EADERSHIP sales goals and analyse business performance  Accurately target retail performance deficits and take corrective action to improve  Consistency of approach © Copyright 2009. The Retail Doctor® Group Pty Ltd

6. PEOPLE AND SALES LEADERSHIP AT, IPT and Conversion Rate (PERFORMANCE CULTURE) A B C Weekly Traffic 600 600 600 Conversion Rate 25% 28% (168) 28% (168) (150 Transactions) ULTURE Average Sale $45.00 $45.00 $55.00 L 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! © Copyright 2009. The Retail Doctor® Group Pty Ltd

7. DO THE BASICS BRILLIANTLY Operational Standards What are some operational and service standards that a retailer should have?  Non selling  Acknowledgment RILLIANTLY  Service levels  Signage  Compliance © Copyright 2009. The Retail Doctor® Group Pty Ltd

7. DO THE BASICS BRILLIANTLY Bringing it all Together 1. Understand your market and product proposition to deliver a winning / sustainable retail concept 2. Build a direct relationship with your customer through multi integrated delivery channels. 3. Develop / implement good product planning and stock RILLIANTLY management 4. Develop good information / reporting platforms to focus on key business drivers © Copyright 2009. The Retail Doctor® Group Pty Ltd

7. DO THE BASICS BRILLIANTLY Bringing it all Together  Use your technology platform to drive  Differentiation  Customer connection RILLIANTLY  Speed to market  Performance measurement  Efficiency of all processes  Increased $ © Copyright 2009. The Retail Doctor® Group Pty Ltd

TODAY’S MARKET THE SEVEN KEY FITNESS STEPS FOR 1. Begin at the End 2. The Unique Branded Difference (Brand Aid ™) 3. Customer Connection ITNESS 4. Productivity Not Panic 5. Fiscal Physical™ 6. People and Sales Leadership (Effective people) 7. Do the Basics Brilliantly © Copyright 2009. The Retail Doctor® Group Pty Ltd

The Top 5 Signs Of An Unfit Business No one can predict the future However, we can prepare for it! “Knowing the other and knowing oneself, In one hundred battles no danger. 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. © Copyright 2009. The Retail Doctor® Group Pty Ltd 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 Address PO Box 209 Milsons Point NSW 2061 Phone | +61 (0)2 9460 2882 Fax | +61 (0)2 9460 3883 E-mail | businessfitness@retaildoctor.com.au Web: | www.retaildoctor.com.au © Copyright 2009. The Retail Doctor® Group Pty Ltd

Australian Retail Symposium 2009 Business Fitness

0 comments

Notes on slide 1

Favorites, Groups & Events