Category Management

In today's highly competitive retail environment, retailers must work harder than ever to differentiate
themselves in the minds of consumers as well as determine and procure the best offerings for these consumers in an efficient and timely manner. Retailers who act now to effectively exploit existing and developing consumer data technology will be those leading the industry into the next century.

Category management is a strategic tool which allows you to harness today's resources to gain a larger part of tomorrow's market share. Implementation of category management improves your
productivity through:
  • Focusing on consumer needs
  • Aligning categories into strategic business units
  • Integrating key business functions
  • Exploiting new technology
  • Developing strategic business alliances
  • Creating proactive business processes

Category management is more than the application of technology and information tools - it is a business philosophy focused on asset management which facilitates your ability to:
  • Maximize both sales and profitability
  • Optimize shelf space, inventory movement, and customer traffic
  • Reap the benefits of the retail industry's (ECR) efficient consumer response initiative

Our recommendation for retail involves the people, processes and systems of your organization. We suggest that you focus on the following components of the category management process:
  • Development of an overall identity for your company
  • Development of an organizational model with clearly defined roles for buying and merchandising (category managers and replenishment buyers) and built-in accountability
  • Assessment of corporate financial goals
  • Analysis of activity-based costing (ABC) and direct product profit (DPP options
  • Selection or improvement and application of customer and retail data technologies, both hardware and software, as well as training
  • Definition and assessment of categories within the framework of the corporate gameplan
  • Development of strategies, tactics, goals and objectives for category segments
  • Creation-of comprehensive category performance measures and scorecards
  • Category Management Training Programs for buyers/merchandisers and store operations personnel
  • Forging or improving partnerships with other players in your logistics pipeline to reach category sales and profit goals

Effective category management is reliant upon teamwork and cross-functional communication. Our team works in conjunction with yours in developing and executing plans, as well as measuring your performance and refining your approach accordingly.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Managing Retail Pricing Integrity

It's no secret that retailers are struggling with price integrity. Unfortunately, determining the cause of pricing errors isn't easy. The entire process - from buying to selling - needs to be examined.

Pricing Errors
There are several types of pricing errors, each with varying causes and solutions.
  • Scanning Errors occur when shelf prices and register prices are not consistent.
  • Controller Errors arise when register prices do not match host prices, often because increases are not updated to the store POS controller.
  • Not On File (NOF) Errors occur when items are not in the computer file

Ramifications
  • Diminished customer confidence - Consumers are demanding more than enhanced service. They are more price and value conscious than ever before. Incorrect and inconsistent pricing procedures adds to shoppers' discontent.
  • Lost revenues - Grocers, for instance, are losing an average of 5+ cents per pricing error. In addition, a common overcharge policy is to give the first item to the customer at no cost. Less obvious losses stem from an unproductive use of time, such as balancing underrings and overrings
  • Increased regulation - As a result of consumer litigation, standards are being developed by various state and federal agencies, including the National Conference on Weights and Measures
  • Regulatory fines - Civil penalties, due to price integrity violations, are increasingly impacting retailers nationwide.

In order to help your organization deal with this challenge we recommend that you evaluate existing pricing systems, sample pricing in select locations, determine the depth and cause of the errors,
and develop a process to correct these errors. This should be accomplished through:
  • Store visits
  • Pricing audits
  • Interviews with store managers and pricing coordinators
  • Operational observations; as well as
  • Operational data collection and analysis

This process should include an examination of several areas to achieve optimal
results. These include:
  • The Price Coordinator Position - Review job responsibilities, performance standards and
  • training materials
  • Store Reports - Ensure they are user-friendly and contain pertinent information
  • Pricing Cycle Timing - Implement adequate lead times for various tasks
  • Operating Policies - Ensure they are up-to-date and in use. If not, policies are refined for efficiency and practicality.
  • Communication Process - Establish effective communication between all levels
  • Buying - Review policies and procedures for new item set-up, price changes, DSD, special deals and ad breaks
  • Distribution - Identify and correct unauthorized items and inaccurate UPC codes before products arrive at the store
  • Systems - Evaluate file synchronization on store price files. Review time cycles for new items and item corrections from buyer to store. Determine system gaps.
  • Management Philosophy - Determine if and how each employee is responsible for price integrity

Typical improvements that retailers experience from properly addressing this challenge include:
  • A 98 percent pricing accuracy
  • Establishment of training procedures and performance standards for the store price coordinators
  • More user-friendly reports that provide useful and actionable information
  • Enhanced communication throughout the organization
  • A price integrity corporate focus that leads to better customer service and enhanced profitability


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Shrinking Shrink

The bad news? Retail shrink is on the rise and cost the industry $37 billion in 2010, according to preliminary results of the National Retail Security Survey released at NRF’s 2011 Loss Prevention Conference. The good news? Retailers can control, and often reduce, the percentage of shrink eating away at profits. In fact, retailers with a serious shrink problem can increase the bottom line by 0.5% -1 %.

The key elements of shrink - internal and external theft, vendor and carrier fraud, inaccurate accounting charges -- haven't changed much. However, with the advancement of retail systems, some new elements are appearing - pricing integrity, store polling accuracy, UPC management, and others. Therefore, the way retailers are attacking shrinkage is changing. Traditionally, shrink was considered a store-level problem. But no more. Retailers are finding out that shrink can originate at all levels - from buying to distribution to selling. That's why they're turning some of their attention to non-store activities, such as buying, information technology, and accounts payable.

Where Retailers Rank
Shrinkage was divided into employee theft (43.7%), shoplifting (32.6%), administrative error (12.9%) and vendor fraud (5.4%). The remaining shrinkage resulted from unknown causes. Companies reporting in the NRF Study indicated that 18.7% of employee theft cases involve collusion between internal and external sources. Retailers with lower-than-average shrink include office supply stores, home furnishings stores, and entertainment and media gaming stores. Retailers with higher-than-average shrink include supermarket and grocery stores, specialty accessories stores, and furniture stores. (Much of grocery stores’ shrinkage comes from spoilage according to the NRF,
which is not an issue that many traditional retailers have to deal with.The shrink numbers from drug and pharmacy stores doubled over last year.

Root Causes
Sources of shrinkage vary Widely and include such variables as:
  • Lack of pricing integrity in the POS system
  • Inaccurate capture of all price adjustments
  • Inaccurate physical inventories due to poor
  • Cutoff errors in distributing merchandise to stores
  • Inaccurace charging of interstore transfers
  • Duplicate or overpayments made to vendors
  • Lack of reconciliation of charge backs to vendors
  • Refund and void fraud
  • External theft by organized gangs

Getting on Track
While shrinkage is difficult to identify and correct, the results are worth the effort.
Following are best practices that should be a part of your improvement plan:
  • Review policies and procedures for new item set-up, price changes, DSD, special deals and ad breaks
  • Identify and correct unauthorized items and inaccurate UPC codes before products arrive at the store
  • Establish a thorough IS audit program
  • Adopt cycle inventories to provide more frequent information on changing trends
  • Establish a quality program to monitor accuracy of intracompany shipments
  • Utilize electronic article surveillance tags on high-theft items
  • Utilize exception reporting at the associate level for sales clerks and cashiers
  • Implement associate awareness and training programs (a very effective component)
 
 
For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Business Transformation - You Can Make It Happen

Retailers are transforming their businesses by examining their industry and market position while assessing the objectives of the total organization. The transformation process determines where functional objectives and supporting human and cultural elements may have created gaps between the optimal and actual operating structure and results. The process touches all aspects of the organization -- both internal and external-- to design comprehensive solutions.
 
 
Identifying Opportunities
There are several key indicators that alert retailers of potential challenges to overcome through business transformation:
  • Higher than average industry SG&A ratios
  • Declining and/ or flat sales results
  • Top performing functional areas coupled with high overall expense rates
  • Below industry inventory productivity
  • Companies in distress

Approaching the Challenges
We recommend a tried and true business transformation approach. First, conduct a comprehensive
review of all practices and productivity levels across the organization. Next, design
reengineering efforts to drive newly defined company goals. Finally, focus on:


Merchandising
  • Leverage merchandising information systems to enhance forecasting
  • Establish micro-merchandising capabilities
  • Establish strategic supplier partnerships
  • Reduce overall inventory costs
  • Review organizational structure of merchandising areas
  • Implement effective merchant goals
  • Develop measurement standards.

Sales & Customer Service
  • Develop a consistent and accurate Customer Service Index
  • Create employee recruiting and selection criteria
  • Implement recognition and reward programs.

Finance & Administration
  • Improve performance in all back office, financial and paper processing areas, including accounts payable, sales audit, general accounting, credit and collections, headquarters and administration
  • Implement productivity measurement, goal-setting and feedback.

Organizational Renewal
Link each of the above areas, as appropriate, with analysis and enhancement of cross-functional processes. The development of operating strategies to support the mission and vision turn concepts into results.

Culture Change & Integration
  • Seek commitment from management
  • Set clear and specific goals
  • Measure and quantify results
  • Coach, reward, and recognize employees.

Realizing Results
Retailers can expect to achieve anywhere from $5 million to $50+ million in savings as a result of a
business transformation project. One $550 million specialty retailer achieved
a 3 percent to 5 percent sales increase over trend, approximately $3 million in reorganization
savings, and $3.2 million in inventory cost of funds. In another instance, a $612 million drug-store chain reduced payroll by $2.5 million, increased same store sales by 5 percent, and improved in-stock rates by 15 percent.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Creating a Pure Customer Environment

Retailers want to deliver a shopping experience consistent with customers' expectations of the
environment, products and employees found in their stores. But too often associates concentrate
on non-selling tasks when customers are in your stores. Associates need to be refocused on the
customer. Sounds simple enough, but many of today's foremost retailers are not effectively and
consistently achieving this focus in all of their stores.

Turn your managers into leaders
Managers are in a unique position to set the tone on customer satisfaction in each and everyone of your stores. You can help your managers by streamlining administrative and non-selling tasks so that they can help associates set selling priorities. The emphasis should be on an active approach to selling.

Develop a customer service vision for the entire organization
A clear vision is the driving force of an effective customer service strategy. The vision should be more than a slogan --it should be a vital, living, changing culture. Everything at your company should be aligned with this vision. And keeping the vision simple will allow consistent execution by all employees, creating satisfied, repeat customers.

Involve the whole organization
Your service vision should be a company­wide effort that sends the message that, "This is a great place to shop and a great place to work." You must first and foremost convey the company standards to your staff because these are the people who will convey the message to your customers. The company standards must be carefully defined and thoroughly understood by your staff -- so that the desired attitudes and behaviors can be reflected in their actions and interactions with customers. In the end, actions alone will make a lasting impression on your customers.

Vision and Training are not enough
A well-defined vision and thorough training won't guarantee success. Employees must embrace the ideas before they can practice the techniques and communicate the vision to customers. Many programs fail because they're viewed by employees as another "flavor-of-the-month" program, a cardboard priority that will bend or crumble during the next expense crunch. The program needs commitment -- not lip-service -- from top management.

Consistency is the key to commitment
Everything from labor scheduling, training, store policies and performance reviews must be aligned with the vision and applied consistently. Only the program's consistent application can develop the managers' and associates' complete commitment to your customers.

Remember the program is conveyed first from associate to associate and then from associate to customers. Many departments never deal directly with customers, but they do deal with other associates. By ensuring that internal customers are treated with the same vision as external customers, the needs of your external customers will be met.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

GateKeeper On Duty

Now more than ever, retailers are moving toward that philosophy as they appoint gatekeepers to filter and funnel communications and workload from regional and corporate offices to the stores. If executed properly, the gatekeeping function can save time and money while improving execution
at the store level. The concept is rudimentary, yet many retailers are overlooking the possibility. Others may not be using the function to its fullest potential. That's why retailers are encouraged to return to the basics. By revisiting elementary retailing elements, retailers are discovering missed opportunities.
 
 
Expected Role
Gatekeepers are responsible for filtering and funneling information to the stores in a timely, efficient manner. Specifically, the gatekeeper: 
  • Receives and reviews all information and workload that needs to be communicated, including price changes, plano grams and much more
  • Determines what should be communicated, how it should be distributed, and when the organization should be informed
  • Stays focused while working with merchants and headquarter's departments to make "smart" decisions concerning seasonal layouts, price changes, etc.
  • Creates a budget for communications and activities, and ensures the organization remains within it

Ideal Candidate
Retailers should appoint a director-level person to handle the gatekeeping function. To be effective, gatekeepers should possess several characteristics and traits, including:
  • Knowledge of the organization's strategies and priorities
  • An understanding of store operations
  • Leadership and teamwork qualities to overcome adversity
  • Strong written and verbal skills

Benefits
There are numerous advantages to implementing a gatekeeper and utilizing the function effectively. For instance:
  • Communication is clearer
  • Standard of execution is heightened
  • Costs decline
  • Labor hours are used more efficiently
  • Customer satisfaction improves

Case in Point
At a large mass merchant, the gatekeeper function was instituted in conjunction with a store effectiveness program. The result was a markedly higher level of execution across the chain with a net reduction of 7 percent in store labor costs.

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

  

Suppliers: Friend or Foe?

Retailers are faced with an ever-growing and ever-changing list of challenges. They are suffering from falling profit margins and flat or reduced market growth. They are plagued by consolidation, increased competition and high standards set by industry leaders. We're not telling you anything you don't already know. You live through these critical issues every day. But you may not realize that closing the gap with suppliers can significantly reduce costs and boost revenues. It is imperative for retailers to develop "Partners" outside of the organization, rather than just suppliers of products or services. Retailers can achieve this by focusing efforts on developing partnerships with the right suppliers and also by understanding the value a supplier brings to the organization.


Segmenting the Supplier Base
The objective of segmentation is to identify suppliers that reflect the retailer's strategic vision. This ensures an improved focus of time and effort on high-value, primary suppliers, yielding closer relationships, increased revenues and reduced costs.

Unfortunately, not everyone will agree on which suppliers should have primary status because each area of the business has different needs. For instance, merchandising might measure suppliers on gross margin and sales volume. Stores and warehouses may measure delivery accuracy and the amount of pre-retailing done by suppliers. Neither are wrong, but a partnership can only start if your organization has similar views on the supplier.

Another tool helpful to understanding a relationship with the supplier is to know the current value to the organization.

Measuring Suppliers' Value/Contribution
A true representation of net contribution to the business is achieved by examining all aspects of the business, and assigning costs and incomes to each. However, most retailers do not have this information at hand. They must invest Significant time conducting research and holding extensive discussions with suppliers.

Information technology can help greatly in this area, but it is important to have an open and honest dialogue with suppliers to understand the costs and incomes of both parties. Discussions also reveal duplication of work and other inefficiencies.

Making a Case
A department store chain client needed to enhance supplier alliances. Specifically, the retailer was plagued by several challenges, including:
  • Too many suppliers, resulting in a lack of focus and a dilution of relationships
  • No formal process to monitor and control the number of suppliers
  • High-volume suppliers that were not cooperating with the retailer's vision

The retailer created a supplier segmentation model to begin its measurement and improvement process. Specific criteria included:
  • Gross sales
  • Uniqueness of product
  • Brand image,
  • Electronic Data Interchange
  • Logistic capability (lead time, hold stock, delivery window)
  • Pre-retailing capability (ticketing, hanging, store allocated vs. bulk shipment, bar coding.)
  • Exclusivity

After segmenting suppliers, establishing performance goals determining alternative actions and holding numerous discussions with suppliers, both the retailer and its suppliers benefited. Specifically, there was a reduction in cost of approximately 5 percent, quicker response times,
as well as increased availability, productdelivery, accuracy and quality. The long-term benefits include decreased mark-downs, improved product innovation and enhanced promotion strategies.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Minimize Payroll Costs, Maximize Productivity Levels

Understanding Your Challenge
Payroll-- the single largest operating expense in retailing -- must be controlled, and it must be controlled without negatively impacting customer service.

Helping You Meet The Challenge
We combine retail business knowledge and reengineering experience with technological ingenuity so you realize significant, measurable savings, while achieving enhanced customer service, associate productivity, and morale. Our practice develops and implements retailer-specific strategies utilizing the most contemporary automated labor scheduling solutions and time and attendance software packages. Our team of retail professionals does more than just automate your current practices. We recommend industry best practices, and we work with managers and associates at every level to
determine the best solutions for your stores and your customers.

Service Approach
Components of a labor management process include:
  • Conduct a focused needs analysis
  • Reengineer necessary processes to Best Practice levels
  • Establish performance standards by key task
  • Install and configure your chosen labor scheduling and time and attendance software
  • Model the installation in various formats and volumes until desired results are achieved
  • Roll out the new procedures and labor management techniques to the chain
  • Train field management to support and maintain the new tools
  • Follow up and refine

Typical Results
An approach that includes a blend of technology and reengineering yields substantial results.
  • Labor costs decline 8 percent to 15 percent
  • Store payroll improves 0.5 to 1.5 payroll percentage points
  • Sales trend increases 1 percent to 3 percent
  • Staff hours match customer traffic patterns
  • The rate of completion for non-selling tasks increases

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Revisiting Non-Selling Tasks

Back to basics. It's the philosophy of any successful retailer. Sure, they look at cutting edge technology and innovative practices, but smart retailers also return to the basics. Smart retailers understand the need for a solid foundation before tackling complex issues. They've witnessed substantial improvements by ensuring fundamental principles were in place. And they know it's difficult to reinvent the wheel. Returning to the basics makes sense particularly in the case of non-selling tasks. I'm sure you're aware of what needs to be done, but can you say for certain they are getting done? Even the most astute retailers need reminders that it's time to revisit the basics. Because we've all overlooked the simple solutions at some point, sometimes at the loss of significant results.

Check List
When was the last time you examined the fundamentals of your non-selling tasks? Take a look at the tasks and processes currently utilized for the following activities:
  • Stocking
  • Price changes
  • Merchandise maintenance, including
  • cleaning and straightening
  • Re-merchandising and layout changes
  • Scheduling
  • Cash reconciliation
  • Payroll
  • Inventory management within the store, including generating orders and updating unit inventory
  • Communication

Benchmarks
As you revisit the fundamental elements of non­selling tasks, keep in mind industry performance indicators:
  • Apparel price changes (units per hour): 350+
  • Accessories and domestics price changes (units per hour): 150+
  • Remerchandising / floor moves (units per hour): 250+
  • Office support as a percentage of total store labor hours: 4%

Benefits
You'll see a marked improvement in operations and the bottom line upon re-examining and enhancing non-selling tasks. Benefits include:
  • Reduced labor expenses
  • Additional selling time
  • Increase revenues

Case in Point
A $15 billion department store chain client improved its non-selling tasks by returning to the basics. The retailer streamlined existing activities, eliminated duplicate tasks, and implemented best practices in several non-selling areas, including receiving, replenishment, recovery, loss prevention, service desk and more. The retailer achieved approximately $20 million in recurring annual operating savings. In addition, substantial improvements were seen in sales, customer satisfaction and productivity.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Operating Procedure Manuals: The Final Word

Doing it by the book. That's what retailers are doing as they discover the benefits -- and necessity -- of utilizing a policy and procedure manual. Manuals contain specific information about many areas,
including: store operations, safety, loss prevention, receiving, customer service - and the list goes on. From taking out the trash to negotiating with vendors -- these retailer-specific documents make it easier for store managers to do their jobs. And it makes it easier for retailers to deliver consistent messages to the consumer. In fact, the use of a procedures manual ensures consistency throughout several areas of a retail chain, which yields numerous benefits -- from enhanced customer satisfaction to increased sales.

Overcoming Writer's Block
There are several warning signs that indicate a need for a policy and procedure manual-- many of which should spur your team into action. For example:
  • Payroll for specific functions varies from store to store
  • Levels of compliance differ from store to store
  • Store profits are impacted negatively by inconsistent practices
  • Customer relationships are adversely affected by inconsistent practices
  • Store emergencies are handled incorrectly and unprofessionally

Make it a Best Seller
Utilize several best practices to compose the most effective manual for your organization. For instance:
  • Every area of managing a store must be included
  • Managers and associates should not memorize each policy and procedure, but they must know how to reference the manual if an issue does arise
  • Avoid minute details, but include relevant information necessary for managing a specific procedure

The Final Chapter
Retailers are sure to realize benefits as a result of developing a policy and procedure manual. Specifically:
  • Sales and profits are enhanced
  • Customer satisfaction increases
  • Consistency is maintained from store to store
  • Expenses decrease
  • Business won't come to a halt because corporate offices are closed or a regional director is not available to assist with an issue

Case in Point
After assisting a retailer that was preparing to open a chain of stores. Developing a manual established guidelines to manage stores consistently. It also standardized the decision­making process during the planning phase to open stores.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Space Management: Make Room for Savings

Running out of room in your store? Be sure to consider the options before making your move. All too often retailers believe the only alternative to cramped quarters in backrooms, office areas, common areas, and selling floors is acquiring additional space. Not necessarily true. In most instances, obtaining off-site storage and relocating people is an expensive proposition that should be a last resort. What appears to be a lack of room is often a lack of efficient space management, which can cause lost sales revenue, poor productivity levels, and an urgency to acquire more space -- leading to increased costs. In many cases, your existing space can be easily reconfigured to save you time and money. Even if you do need more room, you may not require as much as you thought.


Understanding the Issues
Efficiently managed space begins with the recognition of opportunities. These warning signs may indicate a problem.
  • Open spaces on the selling floor, even if the product is on hand
  • Cluttered and disorganized aisles, hallways and stockrooms
  • Excessive time required to put away new receipts
  • Insufficient staging space for large shipments of advertised products
  • Sales associates continually leave the sales floor to locate additional merchandise
  • Poor utilization of vertical space and excessive time required to retrieve product stored on high shelves
  • Sales lag expectations for specific locations where space or fixturing is a known issue
  • Off-site storage or multiple stockrooms required for a single commodity

Meeting the Challenges
Identified space management opportunities? Then it's time for the best practices below.
  • Utilize" space savers" to increase apparel capacity on hang bar by 50 percent
  • Install mobile shelving to decrease square footage requirements and to improve cubic volume
  • Use hand-held "picker poles" to access high hanging apparel
  • Install collapsible or multi-functional material handling equipment to reduce storage space requirements
  • Implement special function storage systems, such as bin shelving for accessories and drive-in pallet racking for large items
  • Design and install special application shelving and material handling equipment to reduce damages
  • Minimize space requirements for P.OS. stations through location analysis and layout; review the use of portable units to handle peak requirements
  • Disassemble, label and design fixturing bins for seasonal or occasional fixturing
  • Use modular, multi-functional, ergonomic office equipment and storage systems
  • Consider mezzanines where high space is available and fast turnaround is not required
  • Review need for mechanical equipment, such as dry cleaners, vertical lifts, carousels

Achieving Results
Reevaluating and reengineering space management will yield significant results. For instance, it will:
  • Increase stockroom cubic capacities 25 percent to 60 percent
  • Improve productivity 12 percent to 30 percent
  • Decrease capital equipment expenditures
  • Increase selling floor space
  • Speed picking and flow-through to the selling floor
  • Reduce frequency of stock room to selling floor replenishment

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Merchandising: Door To Floor

Retailers have slashed costs, pumped-up sales, streamlined activities and reengineered processes
throughout their pipeline. Now they're going back to basics. Leading retailers routinely examine the
fundamental practices of their retail operations, ensuring the best practices are being utilized within the store's four walls.

Best practices for moving merchandise door to floor aren't necessarily cutting edge. In fact, most of you could probably recite them in your sleep. However, the trick for most retailers -- even the most astute -- is revisiting the basics and ensuring each and every step is enforced. Sometimes we overlook the simple solutions for more complex ones, even at the risk of terrific results.

Check List
Take a step back. Look at the basics. You could put yourself two steps ahead.
  • Is merchandise pre-processed and floor ready?
  • Is merchandise sorted by department and/ or aisle?
  • Is apparel pre-hung and pre-ticketed?
  • Are myriad items put in re-packs?
  • Is the backroom configured with the most effective and efficient layout?
  • Does the backroom have the necessary equipment?
  • Is the frequency of deliveries appropriate?
  • Have standards been established and measured?
  • Do you have price integrity?

Benchmarks
Measure yourself against the best practices of leading retailers.
  • Process floor ready merchandise door to floor: 2 - 3 hours
  • Units processed per labor hour: 260+
  • Percentage of goods preticketed: 40% - 75%
  • Percentage of goods received floor ready from vendor: 70% - 75%
  • Percentage of goods received floor ready from DC: 70% - 90%

Benefits
Just a reminder of the rewards you'll reap after revisiting the fundamental elements of moving merchandise door to floor:
  • Reduced labor expenses
  • Additional selling time
  • Increased revenues

Case in Point
A previous client, a $500 million specialty store chain, improved its door to floor activities by returning to the basics. The retailer reengineered store processes to streamline existing activities, eliminated duplicate tasks, and implemented best practices. As a result, the retailer improved productivity by 20 percent and reduced direct annual operating costs by almost $10 million.


For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Pharmacy: A Prescription That Works!


The Pharmacy, like most other areas of the store, can be reengineered to reduce operating costs, increase revenue, improve inventory management and improve customer service. By focusing on five critical focal points, retailers can achieve great results in their pharmacy.

1 - Operational Excellence
To optimize operational efficiency, improve customer service, and minimize operating costs, utilize best practices such as:
  • Ergonomic workspace layout
  • "Speed Shelves" and "Fast Mover Endcaps"
  • On-line interpharmacy communications system
  • Prescription sequencing
  
2 - Staffing and Labor Management
Match staffing level and staffing mix with appropriate customer flow by day of week and hour of day to provide consistent and cost effective service by:
  • Defining and establishing performance standards for each task
  • Ensuring appropriate pharmacist to clerk ratio
  • Implementing automated scheduling

3 - Staff Training
Provide appropriate levels of education, information, and coaching in order to develop the skills of technicians and the effectiveness and service skills of pharmacists. Successful programs include:
  • Contemporary procedures training manual
  • Coaching and leadership training
  • Reward and compensation programs
  • Spirit of continuous improvement

4 - Inventory Management
Improve turns of on­hand inventory, reduce investment in non­productive inventory and improve effectiveness of order process. This can be achieved through:
  • Improving and automating the order process through accurate demand forecasting
  • Proactively utilizing item movement reports
  • Evaluating distribution system needs

5 - Revenue Enhancement
Increase same store weekly script volume and ticket amounts, and improve cross-selling of HBC/GM products with prescription sales. Some approaches include:
  • Synchronizing in-store frequent customer program and pharmacy database
  • Automating the marketing of pharmacy service to targeted health care providers
  • Providing customer reminders for refill or lapsed prescriptions

Typical program results include:
  • Increase in script volume and overall revenue by 8% -12%
  • Improved productivity I scripts per hour
  • Decreased labor costs of 3% - 6%
  • Quantifiable and improved customer satisfaction
  • Improved employee satisfaction and reduced turnover

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc



  

Customers For Life

Customer retention is one of the few ways to ensure long-term financial success. Consider this: A 5% increase in customer retention can increase profits 30% - 50%. Not to mention that recommendations from existing customers can account for up to 60 percent of sales. Satisfying customers is not a new concept, but it's one that isn't easily mastered. Many retailers spend time and money attracting new customers or creating new customer satisfaction slogans when, in fact, retailers should spend time considering the lifetime value of each customer.

Stew Leonard, one of the most successful independent grocers of all time, recognized the lifetime value of his customers. Years ago he figured that the average customer would shop with him for about seven years before moving to another neighborhood. Since the average shopper's monthly food bill was $250, he figured each customer was worth $3,000 a year in sales, or $21,000 over the course of seven years. Current day market basket values are much higher now making customer retention even that much more valuable. Armed with this knowledge, he was much more willing to replace a carton of cracked eggs or to provide an extra service -- all in an effort to create a lasting, profitable relationship with customers. Stew recognized that developing a long term relationship with valuable customers requires providing satisfying experiences over many visits and focusing on key customer relationships.

Satisfying Offers
A retailer has a lot to offer - from merchandise to service. To ensure you're providing a complete and satisfying offer, incorporate the following elements into a continuous improvement program.

  • Customer Satisfaction Index. Monitor the performance of each point in your offering - through ongoing customer surveys.
  • Satisfaction Goals. Establish clear and challenging customer satisfaction goals for employees at all levels.
  • Value Driven Initiatives. Continuous improvement efforts should focus on areas that customers value most.
Service Recovery
Success at the point of service recovery is critical to customer satisfaction and depends upon employees. When a customer's experience is disappointing, the first associate they contact must be empowered to resolve the issue. Associates must:

  • Understand your policies completely
  • Be Committed to satisfying customers
  • Be equipped and empowered to resolve issues
  • Be rewarded on the basis of customer satisfaction goals
Identify & Attract Valuable Customers
Not all customers provide equal value over the long term. Relationship developing efforts must focus on the most valuable customers, including:
  • Defining valuable customers to the company
  • Identifying and understanding their needs
  • Ensuring the offer meet their needs
  • Focusing marketing efforts to effectively reach, attract and retain them
Create Closeness with Customers
Loyalty stems from a feeling of attachment or closeness. Key components include:

  • Customer Focused Culture - All levels in the organization must exhibit customer focus
  • Employee Satisfaction - The employees must feel welcome to make customers welcome
  • Customer Recognition - Customers should receive extra value for staying loyal
Understand Results of Effort
A focused effort requires understanding of results Success in retaining valuable customers must be quantified, understood, and translated into actions. Key tools include:

  • Customer retention measurement
  • Customer satisfaction measurement
  • Valuable customer defection analysis

For more information on this topic contact Pat Fitzpatrick at Atlanta Retail Consulting Inc

Atlanta Retail Consulting - Press Release


Atlanta Retail Consulting, Inc (www.AtlantaRetailConsulting.com) is pleased to announce the completion of another very successful year with escalating sales - providing consulting services to the retail industry. “We had the good fortune to work in a variety of different retail formats experiencing a broad array of retail challenges”, stated Pat Fitzpatrick, President & CEO of Atlanta Retail Consulting. “Our consultant team expanded in response to the demand for our services and currently exceeds 35 members, all of whom have proven direct retail and retail consulting expertise - representing in excess of two hundred man-years of retail experience across a broad array of retail disciplines.”

This past year presented a number of new opportunity areas to Atlanta Retail Consulting, including engagements in; the multi-cultural retail environment, the medical environment with embedded multi-format retail offerings, tri-channel retail integration, and high-end specialty food. The engagement mix was varied and trended back toward store operations and enterprise-wide performance improvement efforts in the mid-size retail arena. Previously, the business mix had been heavily oriented toward more IT and merchandising / inventory management related engagements. A new product developed just recently is a Retail Marketing / Advertising Strategy Effectiveness Assessment. This process combines a detailed Store Operations Assessment with focused in-store customer intercepts to gauge the true level of Corporate Marketing / Advertising compliance and effectiveness – providing invaluable feedback to corporate regarding their promotional efforts.

“We continue to experience a strong growth trend established in our first year of business”, stated Pat Fitzpatrick. “This past year also brought a broadening of our business offering, as we strategically decided to assist mid-size and smaller retail organizations, who actively solicit us, in their quest to become more effective and stable. This strategy shift took a lot of thought, as we had previously decided to serve our large retail customer base exclusively. We recently decided to accommodate consulting requests from qualified mid-size and smaller retail organizations as an addition to our pre-existing large retail base. Our target customer will remain large US and Western European retail organizations.”