Suppliers: Friend or Foe?

Get More Value from Your Vendor Relationships


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, product delivery, 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

Improve Your Operating Efficiency
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 re-engineering 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
  • Re-engineer 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 re-engineering 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

Improve Your Store Profitability


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+
  • Re-merchandising / 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

Optimizing Your Store Procedures 


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 decision ­making 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

Optimizing Space Utilization in Your Stores


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 re-engineering 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

Efficient Store Stock Flow


Retailers have slashed costs, pumped-up sales, streamlined activities and re-engineered 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 re-engineered 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!

Strategic Retail Consulting


The Pharmacy, like most other areas of the store, can be re-engineered 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 inter-pharmacy 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

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

Improve turns of on-­hand 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

The Value of Customer Retention


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 iconic and 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

Retail Consulting Services


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.”


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