Over the past weekend I was scouring the internet for some retailing information. I came across a number of sites with pictures of stores on Black Friday in theUSA. Black Friday is regarded as the first day of Christmas shopping and stores open much earlier than normal in anticipation of the crowds of shoppers wanting to find a bargain.
I was completely taken aback at some of the pictures! The crowds were unbelievable! It all looked like utter chaos in my view and if I lived in theUSI would avoid all the malls and stores over this weekend. I know there are real bargains to be had, but saving a few pennies would not entice me to even think of going anywhere near a shop.
So why am I writing about this today? I live inCape Town, which is a coastal city – and our stores, restaurants and shopping malls look very similar over the Christmas period. You cannot move in the stores, finding parking is a major challenge and worst of all – Customer Service goes out the window! We dine out in a restaurant and when we sit down we know the service is just going to be shocking. The staff are tired and care little about giving good service – they just want the holiday season to pass as quickly as possible. And management is only seen – when they are placating irate customers. (Which is often at this time of the year!)
And what happens to our suppliers in this period?
Many just seem to shut down and if they are open, our orders are never met in full. So we have products that we normally sell, not on our shelves, and customers get irate with us – and our staff bear the brunt of this anger.
So here are a few suggestions from me that might perhaps help us all over the Christmas season.
For those that live along the coast (oh boy I am exhausted already just thinking about it):
- Prepare your store ahead of time – make sure you have the right products ready for sale. Don’t just use last month’s orders – take some time out to properly consider your customer’s needs (remember to have jelly powder)
- Prepare your staff for the onslaught – you know the onslaught is coming and so do they. We all dread it. So think about changing the way you manage your shifts. Give more frequent breaks but of shorter duration – especially to your cashiers. Just five minutes out of the front line gives us all a bit of sanity back into what we do
- Train additional staff to assist in those peak periods – now. Think about employing temporary staff to assist in keeping the store clean, or to take stock for you. Just because you are busy is no excuse for poor hygiene or allowing controls to be relaxed
- Ensure you have your orders ready ahead of time. Increase your stock holding levels if need be – especially high volume items. Yes I know holding more stock is expensive but at this time of the year it is better to at least have them in stock all of the time, than not at all
- Prepare your suppliers now – let them get the stock to your store and not the one across the road. Work with them – you want all the stock you can get. Let the guy next door have empty spaces on his shelves
- Ensure all the hand held terminals are in good working order – and that you have enough of them. You know that in peak trading periods no matter how many terminals you have, they all work slower than normal – so make sure you have enough in good working order
- Walk through the general customer experience with your staff – from the time they enter your site and into your store. See it through your customer’s eyes – and not your own. Plan for where the bottle necks are going to happen – and prepare your staff on how to deal with them
- Work out how you are going to be able to keep the customer moving. It is one thing to have long queues, but if they are slow and not managed they can cause disaster for your business. Perhaps train your security staff to assist in getting people moving? Train them to show your customers where to find certain products in the store? If the customer keeps moving albeit slowly – it reduces the frustration for all concerned
Think about how you can still deliver quality customer service in a shopping season of madness. You know your business better than anybody else. I just urge you to consider what it is that you can do today to ensure a profitable and happy shopping experience.
Take care out there
I have a Total service station just around the corner from where I live. On three occasions I have driven off the driveway as there were no staff to be seen anywhere on the forecourt.
Anyway a week or two back – I had a bit of time on my hands – I decided to try and get attended once more.
The forecourt attendant filled my fuel tank – and then when I presented him with my debit card he said I had to go inside to pay. I asked him why – and he said that their handheld devices had stopped working ages ago but they were not fixed yet.
I asked for the pump number and started walking into the shop. The pump attendant followed me – so I said to him – not to worry he can go and serve another customer – and I will pay at the till. Guess what his response to me was – we have to stay with the customer to make sure that they do pay!
So here we were in a queue with about 5 customers in front of me – all of them also with a forecourt attendant in tow. No wonder there was never any staff on the forecourt – they were always standing in a line inside the shop to make sure the customers did not drive off without paying.
Now how stupid is that? Just get the handheld devices fixed for goodness sake.
The customer in front of me said the owner of the service station lives far away – and hardly visits the site. The handheld devices he said had been broken for a good few months – and nothing gets done about it. Needless to say I have not been back there.
One more thing about hand held devices in general – especially those on most forecourts – they are absolutely filthy! Why can’t we use the same sort of clean wipes we find in our supermarkets for trolley handles? The device can be wiped clean prior to each transaction. Really simple to get it right and it would leave a lasting impression for your customers.
It clearly shows that you care about them.
Some of you will know from our facebook page that I have found inconsistencies in the coffee offering of the same franchise – in the same building. Both are housed at Lanseria airport – one is before you enter the security section and one is just before you board the plane.
The coffee dished up outside the security section is vile. I have tried it a few times now – and it remains awful. On the other hand the coffee served inside the boarding lounge is great – well it was until a few weeks back.
On my last visit through this airport I went straight to the boarding lounge expecting to have a great coffee after a long day at work. It was awful. So I asked to see the manager – I think her name was Tanya. When I told her about my experiences outside compared to hers she immediately said that this is what most customers tell her.
I then told her I was very disappointed with my coffee that day and she explained to me that their coffee grinder had broken and was in for repairs – so they had to get their coffee ground at the other coffee shop. Suddenly it all made sense – the difference was in the grind of the coffee! As simple as that.
And the worst thing about it all – was that management were fully aware of the discrepancy between the two offerings – and did nothing about it!
And so to my question this week – do your staff have the right equipment to do their jobs properly? When something breaks – have you got a back up plan? When last did you personally inspect your equipment? How do you know it is all working as it should be – if you don’t inspect it?
Don’t wait for a customer to complain before you check your equipment – inspect it personally and see it as part of your job on the site all of the time.
The devil is in the detail – make small changes to the way you do business today
Take care out there
A few weeks back I took new dealers in the industry to visit a few sites in the Sandton area inJohannesburg. For those that do not know this area – it is an extremely affluent residential and business area. So there is serious money around.
Many moons ago, I opened some of these shops for the first time – so I knew the layout of some of the stores and of course what they looked like when we opened them. In hindsight that is probably the reason I was so disappointed in just about all of those we visited – regardless of the brand.
The only word I can find to describe them – is tired, looking lost and forlorn! So here is my question to you and your store? Be honest now with yourself – does your store look as great as it did when you opened it to the public for the first time?
Here are some of the things that disturbed me on these visits:
- The pay point/s looked particularly poor. They were dirty and untidy and the fixtures looked like they needed some serious attention. How much could a few new shelves cost?
- Ticketing and labelling was non- existent for about 40% of the stores as a whole. The group had to physically count how many line items had no ticketing – so this is pretty accurate for all the stores we visited. This is an elementary retail norm – why can’t we get it right?
- The shelves looked or were perceived to be empty. In reality they weren’t – but because the products were not being brought forward it left the impression that the store was empty.
- And don’t let me talk about the condition of the toilets/rest rooms…
Ok so here are some suggestions for you and your store this week.
Firstly, take a good long hard look at your store. You need to be honest with yourself here. Because you work in the store all day, you no longer see it through the eyes of your customer. Why do you think it does not look like it did on your opening day? Why does it have the look and feeling of being tired and past its sell by date?
Secondly, take each area of your store one at a time. Start at the pay point – all your customers end up there – so that is your first priority. Is it neat and tidy? Is it clean? Look at the shelves – are they still looking the same as on the first day? Clean the shelves, the partitions, the merchandise, any stands, – in fact any surface that the customer comes into contact with.
Then move onto the sales floor. Try this for yourself to see just how easy this is to do. Walk up and down the aisles and just bring the products forward. Straighten up shelves that look untidy – make sure that there are no empty spaces on the shelf. Now look back and see the difference. Its as easy and as simple as that….you have already made the impression change from a store feeling empty to one that looks full.
Once you have done this get your merchandiser to fill in all the gaps. Get him /her to look at the price labels at the same time.
Now go into the store room –in retail terms we can always tell a profitable store based just on the condition of the store room. How does your one look today? It should be spotless, no papers or boxes lying around, no wrapping or packaging lying around. If you get your store room right the rest will follow.
Now take a walk into you cash office or back office. How does it look? Just because the customer does not see this office does not mean it does not have to be neat and tidy. Are there invoices lying around, till rolls and GRV’s lying waiting to be attended to? If so you know that they are behind in their work schedule – and this office is like the soul of your business. If that gets out of hand – you can bet your bottom dollar that you are losing money!
It should be neat and tidy with easy access to files – you should be able to find anything you might be looking for within a moment or two. Can you do this?
Many people in the retail industry talk about this as your store recovery. It is the simple act of getting your store ready to trade with your customers .It is the combination of several processes to make the store look and feel great. It is the continual process of preparing the store for its customers…
And it should be done on a daily basis!
Take care out there
Last week I was spending some time with a young lady in her first year at University. She was taking very similar subjects as I had done so many years ago. She asked me the question – how did you know what you were going to do after you completed your various degrees?
A really good question! How did I land up in retail of all industries in South Africa? Unlike other countries being in retail in South Africa is bottom of the rung – even the banking sector was deemed a better industry to work in. It still is regarded by most as a dirty industry to work in.
And this is how it happened. During my first year at University I was really struggling. My parents were unable to assist me financially in anyway to study. Early on in my first year I was introduced to a business owner who listened to me saying how hard it was just to stay at university – and how uncertain I was that I would be able to complete one degree – never mind three.
He owned a hotel in Cape St Francis – a good 9 hour drive from where I lived. He was having trouble managing the hotel and its bottle store that was attached to the hotel. Would I like to work each vacation for him – and all the long weekends and public holidays throughout the year? I jumped at it especially when he told me how much he would pay me! It was a huge salary.
And so that is where and when I started in retail – at 18 years of age. My first day on the job was horrific! We had two entrances to the bottle store – one for the “walk in” customers and one for the drive in customers. All returnable bottles were to be handed in on the “walk in” side – and the customer was duly paid for these bottles on that side too.
I could not believe just how many bottles were returned on one day! I spent the day running between the two tills. When I closed up for the night – and did my paper work for the end of day I was horrified at what I found. Guess what I had done? I was receiving and paying out for the same bottles over and over again! I had not secured the empties as they had come in!
And the cost – was almost equal to my month’s salary! I was devastated! My first real days work ever – and I had just cost my boss oodles of money in ONE day…
Anyway I decided to own up there and then. And resign with no pay for the day if need be – or work for the month for no salary. So those were the thoughts in my head when I went to see my boss.
He listened carefully to my story and asked a few clarifying questions. And then he sat very quietly. I was nearly in tears by then. The questions he was asking me sounded like he thought I had deliberately stolen the money – and now I was thinking he is going to call the police. I was a wreck.
He then asked me the following questions:
- “What will you do tomorrow to make sure it does not happen again?”
- “What have your learned today?”
On my way over to his office I had already thought about these very same things – so I was able to answer them quite easily and he was more than satisfied with my proposed solutions.
And so I got my second chance. I grabbed it with both hands. I spent time looking at the range of products, the pricing structures (I was determined to get those lost monies back for him) – I rearranged the layout of the store – not just once but over and over and until I thought I had got it right.
And I found that each change I made – even in the store room – made us more profitable. I LOVED it. He gave me complete carte blanche – I could add or delete products as I liked. I could price as I liked and even source suppliers that I preferred. I set up three pricing structures for each product we sold – one for the walk in entrance, one for the drive in customer – and a third one for the guests in the hotel and its restaurant.
I was hooked! And I never looked back – you either love the retail world or you hate it. It never felt like work to me – I was enjoying each day at work. Everything I learned in those days was by trial and error. It was only years later that I started to “study” retailing principles. But they were mostly old hat to me by then….
So the next time a staff member makes a genuine error which costs you money – think twice about how to deal with that person. As it turned out for me – I worked for Hilton for many years which allowed me the opportunity to complete three degrees. He had bought my loyalty for life! And when I was finished – he asked me to run of his other company’s which I turned down.
I was lucky to be able to do more or less as I liked in that bottle store. I was able to try out new things. It was an opportunity of a life time for me.
But how many of us even listen to suggestions our staff make or even allow them to try something new in our stores? And after a while they stop making any….
Perhaps give them and yourself a second chance…
Take care out there
The challenge for me in this discussion is that I do not have the answer!
And this is because I am not entirely convinced that planograms grow sales or even profitability for that matter, at store level.
What is a planogram?
Essentially it is a diagram that indicates which products go on which shelves – and how many facings of each product need to be on each shelf. The diagram will indicate which variant of a product to stock, and which supplier’s products should be on the shelves. I see planograms as vastly different to say a store layout – which is also a diagram. To some extent I think these are being confused.
A store layout tells you where to position your pay point, where the fridges should go, where chips, sweets and snacks should be displayed in your store etc. As such I see store layouts as infinitely more helpful to me as a retailer when opening a new store or revamping a store. And even as you trade – you can review your store layout to better meet the traffic flow in your store. So a store layout can be very useful to me as a retailer.
A store layout will not show which variant of toothpaste to stock. It will indicate however, where toiletries as a category or department should be in your store. The planogram will indicate actual line item, the colour, size etc – and on which shelf it should be merchandised.
Planograms are the end product of some sophisticated software (that in many cases costs the earth to use or buy outright) – into which all sales of all products are pulled into the system. The software then uses these sales to generate a product layout based on these sales.
So why am I not entirely convinced that planograms can work and drive increased sales at store level?
Well firstly it all depends on where the information is being pulled from. If it is from my store only – then I would concede that there might be merit in using a planogram. However, mostly because the costs of these programs is prohibitively expensive – Franchisors tend to collect information from its entire network – to drive consistent planograms throughout its network.
Some are fortunate to get down to regional level – but even at this level of information I am not convinced it helps me at store level.
For one thing the information is historical. So it is based on sales that have already taken place either a week ago, last month or even worse – the last six months. And those of us that work on the ground know intuitively that our customers’ tastes continuously change.
I remember a few years back when a large supermarket in our country introduced planograms into their store network. Based on historical sales – planograms were sent out and store staff ordered according to these plans. However, in that particular year down here in the Western Cape – we did not have a winter season. So soups and bread were not the priority purchases that had been incorporated into the planograms. Instead customers were looking for a continued supply of fruit and salads!
The one positive thing that worked in this company’s favour – was that they owned the supply chain – it was not a franchised network. They supplied their stores out of their own distribution centres. But it did incur some revision of their strategy in this regard – as the whole supply chain was treated as one business entity – so their suppliers and orders had to be reviewed quite quickly.
Those of you that have worked with planograms will know that it is not that easy to comply with product layouts sent to you. And I am sure like me – there will be those of you that look at the product selection and then say to yourself – but these don’t sell in my store! And this is a common complaint from franchisees.
So why is it difficult to implement store planograms on the ground if there is no central distribution centre?
There are a number of reasons why this is so.
- You don’t stock an item because it does not sell in your store or region
- You do not have the required fixtures and fittings in your store to display the products as depicted in the diagram. This is particularly true when you use pegs and hanging displays
- You don’t sell that variant – your customers for example prefer strawberry yoghurt to vanilla yoghurt
- You don’t like where that product has been positioned on your shelves as your margin on that product is very low
- Your supplier is out of stock – very common in some regions in our country
And by far the biggest challenge for me is that we are basing our future product layouts based on information that may or may not be correct in the first place. They may not be a true reflection of what our customers are looking for.
In this regard a while ago I wrote about a product such as Jelly powder. It really only sells in one month of the year – and if you did not have it last year – it won’t be on the planogram for the next year’s sales.
Don’t get me wrong about those networks that have central distribution points. They too have difficulty in implementing planograms in their networks too – but it is much easier for them than say a franchised network that does not have a DC.
My feeling is that to some extent implementing planograms across a network run by franchisees is hard work for all concerned – and in the end, very few stores are able to comply fully to these at store level.
So my question is why bother in the first place?
I just don’t see the return on the bottom line – except of course perhaps for our suppliers?
Take care out there
A number of my friends have been raving about a new Spar that opened up in the Plattekloof area recently. So I decided to do one of my “big” shops there and test it out for myself. They were right about one thing – it is big!
Anyway, my kids go through cheese like nobody’s business – so I normally buy one of those very big blocks of cheese and take it to the deli section in the supermarket and ask them to grate it for me. So off I went to the deli section in this new Spar and asked them to grate it for me. The person behind the counter told me they don’t do that for their customers.
I said I am sure you are wrong – won’t you please call your supervisor. She arrived and said more or less the same thing to me. I explained that all their competitors do it so perhaps they should check once more to see if they were allowed to do it. The supervisor duly came back and said no they do not provide that type of service.
The shop was not busy at all – and nobody had ventured near the deli counter in all this time. At least 10 minutes with all the walking backwards and forwards to find out if indeed they could do this. Now I bet you a million dollars that there is no rule in that store that says you may not grate cheese for our customers. But they stuck to their guns and refused to grate the cheese.
This is what I call a serious attitude that will be the demise of any store that has just opened. You cannot tell me it is a training problem because it is not. These guys were not even pleasant in their negative responses – they were not prepared to go the extra mile even though there is a great Pick and Pay just one block away which is always full. All of which I tried to explain to them as politely as I could.
On what basis were they selected for their jobs? Were they tested for their attitude on the job?
I had another similar incident at a Spar Tops store recently. I have just moved and have had some temporary staff help me move in. When I drew cash to pay their wages – I got a fist full of R200 notes. So I popped into the Tops which is where the ATM is – to ask for change. I waited until they were serving a customer as I know they are not allowed to open their drawers without a transaction.
What did the cashier do as I asked? She literally slammed the till drawer closed and said “Can’t you see my drawer is closed?” There was another customer right behind this one – so I said I can wait until you open it again. She then said without even asking me what type of change I wanted and said “I have no change”. “But I want notes, not coins” and she once again said “no”.
Now I have moved to a small town called Hermanus – and not one customer standing at the till point at that time was remotely happy with her response and told her as such. I wonder how many of them will return? I know I won’t.
So how do you handle staff, who persist in dishing out negative attitude? That is of course if you know about it?
You can’t train attitude – it comes from within that person. It is the willingness to go that extra mile for each and every one of your customers – each and every time.
They must “want” to do it. If the willingness is not there – it is time to discipline them out of the business. Yes I know that some of you will say – you can incentivize the staff and you will get better results. But that is missing the point in my view.
It is the chicken or the egg scenario – which comes first? Their attitude or your willingness to pay extra for providing what should be just good common sense – customer service?
The sad part for me is that if the manager or owner had been around – there would have more than likely been a very different response to both requests. I did pay the Spar in Plattekloof one last visit recently and was saddened to see how the range had been reduced with huge big empty spaces on the floor. It may have nothing to do with the staff – but my guess is that it has!
Spend more time up front recruiting your staff and test for attitude as thoroughly as you can. None of us can afford to have staff that will not go the extra mile!
Take care out there
Well I certainly opened up a can of words in my last blog. What a response!
Here is the gist of the responses I got:
1. Franchisors run national promotions in conjunction with their suppliers with little regard to the franchisee who bears the costs of stock holding at the end of the promotional period
2. These promotions are supplier driven as opposed to being customer driven
3. They do not “drive” feet to the door
As regards bank charges – well you can just imagine what owners and managers had to say in this regard. In many ways these charges are scandalous to say the least. But bank charges and costs will be the subject of another blog.
As regards a Bp service station charging me an extra 5% on my fuel transaction – I have since stopped at another three Bp service stations to ask if they take my debit cheque card for fuel – and all said no. From this I infer that the Franchisor along with their franchisees have decided not to accept these cards as a form of payment for fuel.
This should be explained properly – at the pumps. There needs to be a sign saying we take all debit cards except – cheque debit cards etc.
However, today I want to look at national franchisor driven promotions in our country in particular.
Let’s go back to basics and revisit why we in fact have promotions at all.
“Generally, a promotion is communicating with the public in an attempt to influence them toward buying our products and/or services.”
So we take a reduced margin in the hope that we will get customers to buy more of that product when they get to our store. We want to drive feet through that door.
So please explain to me how buying two of a product and getting one free – gets me to stop at your service station, when I only know about it when I get to the pay point?
I really can’t see the point of these promotions anymore, can you?
How many of you even bother calculating your breakeven point on each product line before the promotion runs? We used to do that as a matter of normal business some years ago – but when I ask franchisors today, they look at me with a blank face as if I am asking a silly/stupid/ blonde question.
The look says it all – why do I have to even know my breakeven point on each line? If we don’t know our breakeven point – how can we tell if they are profitable or not? If we can’t make money out of them, why do them?
We run promotions to achieve the following:
1. Increased ATV – to increase our average transaction value
2. Increase our sales
3. Keep our primary customers coming back time and again
If we do not achieve these, why do them?
We cannot compete on price with our supermarkets on known value items – so should we be doing these product lines at all? Why take a reduction in margin if our sales do not increase, our ATV does not improve and it does not improve loyalty to our store?
Who is driving these promotions? Whose interest does it serve?
My last questions are the following:
1. Who decides which products go on promotion? Why put Coke on promotion for example when it remains our number one top seller? And some even run these in the month of December?
2. Are we pandering to major suppliers?
3. Where is the imagination in these promotions?
4. Why can’t we get the displays right?
Can somebody out there please explain to me the benefits of running these non imaginative and repetitive promotions? I just cannot see how they benefit the branded networks as they currently exist.
It is time for us to grow up and be a part of the real world that our customers inhabit!
Take care out there and keep looking at the detail!
Goodness me it seems that this has been a very long and arduous year! Anyway this is our last blog for 2010 and completes the previous one! Feedback welcome.
So, how do you improve stock control in your store?
The amount of shrinkage in your store will be in direct proportion to the controls you have in place. The more controls, checks and balances you have over your stock – the lower your shrinkage will be.
There are many areas of our business in which we can “lose” stock. These include:
- Return of goods
- Price changes
- Food preparation
- In-store use
- Point of sale
In our last blog we covered points 1-5, now we review points 6-9 and state some of the concerns for these points – and then offer one or two suggestions on how to deal with it.
As with all the points listed above once again in this area there are so many ways we lose stock in our displays. I will only raise one or two for now.
Firstly there is the old adage of FIFO – first in first out. We have to bring “older” stock to the front of the display before we merchandise the new stock. Ever watched a house wife shopping for milk in the local supermarket? Guess which milk she puts in her trolley – the milk right at the back of the fridge. She knows that the freshest milk is to be found at the back of the fridge.
How do we lose money if we do not implement this rule? Out of sell by date – if it is out of date we have to write it off which is a loss. On some perishable items we are able to claim back from our supplier. But with sweets and chocolates for example – you have to write it off. It is a direct loss to the business. And don’t tell me your staff rotate stock – do a check yourself.
Take any of the count lines.
Start at the front – are the sell by dates earlier than the ones at the bottom or back of the pile?
It is time consuming for your shelf packer to pick up the existing stock and then merchandise the new stock underneath on the shelves. If there are no checks – your staff will take short cuts.
Another area for concern on the displays is our price labels. I have no idea why a Kwik Spar with many more line items than us – can get this right on their shelves – and we can’t? I am doing some store visits tomorrow in the Sandton area with new dealers – and this is one of the checks that they will be asked to do.
- How many products had no price labels?
- How many had incorrect price labels?
- Do this check yourself in your own store today!
This costs your business each and every day.
Firstly where there are no price labels, customers will be less likely to buy the product. They do not want to buy something that has no price attached to it. So it’s a lost sale.
If the price is incorrect when the customer gets to the till point – they pay the price that has been displayed. You lose again – your margin has just been eroded.
It gets even more scary if the product and price have not been entered on the system! The cashier will make a decision on what to charge based on other like products – which may be way out of line!
Our displays are our business in many more ways that one! – We need to get each detail of this piece right in order to ensure we do not lose any monies or sales from this vital point.
Not all of us prepare food on our premises but those of us that do will know just how hard it is to keep track of our food items. At best most of us prepare pies. So I will stick to this simple example for the most part.
The challenge here is firstly to accept that there is going to be some wastage when preparing food. How much are you prepared to lose daily? And then keep track of this as wastage! You are still losing money – but you have it under control.
Measure what is going in (how many pies are baked) and then cross check with what goes out…..How many are sold! At best – there should be no shortages at all!
Take stock per shift and cross correlate these with sales per shift. Work out what is OK to be lost to wastage and work within that rule for you. I buy in and prepare 20 pies per shift – then you need to ensure that you sell 20 pies per shift!
It gets harder when we prepare from raw product. How many slices do you get out of an average tomato? At the end of the day how many products did you sell with tomato’s – and how many are left whole in the store at the end of the day? The rest is wastage at best – but if the staff are nibbling – it is shrinkage. Both are a loss to the business.
From bitter experience – bacon is a big one for losses! Check it out on a per shift basis.
Most of you will take one look at this heading and say – yes I know we use products off the shelves for our own in-store use. But it is small and does not warrant too much energy on our part checking it.
The fact remains – you bought 10 bundles of 2 ply toilet paper each containing 48 rolls. You receive this as stock onto your system.
You need to take it into stock on two fronts.
- In-store usage
- For resale to the customer
- Allocate this based on actual sales and usage – which you can only get if you account for it appropriately.
Now you run out of toilet paper in the public toilets. If you take one from the shelf – do you ring it through on the point of sale as a sale item? If not – it leads to shrinkage.
There is a great concern if you are taking stock items off the shelf for store use and NOT ringing these up as a sales item. Your staff see that – and know that if they take one or two rolls home – nobody would be any the wiser.
Another example: If you sell fresh fruit for example in your store. You need to replenish your fruit salad offering – so your staff take another 2 banana’s, 2-3 apples etc – all for use to replenish that fruit salad for resale to your customers. It is not rung up as a sale – nor is it transferred to the food offering for resale!
You are under on the resale – and over on the fresh food offering. But having no controls in place allows your staff to move stock at will – and then the accounting thereof gets out of control – and it all leads to further losses! On the system anyway…
Point of Sale (Till Point)
Books have been written on just this area of our business and – yet it remains a porous area of our trading environment.
Not all of our losses in this area can be attributed to theft and fraud (a subject that we have a few articles on up on our website, such as “Point of Sale Fraud”, “Inventory Record Frauds” etc; see www.cstores.co.za )
Most are just plain carelessness.
Scenario one: a customer comes to the till point puts his goods on the counter and takes a sip of Coke while doing so. The cashier rings up the goods on the counter and omits to ask to scan in the Coke. The result: One Coke lost.
Scenario two: a customer comes to the counter, places their goods on the counter and these get rung up. The cashier does not see that their child is busy eating a chocolate – their head height is too low for the cashier to see this.
Another scenario: Our cashiers are often responsible in the mornings for the returns of newspapers and milk. It is often their busiest part of the morning rush hour – so the rep does the count of what is being returned – and she just signs it on your behalf. Customer comes first – and they must not be kept waiting after all. There was no check done at all – and in particular newspapers and returns remain a key concern as invariably sales to purchases never match!
Simple scenarios but all too common. In each case – the amount lost is not big monies. But if you add them up across all these areas in their totality over a month – you have a shrinkage problem.
My suggestion is to keep your eyes peeled and demonstrate to your cashiers what to be on the look out for each and every day. Easier said than done, I know!
Almost 2011! To those of you that are travelling over this festive season – my wish for you and your family is that are you arrive home safely having had a wonderful break. To those of you trading in perhaps your busiest period of the year – I hope the tills keep ringing merrily along out there! Happy trading..
Speak to you in 2011
The amount of shrinkage in your store will be in direct proportion to the controls you have in place. The more controls, checks and balances you have over your stock – the lower your shrinkage will be.
Sounds simple I know! And it is – if you put the effort into ensuring that strict procedures are in place. And that they are maintained at all times!
There are many areas of our business in which we can “lose” stock. These include :
3. Return of goods
5. Price changes
7. Food preparation
8. In-store use
9. Point of sale
In this article we deal with points 1-5. In the next issue of Wholesale Business we cover the others
For each point we explain the area of major concern – and then give one or two suggestions to help you manage them.
Managing stock is a huge subject. Many books have been written on it. Most are very technical and serve to confuse rather than assist in resolving the question – “How do I improve stock control in my store?”
So our aim here is to keep it simple and practical and to demystify something which is often made overly complicated.
Orders go wrong when we do not count stock on hand before placing the order. In particular – not checking for “hidden” stock in the store room.
Over-stock on a line item results in shrinkage when we have to write it off because it has passed its Sell By date or it has become damaged from being on the shelves too long.
Make sure that your ordering procedure ensures that stock on hand – both on the sales floor and in the store room is counted before the order is placed
Orders also go wrong – when the person placing the order does not have access to the previous sales figures. Without them they cannot order accurately. It is important that they have the sales figures of each line item variant or sku (stock keeping unit) they order.
In this scenario – we often end up with variants on our shelves that are not the variant of choice of our customers. (Variants include for example the different flavours and the pack sizes that a product comes in).
When you have a new person doing the orders work with them to help them place an informed order that reflects your customer base’s choices.
It’s especially important in our retail environment when buying stock from van sales operators to make sure that you get the top selling sku’s – and not just what’s left on the truck.
Where possible move to a pre-order situation where you place your order with the supplier ahead of the delivery. This should ensure that the stock you order is at least put on the truck. It does not, however, mean that you will get what you order. Too often, part of the stock you’ve ordered goes ‘missing’ – to some other store – earlier in the delivery route.
There’s a way of dealing with this problem as we will see under receiving
Receiving is where most shrinkage takes place in stores. And, it does not require dishonesty on the part of our staff for that to happen – although to often that’s a major cause.
For starters we often receipt goods that are just not there. Counting boxes delivered is not enough. In a previous article I discussed how I had personally receipted a delivery from Simba – the well known supplier of chips only to find out afterward that not one – and I repeat – not one box had the correct number of packets in them! One box of supposedly 48 packets had less than 30 in it!
So make sure your staff check each and every box they receive – that means opening all of them – for the correct pack quantity. Now I know the reps delivering stock hate this and complain that they have to get to the next store. All this puts pressure on receiving staff to take short cuts.
There’s one way to enforce this. Personally re-check a delivery from different suppliers each and every day . Once your staff know you are going to check their work – they will make sure that they do it right the next time around.
The next challenge in receiving – is checking the quality of goods. The first quality check is for expiry dates. Too often expired or close to expired stock is receipted. Quality control also includes checking that the packs are properly filled – you’ll be surprised at how often this happens – and that they are not damaged in any way. Again, our staff will be pressured by delivery people to take short cuts.
If you check expiry dates as you do the quantity of packs in each carton – your staff and the supplier reps will soon learn not to take a chance when delivering to your store. Let them short deliver and deliver poor quality to your opposition down the road instead! At the same time these random spot checks will discourage dishonesty and collusion on the part of your receiving staff with delivery people.
A major cause of having the wrong stock, especially the wrong product variants, in stores is the habit of checking stock against the delivery note rather than against the order. It enables van sales people to load a store with all the unwanted stock in their vehicle. So the first thing that receiving staff should do is to strike off items on the delivery note that were not ordered and refuse to receive them.
Case quantity also needs to be checked . Suppliers often change the number of packs in the box – so we may count a case in as a six pack – but the quantity has been changed to four packs to the case. I have yet to come across a supplier van sales person that points out this fact when counting in stock at receiving. They are always just in a hurry and often fluster your staff into just signing the delivery note.
Price checks are part of one of the headings – but the lack of any price checks at receiving – accounts for stock “loss” on the system. ???
Return of goods to suppliers/credit notes
Many suppliers will take back stock not sold due to damage or because it has passed its expiry or Sell By date.
However our controls on return of stock are generally very poor. Who controls the return of goods? Where are they kept while waiting for the rep to come and uplift them? Who produces the credit note and counts that all the stock being returned is on that credit note? Any stock item not reflected on the credit note is another loss.
Newspapers and magazines are major culprits in this for most stores. Who counts the returns – your staff or the rep that uplifts them? How do you record that credit note? How do you check that the supplier has passed that credit note in your favour?
Do you have a system in place that “ties up” stock returns – the stock itself, the credit note – and the recording thereof on the system?
Are you aware of each suppliers policy on returns? I have been in countless stores over the years where the owners were unaware that they could have returned the stock instead of writing it off. Again its money lost.
Do you and your staff know about supplier policies about the packaging of the returns? Some suppliers will only take it back if it is in its original packaging? Do your staff know that? They should of course know about it – you don’t want them opening packages that they can see have a week to go before they expire.
The best way of handling returns is first to have a specific place for returns in the deep freeze room, the chiller and dry stockroom. The products should be stored by supplier name. The credit note needs to be written up before the supplier representative, delivery truck driver or van sales person arrives. Usually the receiving manager is the best person for the job and needs access to the cost prices paid. The signed credit notes then need to be passed to the creditor accounts person and entered into the accounts system.
In most stores the person doing the pricing – is not the same person that does the receiving. This should be a huge area of concern. Not only does this increase the potential for incorrect pricing – but as they are mostly administrators and do not think like retailers, it increases the potential for wrong pricing.
For example; you manage to source cigarette lighters cheaply at the local cash and carry. The receipt gets to the administrator – and they just add the normal mark up or gross margin that you have set for that product category. Now, your mark-up on lighters is 100%. This normally gives you a R7.50 selling price, but as you only paid R1.50 per unit – what price will they now be sold at per the system? Not the normal R7.50 I can assure you! This is loss of profits – not necessarily loss of stock I know – but it highlights the disconnect between the different functions in our stores.
The person on the system will also not be able to pick up any changes to pack sizes or bar codes – unless they are brought to their attention and they physically see the goods. Roughly 20 – 15% of all suppliers make changes to their products each month that range from pack size to flavour variant or even pack design. Each of these changes occasions a new barcode number.
So, you need to introduce an easy to use system in which a sample of every product in every delivery is brought to the back office administrator and scanned. This will check if the barcodes are on the system. There’s a danger that if a product does not scan the cashier will guess at the price and those guesses are almost invariably in favour of the customer. The administrator also needs to compare the cost prices on the system with the cost price on the delivery note to ensure they have not gone up. And if they have, to change the selling price if required.
In an ideal world no products should be put on the sales floor – until you are certain that they have been captured and costed correctly. The world is not ideal, so put a system in place that ensures that deliveries are processed quickly but are held off the sales floor till this has been done.
Checking price changes on most of computer software today has been made easier…but this functionality is often not used in our day to day operations. We just want to ensure that all our delivery notes have been captured on a daily basis – what we don’t check is the quality of that data capture.
The person putting or capturing the stock onto the system is the best person to identify price changes in those lines. Those of us that make use of cash and carry’s to supplement our stock on a weekly basis have an enormous challenge in managing pricing of these products. They often change on a weekly basis – up and down. How do you decide on when to implement a new price change?
And then our range of products also creates a problem on the shop floor. For example, we want to keep a tooth paste on shelf. Last week we bought brand A at price X. This week we buy Brand B at price Y. Now we have two competing brands on shelf taking up more space than we budgeted. – and they are priced differently. So we land up with an overstock of one brand because the other brand is cheaper…..
Golden rule: No stock should be on the sales floor unless it has been captured correctly on the system. You need to have a procedure in place to ensure that this is adhered to – and one that checks the quality of the information captured.
Stock is money! We often forget that our money is tied up on those shelves and it might very well have yielded a better return if you had just put the money in a market link account! Each lost item – is a loss to you personally.
Guard it well!