Archive for the ‘Retailing’ Category

Reinventing Dairy

Friday, March 18th, 2016

dairyThe dairy department in a grocery store is like Rodney Dangerfield, it gets no respect.

Dairy is not top-of-mind when it comes to the topic of fresh, like it is with produce.

Dairy doesn’t get front page attention on the store’s weekly ad.

Dairy is viewed more as a necessary commodity and not a destination item like those fancy chips or organic meats that only your favorite grocer carries.

So when I was asked to give a talk at the recent National Grocers Association convention in Las Vegas on “Reinventing the Dairy Department”, my initial reaction was only so-so.

But then I did a little soul searching and decided that the dairy image needed some help and I accepted the invitation. After all, dairy provides over 15% of sales and about 20% of the profit of a typical store. Without a solid and up-to-date dairy department, a grocery store will linger from becoming exceptional.

A few years ago, we decided to overhaul our meat department as its results were not up to par. We wanted to expand the department by eight linear feet, but that required a domino effect of meat spilling over into dairy, dairy into beer, and beer into our wall of values.

We called on our wholesaler SuperValu for guidance and help. Coincidentally, SuperValu was rolling out a new Dairy Initiative which focused on making sure the anchor items like milk and cheese were positioned appropriately to allow higher visibility to complimenting items like biscuits and yogurts. The program refreshed our assortment making sure that we had the best movers, the latest nutritional items like probiotics, and threw out the items that lagged and tended to expire.

So we adopted the program after we did a thorough cleaning and relighting of the department. The results were amazing. Not only did the Dairy sales increase 9%, but so did meat, beer and total store sales.

With the help of some other colleagues our dairy presentation was a hit to a standing room crowd!

Think about this the next time you are asked to help on a routine project like a parade or a school musical. Or invited to help an average kid with tutoring or coaching a sport. With the right attitude and solid effort, you can take something ordinary and make it extra-ordinary!

 

John Marklin

www.marklinfinancial.com

J Curve-update

Saturday, January 2nd, 2016

I first blogged about the J Curve back in 2012. I talked about how any time there is a change in the eyes of the customer (a new store, a remodel, new items, etc.) that a customer can react opposite from desired results.

The change from the customer’s perspective can cause a feeling of uneasiness, complexity or confusion. As a result, the customer may flee and search for more familiar shopping conditions.

Customer flight causes a sales decline for the retailer, even though they may have “improved” the shopping experience. The eventual success of a retailer is to not give up and continue to show constant improvement every day. Eventually the relentless pursuit of perfection will result in improved sales.

But it does takes time, sometimes months and years, to break out of the J Curve. There are no get-rich-quick schemes in retail.

Look at the graphs below. These are two real examples of stores I owned. See the similar progression of how sales started out high, retreated and then slowly climbed back as we eventually won the customers back.

This J Curve can be applied to businesses and processes other than retail. New cars, technology products and fashion items are not immune to the J Curve. I would even suggest that there is a J Curve when a sports team fires a coach and replaces him with a big named celebrity. It takes time for fans to buy into the new system.

The key is not to give up when you are at the bottom of the J Curve.

 

John Marklin

www.marklinfinancial.com

 

The J curve

Monday, December 10th, 2012

When a new store gets ready to open, it blitzes the community with grand opening ads in newspapers, radio and even TV. The buzz in the neighborhood starts as a result of carefully placed road signs. Neighbors start to talk about the new store. Coupons start to arrive in your mailbox.

Most retailers do a huge business during the grand opening week. The store is in its best shape and there usually is plenty of help ready to assist you.

Grand opening sales week usually is the highest sales week of the year.

After shopping the new store, many people retreat to their old buying habits. Habits that usually are defined by convenience, clean, fresh, service and price, and some do not return to the new store. As a result, sales can decline, sometimes 10-30%. The retailer then begins his real test, getting those initial customers back. As he succeeds, sales can eventually return and get back to grand opening levels. It is not easy, and it takes time.

This cycle is called the J curve. The success of a retailer depends upon how short a period of time the bottom of the J curve is.

Reality also shows that a J curve is evident in not only grand opening situations; it can happen no matter what change you make in a store.

A new remodel. A reset of product. Moving a department within a store. Adding/removing a product line. All of these conditions cause some disruption to the sales and traffic pattern of a store. Some customers will like the changes, and others will complain. Invariably sales can decline post-change even though the retailer has “improved” the shopping experience. But the improvement is in “his” eyes. He needs to convince the shopper of the improvement.

The J curve becomes particularly important when large capital is invested in the grand opening or the change. Payback models are predicated on a certain sales level. Ignoring the bottom of the J curve can prove to be disastrous to a retailer.

 

John Marklin

www.marklinfinancial.com

Closed for Thanksgiving

Thursday, November 22nd, 2012

Our two grocery stores are closed today.

In Bridgewater, the store has always been closed before we bought it. And Lee and I have continued the tradition, even though every other grocery store in the area is open.

Yesterday was our Black Friday. Usually the biggest day of the year as customers flocked to the store the day before Thanksgiving. I spent most of the day bagging groceries and helping older customers to their cars. I had several customers thank me for not being open today.

And a few vendors (soda and wine) were particularly thankful to not have to make a delivery to our store today.

Closing a store is a difficult decision and goes against most “Retailing 101” concepts; the thought of giving away sales to the competition.

There used to be a grocery store chain in Richmond called Ukrops, which was known for being closed on Sundays. Ukrops sold out to Martin’s a few years ago. Martin’s first action was to open the doors on Sunday. Sources tell me that Martins has less total sales than Ukrops had even though they are open an extra day.

I want to take this opportunity to thank all of my readers. Your reading and comments give me the desire to continue to blog. I treasure this very special relationship with you.

Thank you.

 

John Marklin

www.marklinfinancial.com

Judicial process

Monday, April 23rd, 2012

“John, check the security cameras. I think a shoplifter just left the store.”

That was the message my front end manager gave me on the phone about a very suspicious looking customer.

So I checked the monitors in our back office and sure enough found a young man take a bottle of beer, hide it in his gray hoodie pocket and walk right out the door. I made note of the customer and told the cashiers to alert me if he returned.

A couple hours later the same person came in and I was immediately alerted. We watched him on the cameras and found him take a deli sandwich and put it in his pocket. I left the back office and hung around the front door until he tried to leave the store.

I stopped him before leaving and asked him to take out what was in his pocket. His face sighed at being caught and he showed me the sandwich. I took his name and address and told him never to come into my store again.

Dealing with shoplifters is part of being in the grocery business, or any retail business. Owners and managers know that it goes on, and some have elaborate camera and security systems to catch thieves. But following through on prosecution is not always done. Why? Because the time and effort required to prosecute can be many hours, or even days. So an owner has to decide if it worth it.

My business partner and I believe very strongly in having a zero tolerance policy regarding shoplifting. It is not so much due to recovering a $2.59 deli sandwich, but the message that it sends to the community. Shoplifters talk and when they hear of someone getting busted, the word spreads. If a store is not tough on crime, we are sending a message to all to come and steal from us; we won’t take the time to prosecute.

My front end manager and I had to spend three hours in a courtroom waiting to hear the outcome of the shoplifter. The judge finally ruled and gave the culprit a conviction and a fine, and explained that three shoplifting convictions equal time in prison.

As I left the courtroom I had mixed emotions about the whole process. It shouldn’t require six man hours of the victim’s time in a courtroom to prosecute a shoplifter. But if I don’t spend the time, I may have a bigger problem and more theft in the future.

I guess I will have to get used to sitting in this courtroom.

 

John Marklin

www.marklinfinancial.com

Focus on current customers

Saturday, February 18th, 2012

I am sure you have received offers from cable, satellite, phone or fitness companies offering reduced rates for new customers. The rates are teasers and usually last a year. After the year is up, the rates go up unless you call and threaten to leave, at which time the rates are usually lowered again for a year.

My question has always been, what about offering reduced rates to the loyal customers? Those who have been your customer for years.

This marketing ploy has always baffled me to the point that I find it offensive.

It usually happens in service industries, but rarely in retail.

Consider how bizarre it would be to offer a reduced price for meat and produce only for new grocery store customers? Or a reduced price for only new car customers? Retailers usually don’t play this game. They will take a sale no matter if you are new or returning. Other industries could learn from this.

If I did have to choose between spending marketing dollars on getting new customers or existing customers, I would pick existing. They have used your service before and chances are they probably had a positive experience. Up-selling to existing customers is not only easier, but cheaper, than getting a new customer.

Up-selling to existing customers doesn’t have to be in the form of advertising. It could be with samples or tastings. This is often done in the grocery business with good success.

A woman was eyeing our new coffee kiosk in our Bridgewater Foods Supermarket. I asked her what she thought. She said the display was lovely, but a little overwhelming-too many choices. I asked her what kind of coffee she liked. She said robust. I offered her a free “Fog Mountain” sample. She liked it. I showed her our grinding station. She bought a pound for $9.99. She left very happy.

If you treat your current customers well, chances are they will spread the word and your new customers will come from referrals. And that is the cheapest ad money you will ever spend!

John Marklin

www.marklinfinancial.com

Adapting to change

Thursday, February 2nd, 2012

For the past few years, Debbie and I make a mad rush in January and February to see all of the movies up for an Academy Award. We started our annual dash last weekend and saw three movies. The one I liked the best so far was The Artist, a silent black and white movie.

Admittedly, I was a little reluctant to see a movie with no sound. Other than a few old-time comedy flicks, I really can’t remember sitting through an entire silent film.

But this movie is wonderful. The story is about a popular Hollywood silent movie star in the 1920’s who falls in love with an actress rising in fame as she becomes a star in “talkies”. The actor, however, refuses to adapt his acting style from silent to movies with sound. Hanging onto the past, he struggles and falls from stardom.

During the movie I found myself concentrating more so as not to miss any gestures that I would take for granted with sound. The movie had drama mixed with comedy and the 1 hour and 40 minutes seemed to fly by.

Afterwards, I reflected on the struggles of the “artist” and how it plays out in so many other later adaptations. Moving from hardbound encyclopedias to internet based media like Wikipedia was traumatic for the World Book encyclopedia company. Transitioning from film to digital cameras caught on like wild fire and left some companies like Kodak filing for bankruptcy as they were slow to change. And the switch from land line phones to cellular phones has resulted into some of the biggest companies yet like ATT and Verizon as well as hardware manufacturers like Apple and Nokia.

Another industry that has experienced rapid change is coffee. Starbucks are now seemingly on every corner and stores like Panera have become very popular with the young business crowd. Giving customers more choices in coffee has become very popular.

A month ago, we looked at changing the way we sell hot coffee in our Bridgewater Foods Supermarket. Forever, we brewed one flavor of coffee in the deli and served it in small and large cups to our customers. We looked at ways to do things differently and came across a company willing to invest in our coffee business. Within a month we added a coffee kiosk in the store that offers six different flavors in canisters (including my favorite Fog Heaven). We now have small, medium and large sizes and our coffee sales, as well as doughnut and pastry sales, have increased.

How do you adapt to changes in your line of business?

John Marklin

www.marklinfinancial.com

When things go dark, people can shine

Monday, December 26th, 2011

Last Thursday (three days before Christmas) was to be a big sales day for retailers, including grocers.

Our IGA store was ready for business. Extra product on the shelves, the smell of fresh baked goods in the air and some employees wearing Santa hats which was a nice complement to our Kelly green uniform shirts.

The day was busy and on pace for a robust sales day. Then, at 3:18PM, things could have changed for the very worst had it not been for some very good employees and understanding customers.

I received notice from Cheryl, our front end manager, that the credit/debit card system was down. This has been happening in the past but usually comes back after a few minutes. So we called in the outage and hoped for the best.

We do about 50% of our business with debit/credit. The other is cash or checks. Debit/credit has been so ingrained in our buying patterns that many people rely on the processing system to work all the time and often times carry little cash.

We received notice from the third party carrier that they did not know what the problem was. Hmmm. Many things ran through my mind; all scenarios were not good.

It was apparent that we may be done a while. And I became furious about the problem. Hanging on the phone, trying to understand what was going on and how to minimize the damage.

Then I saw true professionalism played out right before my eyes. First with our employees. Led by Cheryl, a sign was quickly posted on the door explaining the our debit/credit card system was down. We opened up all cashier lanes to handle the customers. Then she quickly told the cashiers what to say to the customers: describe the situation, apologize and give the options of paying in cash or checks or writing down credit information to be processed later when the system returned.

The calmness of the explanations from the cashiers to the customers was admirable. And the response from the customers was even more amazingly calm. One could have thought the busyness of the holiday season would bring out irate responses. But not one! Not for the entire 4 ½ hours the system was down. People seemed to understand that these things happen and that we were doing all we could to make a very difficult situation a little better.

We blanketed the front end with employees helping to bag, take out groceries or do anything possible to make a bad situation a little better.

The system came back on at 8:04PM. We had gone through the busiest part of the day with an archaic system. But we seemed to survive. Very few customers left because they couldn’t pay. And very few complaints.

We are making plans to add automated backup to our system to minimize this risk from happening again. In the meantime, it is comforting to know that we have a wonderful group of employees and customers.

John Marklin

www.marklinfinancial.com

Pay attention to the little problems

Monday, December 19th, 2011

It is difficult to pin point what makes someone finally crack and do something drastic. It usually is a series of little things that add up and finally a person has had enough and is ready to make a change.

This happens in the grocery business all the time. Employees or customers become annoyed at what might seem to be the littlest of things. A carton of milk that is spoiled. A bad bunch of bananas. Having to work on a regular scheduled off day. Told to do something contrary to the way you have done the same task forever.

As an owner or manager, it is easy to overlook the importance of seemingly little things. We are focused on the big picture. To us, asking someone to stay an extra 30 minutes to cover a heavy shift might not seem like a big deal. But to the employee who has a big date that is being pushed off ever so slightly, it may seem to be a huge deal.

Unfortunately, we are immune to the crescendo of these little things until it finally gets to a decision point. We are then shocked when the employee confronts us with his resignation. We ask why. And then we get the series of answers; all the little things brought to our attention that we chose to overlook.

The true test of a manager is to spot the little problems and address them before they get to the boiling point.

John Marklin

www.marklinfinancial.com

Thrilled to be in Bridgewater, VA

Tuesday, November 8th, 2011

A week ago my business partner Lee Armbuster and I bought the Bridgewater IGA in Bridgewater, VA. What started out as a lead from a friend back in the summer has resulted into owning our second store in 2011. Our first store is the Save-a-lot in Danville, VA.

The Bridgewater IGA is a 20,000 square foot conventional grocery store right on Main Street in Bridgewater. We have 30,000 different items available for our customers in our grocery, dairy, frozen, health and beauty aids, deli and bakery departments.

Bridgewater is a town of 10,000 nestled in the hills of the Shenandoah Valley. Just 7 miles south of Harrisonburg, VA (home to James Madison University), Bridgewater is a quaint town known for the small liberal arts Bridgewater College, as well as rolling farmland and agricultural manufacturing plants. The town is also home to many Mennonites and it is not unusual to find a horse and buggy going down Main Street.

The store has been around for over 30 years and is a mainstay in the town. Right across the street is the Little League ball fields and within walking distance are local banks and restaurants. It has the feel of Mayberry R.F.D., where everyone knows of and cares for each other.

Lee and I have temporarily moved to Bridgewater during the week in order to run the day-to-day operations of the store. We plan to takeaway very little, but add a lot. New deli items, and redesigned produce, meat and bakery departments will give our customers much to enjoy while grocery shopping.

If you can make it to our store, please ask for Lee or me. We will gladly give you a tour and meet some of our incredible employees.

Following are some pictures of our store and our employees.

John Marklin

www.marklinfinancial.com