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March 2009
Microsoft Retail Innovation forum
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Surviving versus Thriving in Retail
Brian Walker, Managing Director
The Retail Doctor® Group Pty Ltd
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Today‟s Appointment with the Retail Doctor
How high performing, fit retailers operate
The key steps from surviving to thriving
In the last 3 years:
Over 150 retailers interviewed
Over 65 companies
Customer surveys
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The Good Times
14 periods of positive GDP
High consumer confidence
Rising exports
Strong housing growth
Retail 10x EBITDA earnings
Retail Growth
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We are in the midst of a perfect storm:
Slumping consumer confidence
Prospect of rising unemployment
Fluctuating dollar (costlier imports)
Yet
Lowering interest rates
Government stimulus
You can‟t change the headwind though you
can adjust the sails
The Perfect Storm
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The Times They Are a Changing
Differentiation- A place in the sun
Speed, innovation and adaptation
Continuous improvement
The connected customer
The lines are blurrier
Efficiency of process
Online/offline becomes in line
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The Trends Customers are increasingly time poor &
connected
Demassification - the hunter vs. the herd
Technology is mission critical
Customer choice has magnified dramatically
Demographics increasingly matter
Demand chain replaces supply chain
Adaptation – smarter and faster are winning
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The Seven Key Fitness Steps for Today‟s Market
1.Begin at the End
2.The Unique Branded Difference (Brand Aid™)
3.Customer Connection
4.Productivity not panic
5.Fiscal Physical™
6.People and Sales Leadership
(Effective People)
7.Doing the Basics Brilliantly
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1. Begin at the End
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Define the destination
Businesses with clearly defined exit strategies sell
for higher multiples
Every business is for sale
Alignment starts here
Capital isn‟t scarce ,vision is (Sam Walton)
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What is Your Desired Destination?
Our Findings:
High fitness retailers define the end
game score, know the present, and
adjust to achieve the planned future
value of their business
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2. The Unique Branded Difference (Brand Aid™)
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The „EST‟ Model
Easy„est‟
(Service)
Cheap„est‟
(Lowest Prices)
Big„est‟
(Selection)
Hot„est‟
(Fashion)
Black Hole
The Middle
Quick„est‟
(Speed)
Specialty
K-Mart
Target
David Jones
Dan Murphys
Myer
Many Specialty
Independents
McDonald’s
KFC
© McMillan Doolittle
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Develop the Point of Difference
What is their point of difference?
Does their delivery marry to their brand?
Do they actively seek out customers and how
do they manage them (CRM?)
What is that they do better than their
competitors?
How do they continuously adapt their point of
difference to the market?
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Adaptation
MFI and Adams in the UK
Woolworths in the UK
Waterford Wedgewood
Herringbone
EzyDVD
Circuit City
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Deliver Point of Difference Seamlessly
Store design and format
Appealing and relevant
Visual merchandising
Your story by categories
Line of sight
Impact
What do you want me to buy?
Take the customer on a journey
Multi channel (web site)
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Point of Difference
Our Findings:
Fit retailers define how they are unique,
consistently offer this uniqueness, communicate
it, improve it ,stay tight, refine and measure
(and the customer gets it!)
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The Times They are a Changing.
“When the rate of change outside your company
exceeds the rate of change inside your company,
disaster is imminent.”
Lou Pritchet Senior VP, Procter and Gamble
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The Lines are Getting Blurry
Manufacturers are becoming retailers:
?is the worlds largest retailer of cameras
? produces the equivalent of 306 million tires
per year - world‟s largest plastic retail product
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The Internet 13.6m users
Over 50% of purchases are pre
researched on the web
E-Bay‟s $48.3 Billion sales in 2007
(a 30% volume increase!) would make
it one of the top ten retailers in the
world and it is redefining what is “retail”
Gen Y,X & Z
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Customer Connection
Personal, Interactive and engaging
experiences that excite and convey value.
Know me and communicate with me
Make it about me and give me plenty of
choice in channel
Tune in to WIIFM 1
Connect me and make it real
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3. Customer Connection
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Demand Becomes Where It Is At
Increasingly retailers are understanding that it is not about the
supply chain it is about the customer demand chain
Customer purchasing patterns become the key to replenishment &
understanding of quantities and items
Collaborative planning where retailers share demand information
down the entire chain is becoming commonplace
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Customer Connection
Our Findings:
Fit retailers are customer rather than product centric.
They understand customer trends, add greatly to the
customer experience and reap the reward of customer
satisfaction and loyalty.
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4. Productivity Not Panic
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Inventory Management Consider carefully:
The Quantity of inventory
The Profile
The Aging
The Stock turn = Net sales / av stock holding
View retail performance against benchmarks
NOTE:
Inventory position / stock management is a key determinant of
the health of a retail business.
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Do You Benchmark Your PerformanceAs a minimum, focus on:
Sales per square metre
Final gross margin
Stock turns
Store contribution
What is great performance in your sector?
Benchmarks will vary between retail segments
Performance within a segment will not
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Inventory Management
It is seldom what you
don’t have that puts
you out of business
–
it is what you have
too much of!
Don’t Buy
What Won’t Sell!
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Sales Production
Sales
Where and how do they produce their sales?
Sales to plan
Team sales
Product mix/Profile
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Technology
Retailers still spend too little on technology
Average spend as an industry is less than a third of insurance, banking,
transportation and manufacturing
Technology is no longer a nice to have, it is an absolute requirement for
survival.
It is vital to defining the position, connecting with the customer, reducing
expenses, and in increasing productivity and efficiency.
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Do You Benchmark Your Performance?
Our Findings:
Fit retailers work with live fast information providing one
version of the truth, through end to end solutions
measured against best practice.
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5. Fiscal Physical™
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Understanding the Numbers
Understanding the numbers is important!
Understanding the trends is crucial!
In isolation numbers are reasonably pointless
Look at interrelationships
Ensure retailers understand their numbers and Ratios
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The Top 5 signs of an Unfit Business
In 2007, every 11 ½ minutes one US retailer failed due to
one of the top 5 retail killers:
5.Out of control growth
4.Out of control expenses
3.Failure to manage gross margin
2.Out of control inventory OR
1.Being out of cash
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6. People and Sales Leadership (Effective People)
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People and Sales Leadership (Performance Culture)
The Human capital asset
Understand setting and achieving retail sales goals
Its about winning and improving
Define and understand key retail statistics to set sales goals and
analyse business performance (AT,IPS,Conversion)
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7. Do the Basics Brilliantly
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Bringing it All Together
Use your technology platform to drive
Differentiation
Customer connection
Speed to market
Performance measurement
Efficiency of all processes
Increased $
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Bringing it All Together
1. Understand your market and product proposition to deliver a winning
/ sustainable retail concept
2. Build a direct relationship with your customer through multi integrated
delivery channels.
3. Develop / implement good product planning and stock management
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Do the Basics Brilliantly
Our Findings:
Fit retailers understand and consistently
execute the basic retail disciplines.
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The Seven Key Fitness Steps for Today‟s Market1.Begin at the End
2.The Unique Branded Difference (Brand
Aid™)
3.Customer Connection
4.Productivity not panic
5.Fiscal Physical™
6.People and Sales Leadership
(Effective People)
7.Do the Basics Brilliantly
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No one can predict the future
However, we can prepare for it!
“Knowing the other and knowing oneself,
In one hundred battles no danger.
Not knowing the other and knowing oneself,
One victory for one loss.
Not knowing the other and not knowing oneself,
In every battle certain defeat.
Sun Tzu 1300 BC
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Contact Us:
www.retaildoctor.com.au
Phone |+61 2 9460 2882
Fax |+61 2 9460 3883
E-mail |
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Contact Microsoft:
Speak to one of our Microsoft Solution Consultants,
we can help you:
• Find your local, certified Microsoft partner
• Request more information
• Find the best Microsoft solution for your business
www.microsoft.com.au/retail
Phone |+ 1800 197 960
E-mail | [email protected]
4646
THANK YOU
