PREFACE TO THE THIRD EDITION xiii
INTRODUCTION xv
Learning to Be a Generalist xvii
How to Use This Book xviii
1 THE BASICS OF RETAIL 1
Understanding the Six Rights of Retail 2
Your Profit and Loss Statement 2
Preparing a pro forma profit and loss statement 8
Adding Value to the Products You Sell by Adopting a Best-Service Strategy 10
Developing a Strategic Framework 13
Developing your secret weapon 14
Developing a Clear Vision of Your Business 16
Identifying and Studying Your Three Most Important Direct Competitors 19
Conveying Your Strategic Message Through Your Store Location 24
Conveying Your Strategic Message Through Your Store Design and Layout 26
Conveying Your Strategic Message Through Your Advertising 29
Your Advertising Plan 32
2 MERCHANDISING 37
Grouping Merchandise into Departments and Classifications 38
Learning from Your Customers What They Want to Buy from You 39
CONTENTS
v
vi Start & run a retail business
Using the Retail Method of Accounting 43
Monitoring Your Business Using a Monthly Maintained Margin Report 44
Controlling Your Business with Four Key Operating Ratios 51
Turnover 51
Stock-to-sales ratio 53
Gross margin return on inventory investment (GMROII) 54
Sales per square foot 55
Using Markdowns Effectively 56
Using promotional markdowns to stimulate your sales 57
Using regular markdowns to adjust your inventory to market value 58
Increasing Your Credibility by Using Seasonal Markdowns 61
3 BUYING 65
Seeing Your Products Through Your Customers’ Eyes 66
Building Win-Win Relationships with Suppliers 66
Buying Terms Are Often More Important Than Price 69
Following Eight Proven Buying Guidelines 72
Implementing a Price-Point Discipline 73
Establishing a Credit History with Each Supplier 75
Striving to Reach “Sell and Buy” by Choosing Payment Terms 77
Calculating an “Open to Buy” for Every Classification, Every Month 78
Forecasting and Creating Six-Month Merchandise Plans 80
Buying with a “Just in Time” Philosophy 85
4 HUMAN RESOURCES 89
Demonstrating That People Are Your Most Important Asset 90
Developing a Written Job Description 92
Determining duties by priority 93
Identifying relevant characteristics and qualifications 97
Sales-per-hour and average transaction objectives 99
Creating Win-Win Employment Relationships Through Employee Benefits 101
Paying Your Sales Associates 103
Following Established Guidelines for Effective Interviewing 105
Five-step interviewing 107
Evaluating the candidates 111
Contents vii
5 SALES MANAGEMENT 117
Budgeting Wages and Benefits as a Percentage of Sales 118
Bringing Productivity to Your Store with Four Key Ratios 121
Selling cost 121
Conversion rate 123
Average transaction 125
Items per transaction 127
Using the Apprenticeship Method of Staff Training for All New Employees 129
Providing Guidance and Additional Training 130
Following Six Steps to Become an Effective Coach 133
Using Praise 135
Adjusting Training Methods 136
Matching Goals and Incentives to Your Sales Associates’ Needs 138
6 TECHNOLOGY 143
Embracing the Relevant Trends in Retail and Internet Technology 144
Using a computer and retail software as a cash register 144
Automatic replenishment 145
Multimedia 145
Executive information systems 146
UPC and EDI technology 146
The Internet 148
Budgeting for Technology 151
Selecting the Right Integrated POS/Merchandising/CRM Package 154
Understanding the Many Things Your Integrated Package Should Do 155
Using Technology Wisely to Run a Profitable Business 158
Keeping Your Inventory, Sales, Profit, and Space in the Correct Balance 160
Making an Informed Decision About POS Software Suppliers 161
Questions for potential POS software suppliers 162
POS questions for retailers 165
7 CUSTOMER SERVICE 169
Knowing Your Customers 170
Competing with Vending-Machine Retailers by Adding Significant Value 173
viii Start & run a retail business
Creating Top-of-Mind Customer Awareness 175
Providing Extra-Mile Service 177
Giving Customers What They Want 179
Identifying extra-mile service opportunities 181
Offering a Make-It-Right Refund Policy 183
Implementing Relationship Marketing and One-to-One Communication 186
Identifying Your Best Customers and Creating a VIP Club 189
8 THE IN-STORE EXPERIENCE 195
Stepping to the Other Side of the Counter 196
Keeping Up to Date in All Areas 198
Acting Like a Premium Brand That Customers Will Choose 200
Presenting Merchandise Like a Theater Company Would 202
Creating an Optimal Retail Environment 204
Focus customers’ attention 204
Eliminate all distractions 206
Establish a feeling with music 209
Have professional sales associates play their roles 211
Differentiate onstage and offstage areas 214
AFTERWORD 219
APPENDIX 1 — PUT IT TO WORK: ACTION PLAN 221
APPENDIX 2 — ADDITIONAL READING 226
Contents ix
CHECKLISTS
1 Supplier Checklist 76
2 Job Interview Evaluation Checklist 112
3 Preferred-Customer Database Fields 191
FIGURES
1 Added-Value Strategies 11
2 Store Location Considerations 24
3 Advertising Options 30
4 Classifying Your Merchandise 41
5 How to Structure an Interview 110
SAMPLES
1 Profit and Loss Statement 4
2 Three Profit and Loss Scenarios 6
3 Comparing the Value of Locations 26
4 Advertising Plan 33
5 Monthly Maintained Margin Report 45
6 Six-Month Merchandise Plan 82
7 Job Description of a Sales Associate 94
8 Weekly Payroll Budget 120
WORKSHEETS
1 Developing a Clear Vision 17
2 Analyzing Your Competitors 21
3 Customer Experience Scorecard 176
4 Evaluating Extra-Mile Service 182