Missed Opportunities: Quantified

thumbnail image

Missed Opportunities: Quantified

Retailers need to take a closer look at their missed opportunities; they need to quantify lost sales. I am going to do that right now, for a large office supply chain with very little competition.

Just to give you a bit of background…

The new mini laptops – or netbooks – are quite the thing to have right now. They’re light weight and just the perfect size for travel. I travel a lot and I need access to my computer while I’m travelling, whether for business or pleasure. So, of course, I must have one. Costco has them for $299 right now so out I went to get one.

I decided to make a stop at another store, the big office supply store, just to check their prices. You never know when you might find a better deal, right? I knew it was unlikely because Costco knows what they’re doing but it sometimes pays to shop around.

All things being equal, my decision to buy a netbook was definitely going to be based on the weight of it. I want to pick it up – minus the lock and key and wire hanging from it and plus the battery which has been removed for display – so that I can feel how heavy it is.

In the office supply store, the associate wore a tag that said “I am not on commission”. Well, that’s fine – too bad for him, but it really doesn’t mean much to me. I don’t care if the associate is on commission or not. I don’t care if he’s a volunteer. If he is there to assist me, that’s great.

***********************************************************

Avoid missed opportunities with the Super Retail Success Bundle

***********************************************************

I’ll make this part of the story short because the details aren’t really that important – the price was good and I was ready to buy; the fellow who was ‘not on commission’ would not go and get a battery to put in the netbook so I could feel how heavy it was. I asked to see the Manager. He pointed me toward the front of the store and walked away from me. The Manager was at the checkout ringing in purchases – too busy to deal with me. I left the store. The value of that missed opportunity for that store was $300.00, at that moment, and who knows how many dollars in future business. In my case it’s a lot because I need, and buy, lots of what they sell but that is not going to be taken into consideration right now.

So, let’s do a calculation regarding that missed opportunity. To be fair, $300 is probably too high a number to be used as the average sale for this company. And also, to be fair, we cannot assume that all of the stores in the chain operate like the one in my example. I’ll take these things into consideration.

Let’s say the average sale at this company is $75. It’s probably higher but I have no way of knowing for sure. And let’s say they have 100 stores and that 10% of them are managed by the same Regional Manager as the one I was shopping in – so, 10 stores. I will also assume that at least once, every day, an opportunity is missed. That is being kind because I’m quite sure many more missed opportunities are happening each day in that store, and in most stores for that matter.

Anyway, the stores are open every day except for statutory holidays so let’s say they are open 358 days per year.

$75 average sale X 358 days = $26,850 X 10 stores = $268,500 in lost revenue

The situation I have described is far from unique. If the store is actually missing more opportunities – say 5 a day – it looks much worse:

$75 average sale X 5 lost sales or customers X 358 days = $134,250 X 10 stores = $1,342,500 in lost revenue

Clearly, it would be worthwhile to do something to stop those missed opportunities from happening.

***********************************************************

Avoid missed opportunities with the Super Retail Success Bundle

***********************************************************

Now, let’s see what happens when the chain is 500 stores strong and 50% of them are managed by people who are either untrained or just don’t really care as much about the top line as they should, or maybe don’t even know what is going on in their stores.

$75 average sale X 358 days = $26,850 X 250 stores = $6,712,500 in lost revenue

OR, the other scenario:

$75 average sale X 5 lost sales or customers X 358 days = $134,250 X 250 stores = $33,262,500 in lost revenue

Don’t think that this is an exaggeration. It is the reality out there today.

But, even going back to the first example, one district or region may be missing out on over a quarter of a million dollars annually just because of missed opportunities; the ones that they just threw away. My calculations don’t even take into account the missed opportunities that happen due to out of stock situations or customers who are still ‘just looking’. Those missed opportunities just might become opportunities again someday. The type of missed opportunities I am talking about – the one in the example- will not.

I did not buy my netbook from the store in the example. And Costco wins again. How many more missed opportunities will the big office supply company, or any company, be able to sustain?

Do the math and see what you are losing. The really exciting part of this whole exercise is that it gives you a starting point for huge revenue increases. Just do what needs to be done to turn these employee related missed opportunities into sales and, like magic, you have a revenue increase! It’s not even difficult to do!

Start today.

All the Success!

P.S. Any store that has a Manager at the cash desk with his head down ringing in purchases, instead of managing the store, will encounter a high percentage of missed opportunities. Guaranteed.

***********************************************************

Avoid missed opportunities with the Super Retail Success Bundle

************************************************************

 

Post a Comment

Your email address will not be published. Required fields are marked *

  • Retail Management Success Guides

  • Retail Management Success Bundles

  • YourTime Study Courses

  • Retail Management Workshops

  • Recent Posts

  • Categories

  • Sponsored