Retail Disasters & Victories
Throughout history, there have been many, many examples of people who have succeeded in a given field, or discipline, through the application of common sense, hard work, firm principles and, above all, great leadership skills.
In retail, this combination is rarely found. That’s not to say that there aren’t many exceptional people in retail – only that the particular combination mentioned isn’t seen very often. Great leaders apply the above, and much more.
To lead a retail company, region, district or store is no small task. Many would argue that, because specialized degrees or formal education is not necessarily required, or indeed, even sought out when recruiting someone to run a store, district or retail organization, that anybody can do the job.
I once met a person, who was searching for employment, who said “Job hunting is so difficult. I can’t even get a job as a Store Manager, even with my qualifications.”
The individual who spoke those words had a college education, but had never held a leadership position in any job and had absolutely no retail experience whatsoever. That person, and many others, don’t think leadership skills play an important part in managing in a retail environment.
They think pretty much anyone at all can successfully manage a store. I apologize if that comment offends, but, really, if you ask people that’s pretty much what you’re going to hear.
We, at DMSRetail, disagree whole heartedly, of course, and here’s why…
The retail business is all about people; people dealing with people. Though the hardships are many – long hours standing and walking around, schedules conflicting with family members’ schedules, sometimes getting too few hours to earn a decent living, or too many hours, often no benefits etc. – retail employees must soldier on. Or they leave.
The retail story is actually very big and quite complicated. While the process of selling products to customers is simple, the back story is fraught with problems that need to be solved. How a particular retailer solves those problems, day in and day out, will determine the level of success achieved.
To achieve at the highest levels, great leadership is required.
Let’s look at where it starts; let’s just take a single store owned by a single person. The person secures a location, finds a supplier for a product or many different products, gets the inside of the store all decked out with the latest and greatest fixtures and POS equipment, has a logo designed and gets a great sign outside, and the various other things that need to be done to get a store open for business.
On opening day, s/he is worn out but excited because the dream has come true – they took an idea and saw it all the way through to fruition. Often, the store owner works in the store and welcomes the customers; and does everything else too.
In a short time, though, the owner realizes s/he can’t possibly handle everything, and can’t work 75+ hours a week. So, they start hiring. They hire one, or more, people to work in their store. And that is where their problems often begin.
Without really knowing how to recruit, hire and train, the store owner finds that the new hires really aren’t doing things the way they would do it themselves. The new store owner expects, and naively assumes, that the new hires will have the same common sense, direction and level of concern that they, themselves, have.
Not so. And how could they? They weren’t part of the dream and they didn’t travel the long road of seeing it materialize. And they didn’t invest all of their money and time and effort into the creation of the dream.
They have simply applied for, and landed, a retail job – probably at minimum wage.
Now, if we take this small scale example and blow it up to look at a retail chain, of course everything gets blown up. More stores, no passionate owners in the stores, lots more money invested, more policies and procedures to follow, perhaps an established reputation to protect, and the list goes on.
So, although we can expect that more people know what has to be done, we also have much less control. We are managing remotely which is not easy. We simply cannot rely on every person in the organization to always do the right thing. That is, unless we have great leaders who have instilled a performance culture in the organization.
Of course, that’s no small task. A performance culture is painstakingly difficult to build, it must be nurtured, requiring constant attention to detail and it’s very easily destroyed.
Here’s a couple of stories about two different retailers whose experiences can teach us all…
The year was 1997 and this retailer had a chain of 50 stores. While sales had been fairly consistent for many years, things were going downhill. There was no particular culture and the brand wasn’t particularly strong. The company was faltering and bankruptcy was unsettlingly close on the horizon.
When the first store had been opened the owner had a success on his hands. Everything was right. Great product, great looking store and a great manager. Building on that success a second store was opened, and then a third and so on. All the while, the owner was oblivious to what was actually going on in the stores. Sales didn’t suffer immediately, of course. Often that is the case.
If only we could point to a single decision; one particular thing that was done wrong to cause the downturn. But that rarely happens. Usually, it is difficult to connect those dots and, therefore, difficult to take corrective action. Sometimes one bad decision leads to another and another. By the time the downfall happens, no one has any idea whatsoever as to what really happened. The ‘root cause’ may never be identified.
Anyway, this particular owner had a lot at stake. His family had been supported by the small chain of stores for a few years and bankruptcy would take a heavy toll and destroy their lifestyle and any hope of a bright future. So, before it was too late, he set about figuring out what went wrong so he could a) stop it; and b) start moving in the right direction.
To find out what was wrong and how to correct and go forward, he had to do a lot of travelling, talking, listening and soul searching. This man had great leadership skills in him…but hadn’t, as yet, put them to work. Busy running around attending to details all these years, he forgot that people need great leaders.
“A herd of sheep led by a lion will beat a herd of lions led by a sheep.” – Author Unknown
“A herd of sheep led by a lion will beat a herd of lions led by a sheep.” – Author Unknown
He attended many executive leadership training retreats, read every management book he could get his hands on, spoke to every single associate and manager in each and every one of his 50 stores. He asked quality questions and took note of every answer.
Before long, he had the company back from the edge of the cliff, and extinction. With a crystal clear view of what had gone wrong and what needed to be done to go forward successfully, he set sail on implementing his plan: to build and maintain a performance culture. This, and this alone, was the only clear path to success.
Not so fast, though. And not at all simple. As mentioned above, building and maintaining a performance culture is not something that is easy to do or to maintain. Perhaps that is why so many companies – not just retail organizations – don’t do it.
So here’s what took place:
- He communicated all of his findings, and lessons learned, to his existing executive team, and to every level of management, and to all associates at store level – even part timers working a few hours a week.
He introduced new ways of doing things and new ways of ‘being’ – basically, he introduced new standards of behavior and new standards of performance in every area.
Accountability for performance became the new, and very important, operational guidepost.
He discussed every single detail of the new way of doing things with everyone in the organization.
He communicated his vision over and over again.
With the help of his team members – and that meant everyone in the organization – he developed the vision/mission/purpose statements and code of conduct for the company.
He was relentless in following up to ensure that every level of the organization was on board and following the new way.
And he spent a lot of time and energy on all of the above. In fact, he lived it. The company went on to new heights; it became very successful.
Some may ask “Does an owner or CEO really have the time to do all of that, and should they do it?” Many, in fact, will dismiss this as a waste of the owner or CEO’s time.
So, how would you answer the question?
If you answered yes, then you have the right mindset and can very likely do it and, if you do, you will undoubtedly reap rewards.
If you answered no, then you don’t stand much of a chance of getting a performance culture working in your organization. It simply can’t be done half- heartedly. To try, without putting everything you have into it, is a waste of time and will probably create more confusion than anything else.
The correct answer is yes, definitely take the time and make it happen. Here are just a few of the benefits of doing so:
1) Your executive team will have a renewed sense of direction and a thorough appreciation for the workings in every department in the organization
2) Your head office support people will be on a mission to help your stores be as successful as they can possibly be
3) Your store managers and staff will feel pride of ownership. Yes, even without profit sharing or anything similar, they will work as if they owned the company
4) Because of the first three benefits, your customers will feel the positive vibe. They’ll know they are special and they will reward you with loyalty. They’ll keep coming back, they’ll refer you to their friends and family and they will become ambassadors of your company
5) Everyone involved with your business, including your suppliers, will want to do their very best for your company
6) Everyone wins
There is plenty of compelling evidence of success when a retail organization operates within a performance culture. In fact, anyone reading this can likely think of at least two or three retail operations that they are loyal to. And, given enough thought, you’ll probably come up with the reasons why you’re loyal and you’ll likely see a lot of similarities to the company mentioned above.
You know, we talk about the funnel effect often in our workshops. There is a good reason for that. Every single word spoken by your store managers, district and region managers and your executive team members will have an impact on someone, somewhere in the organization and/or the customers. Every decision, good or bad, will affect the results you get. Every policy, procedure or new rule, well thought out or not, will affect the results you get.
That’s the whole idea of the funnel effect – everything that goes in, whether good or bad, positive or negative, right or wrong, impulsive or well thought out will, undoubtedly, affect the results you get.
Not so long ago, a survey (Bain & Co.) of several CEO’s concluded that 80% of them believed that their company delivered excellent customer service. When customers were asked to rate the level of service delivered in those same companies, only 8% gave them high marks. Hmmm. Something’s obviously not right.
But we are encouraged by the results of the survey.
Every CEO and every Retail Manager, at every level should be delighted with the results of this survey. It clearly points out that we may be out of touch. It shows us what’s wrong. When a CEO is out of touch with what is going on in his organization, isn’t it wonderful that s/he finds out about it?
It’s nothing less than a gift.
S/he may have been so consumed with other areas of the company, that s/he didn’t even realize what was going wrong at the customer level where it counts the most.
Whenever we can clearly identify a weak point in our organization – like the example above where the weak point is service delivery – we get an opportunity to work on specifics that will correct the situation. We can deploy resources with full confidence that what we are doing – what we are spending money and energy on – are, in fact, things that matter; things that will truly make a difference.
Without that knowledge, we can go on for long periods working on the wrong things which get us nowhere.
Now, for Story #2…
There is another company I want to tell you about to illustrate what happens when CEO’s and Executive Teams either don’t get the feedback they need, or don’t properly heed the warnings of feedback from customers and store personnel.
The company was doing very well. They had about 1,000 stores in North America. They did an amazing job serving a niche that was barely, and badly, served by other retailers, and they’d been doing so for many years. They basically had that market wrapped up.
One day, a new President was given a mandate for change: start enticing a new customer. She took the mandate, from the Board of Directors, very seriously but did not do her homework before starting out on, what turned out to be, the worst possible way to handle the change.
Armed with all of the resources and approval she needed, she began making huge investments in renovating stores and filling them with fixtures and merchandise that would, supposedly, attract the ‘new’ customer. Overnight, the chain changed its focus.
All of the signage and marketing campaigns were focused on a new customer.
Many of you are already seeing what’s coming, aren’t you? Yes, it was a colossal failure.
Suddenly, they found themselves competing for the business of an already over served market. Far from the niche that they had so comfortably and effortlessly served for so many years, this new customer had dozens of choices and the company found it very difficult to keep up. All the while their store personnel and their customers were wondering what on earth was going on. Everyone was screaming ‘stop this nonsense’.
Loyal customers were alienated completely. They lost faith and stopped shopping at the stores. Many long term management and staff left the company as it had clearly gone off the rails. The big question, in everyone’s mind was “What are you doing, and why?” It just did not make sense from any perspective.
The chain experienced a very significant loss in business; so significant that, if things had stayed on course, it would have put them out of business altogether, within a few months. So what happened?
The President was removed and the company, reeling from the disaster that had been created, changed direction. They still wanted to entice a new customer but, this time, they would do it very, very slowly and carefully. This time they would actually do some work to find out how to entice a new customer while maintaining their loyal customer base.
But, unfortunately, they had suffered losses to the point where over 90% of their stores were eventually closed. The company still exists today, but only as a small chain. It’s been bought and sold a few times to different investors. It continues to struggle along.
The moral of the story: Particularly if you are in a leadership role, never assume you know everything. Be smart. Listen to people and learn.