I can't see the clothes for the signage!

Currently as I walk through shopping malls and look in apparel retailers it is immediately apparent as a customer that stock is in bountiful supply, full size range still available in almost every style towards the end of the winter season, with spring and summer lines making their way on to racks as well. There seems to be no better example of a downturn in customer shopping (buying) habits than in the many clothing retailers. When money gets tight, or that extra cash is put into the mortgage just in case interests rates go up, one of the first discretionary purchases that is often put off until later is new clothes, as long as last year’s jeans still fit!

As a result of the long overseas supply lead time in Australia, orders are normally placed a season ahead based on what was sold previously and with an increase factored in based on current trends. This long lead time is due to us not having a local clothing manufacturing industry any more; clothing is sourced predominately from Asia and the Subcontinent with their low production costs that cannot be matched in Australia. Most clothing retailers do not want to get caught out not having enough stock to meet customer demand, and the attractive bulk purchase rates will always entice that extra few cartons to be ordered. A half full container costs the same to ship as a full one!

With this backlog of cartons that I imagine are still sitting in the stock rooms and reserves everywhere, comes the difficult decisions for the Management teams to take.

Do we discount the stock to get it moving?

How much do we discount, 20%, 50%?

What do we do if it still does not move?

Spring / Summer stock is arriving, do we put out now?

Do we box up the winter unsold stock and hope that it is in fashion next year?

As I look through the many clothing shops I visit, being the dutiful Husband and sit outside fitting rooms with the other similar Husbands (wishing we were mowing the lawn or out fishing), one point really stood out.

I cannot see the Clothes for the signage!

This was not in just one Store, but every Store we went into. Large racks bulging full, straining so much that when you try to remove one coat hanger five more fall off, causing the already over worked staff member to sigh and keep bending over picking up. The amount of signage screaming out in all colours and fonts, neat handwriting and messy, crossed through with extra markdowns, it just went on and on.

Many Stores still were also trying to use that amazing merchandising item, which is still held in high regard by many Store teams. That item that they hope can make the difference and sell all those thousands of dollars worth of inventory sitting idle, clogging up the supply chain all the way back to Shenzhen.

The sale balloon!

What is the solution you ask?

Well unfortunately this season is over for many clothing retailers. Many racks I saw still had full size ranges and were priced at 70% of the original price. The profit is now probably gone!

They can try to clean up those racks and free up space so that they can be shopped easily. We walked out of many Stores empty handed as it was just too hard to shop and find what we needed or may have been interested in.

Clearance lines must be looked after and displayed with as much detail and love as the new season apparel. Many markdowns can be saved if correct merchandising is adhered to throughout the season. Try merchandising clearance lines by price point, i.e. $10 racks. Try merchandising by size if volume permits.

And the most, most important point of all is to have sufficient staff allocated to keep the racks clean and well presented. No one likes to have to ‘dig’ through a stack of tangled garments and coat hangers just to save a few dollars to buy a garment that no one else has wanted to buy.

In summary,

The entire season’s profits can be quickly eroded if the correct disciplines are not used during the clearance phase in Apparel retailing;

·         Continue merchandising the clearance until sold (if you ignore the clearance lines it will hurt your bottom line in a big way!)

·         Only take markdowns as needed, the smaller the better, review daily as needed until the sell through rate increases.

·         Do not over do the signage; you have to see the Clothes still!

·         Keep the racks clean and tidy at all times

·         Rearrange, reposition as necessary, and keep the displays fresh. If it looks the same, your regular shopper will walk straight past.

·         Keep the balance right between clearance and new seasons garments. Watch the weather and adjust the balance as needed, daily if required.

Come on summer

Retail profits take a hit in 2010-2011

Retail profits take a hit in 2010-2011

When Customers stop walking through the doors or are always responding  “just browsing”, it is very easy to “externalise” and push the blame for slow and reducing sales figures on the Australian financial markets, interest rates, the emissions trading scheme, global trading downturn, the Greece debt crisis, or even the Chilean ash cloud!

You start to talk to your neighbouring Stores, your competitors and Head Office, everyone says that trading is tough at the moment. You start to feel that things are out of your control and you keep on doing the same things each day and week to keep your Store running. Sales will pick up next week. Sound familiar?

It is not your fault that customers are not buying is it?

Or is it?

You can do something about increasing your Sales, or profits or even better both, according to Geoff Hatton, General Manager of Retail Training Australia.

“People are still spending, there are still potential customers walking in and past your Store every day. You can turn those lookers and browsers into buyers” said Mr Hatton.

Now more than ever, Businesses need to focus in “internalising”.

Business owners and Store Managers need to have a good honest look at their total Store operation, take off the rose coloured glasses, and stand back so you can see the forest and not the trees!

It is an easy trap, for many small business operators (and large) to get caught up in what is happening today, right now and not put aside the time to work on your business and not just in it.

Again,

Work ON your Business, not just in it.

“Review your business plans, and write up one if you don’t. A business plan does not have to be some elaborate document. It has to be workable, something that you refer to consistently to stay on track. It is your recipe for success, your road map to help you find your way to financial success” said Mr Hatton. “You should keep referring back to your plan and keep it updated regularly. Set a date for the next review, include your Team in the planning, they deal with your Customers every day and will have lots of suggestions of what needs to be achieved. Remember your Staff have an interest in the Store succeeding as well” Mr Hatton went on to say.

You need to recapture the passion you had when you first started in Retail.

The most overlooked appreciating asset in any Business is their employees. Many retail businesses simply do not invest enough time and money into training and development of their Staff. A fully trained and competent Sales person on the floor can convert ‘lookers’ into buyers, sell add on items to customers increasing your average sale, this will have a dramatic effect on increasing your Store profits. Even a small store with only 350 customers a week selling each customer an extra $5 item will obviously increase their sales by $1,750 a week, which could be an extra $91,000 each year. That simply example can be the difference between making a profit and a loss. “Training your team can be the answer to your decreasing sales results” explained Mr Hatton.

With Customer buying habits constantly changing, and the continual growth in, online purchases increasing at a growing rate, Retailers now more than ever have to be creative and flexible to entice Customers into their Stores. What worked today to make a sale will not be successful tomorrow. All Retailers today need to have an online presence to capture the online shopper, or fear being left behind. Several retailers are doing this well, showcasing their range, new lines and specials online, interacting with their Customers via  Social media sites and then directing customers into their Stores to make the purchase. Retailers also have the constant risk of online shoppers using their Stores to touch and feel the items that they are looking to purchase, and then shopping around online for the lowest price available. “By having your Sales team trained in the correct sales techniques, the risk of losing these sales to the virtual shopping malls can be decreased” said Mr Hatton. Multi channel retailing can be simply and more cheaply done now as technologies increase and are more widely used. The rapid increase in social media sites can also be a benefit to Retailers enabling instant feedback and communication with your customers. Every Retailer would love to go ‘viral’ with their latest sales event.

“With the Government funded approved training in Retail for eligible employees, there is no excuse for Retail Businesses not to train and improve the productivity of their employees, cost of training is not an issue” said Mr Hatton.

Smart Retailers are taking advantage of training and up skilling their new and existing Store Teams, through government funded training packages with registered training organisations. Through the user choice funding programs, Businesses have the choice of who they choose to train their Teams and still qualify for government incentives when training is provided through traineeships.  It is the smart retailers that will survive and grow into the future.

 “Unfortunately those retailers that fail to respond to the changing customer shopping habits and do not invest in the training and development of their staff, will not have much chance of surviving in the modern retail world and will just be another boarded up Shop front in your local shopping centre” said Mr Hatton in closing.

Geoff Hatton after working for the last 29 years in Retail Stores in various locations and Management positions is now the General Manager of Retail Training Australia and is pouring his years of operational experience back into the training and development of the next generation of Retail Leaders.

www.retailtrainingaustralia.com.au

info@rtaustralia.com.au