Perform an Operational Refresh

By
Casey McKenzie, Senior principal consultant

Article Preview: 
It seems c-store retailers are always looking for the “next big thing” or the “magic bullet” to help them take their operational performance to the next level. In today’s economic and competitive environment, that is understandable.
 
But being a firm believer in “Retail 101,” I am always surprised by how often operators lose focus on the basics while chasing that shiny new thing. It can become a vicious cycle: Bring in the new, overlook the old, bring in more new stuff, and continue to overlook the old. 
 
What is stopping us from breaking the cycle? Is it outside of our control to turn our business around? Perhaps you need an “operational refresh” from a merchandise perspective. Your situation may be creating more “pain points” than you realize.  
 
Here’s how to optimize three areas related to your merchandise.
 

Hire, Train and Treat Them Right

It’s easier said than done, but nothing a retailer can do will have more of an effect on business performance. And it doesn’t stop at hiring the right person, providing the proper training and encouraging him or her. People want to feel as if they are part of something important, to have purpose in their work. 
 
Every store employee should have customer service as the top priority, of course. But couldn’t every store employee have a secondary role as well, such as being named a “specialist” for something (e.g., plan-o-grams, inventory management, signage, pricing, diplays)? Best-practice operators assign responsibility for category or aisle execution to specific individuals. That person is “in charge” of that area and takes pride in its performance. There is no better candidate than the store associate to help you execute from a customer perspective.
 

Flow It Right for the Customer

Ensuring that your facility is safe, clean, well lighted and properly maintained are basics. But getting those basics right can be overshadowed if you stack your inventory too high, thereby inhibiting sight lines; load up on floor displays that block walkways; clutter the view with too much and/or confusing signage; and clog the counter with so much stuff the customer has to fight their way through to pay you.
 
Making these mistakes means you are not presenting the right flow for your customer, either visually as they look around the store or physically as the move through the store. You typically have them in your store for just over 2 minutes, and they are clearly in your stores for convenience, so open up the flow and let them stroll.
 

Carry the Right Quantity 

Even if the item assortment is not perfect, the inventory on hand can be. Addressing excess inventory is the key to unlocking a “hidden” source of working capital. It’s in plain sight, and yet we walk right by it every day. Clear your store of the clutter from old marketing programs, outdated holiday displays or bad ordering practices. It is unproductive capital and it is not serving your business or your customers.
 
The expected results of getting your inventory right are numerous. For more than 15 years, via our Item Inventory Optimization Case Study, we have consistently seen the following results by simply focusing on the days on hand: 
  • Released working capital (by reducing on-hand inventory) of nearly $15,000 per store in cigarettes alone.
  • Reduced days on hand (from current levels) by nearly six days.
  • Increased sales (from improved in-stock position/reduction of out-of-stocks) 1% to 2%.
  • Reduced store labor (time spent on ordering/counting inventories) of 25 minutes per store per order.
Once you’ve reviewed what’s truly selling and the right amount of inventory needed to support those sales, get rid of the excess. Return it if you can, or mark it down if you can’t. If it still sits, donate it (if allowed) or offload it to a reseller at a discount. The only wrong answer is to continue to sit on it.  
 
I won’t discourage you from pursuing “the next big thing,” but I encourage you to review your operations against this list: 
  • Hire the right people and give them purpose.
  • Walk your store as a customer to see if it flows well. 
  • Right-size your inventory and free up working capital.
This “operational refresh” just might be the silver bullet you’ve been looking for! 

Click here to download full article