March 2020 - 51
POHMER ON
average customer probably shops your store less
than 1.2 times per season. By capturing customer
email addresses, especially your highest volume
customers, and marketing directly to them, you
stand a great chance to increase their frequency
of shop. As an example, if you could increase the
purchase frequency from 1.2 to 1.3 times per season
(and transaction values remain the same), you
generate an 8.3% sales increase!
* Increasing the quantity of your customers: This is a
function of both your marketing and advertising to
attract new customers and through word of mouth
from your loyal " brand champions, " your most
satisfied customers who praise you to their friends
(the best advertising you can't buy!).
* Converting more " walked " customers: Even though
you're a destination shop, there will always be a
certain percentage of customers who " walk " without
purchasing (possibly as high as 20% of your store
traffic). Train your sales associates to be on the lookout
for confused and bewildered customers who don't know
exactly what they need and could use some help to
prevent them from leaving empty handed.
Increasing Margins
As mentioned above, the second area of focus I've
identified is to increase your initial margin as much as
possible as a means of driving your bottom line. Here are a
few discussion points:
* Raise retails: As in the sales discussion, there are
opportunities to raise retails to generate incremental
profit.
* Decrease product costs: With pressure from tariffs, and
higher production, transportation and labor costs, there
may be limited opportunity to reduce acquisition costs.
That said, look for opportunities to generate efficiencies
with your supply partners to reduce, or at least main,
purchase costs.
* Manage the mix: What you advertise, what you
feature in your merchandising scheme, the space you
devote to different categories of product can help
direct your customers to the higher margin products
in your assortment.
Don't take this the wrong way ... I'm a firm believer
in using financial ratios to benchmark and measure
performance, providing you with the ability to make
corrections to maximize your top and bottom lines. But
keeping a firm emphasis on maximizing your sales potential
and initial margins will go a long way to keeping your
operational costs and expenses under control.
It's all about keeping it focused ...
Stan Pohmer is president of Pohmer Consulting Group in
Minnetonka, Minn. He can be reached at spohmer@pohmerconsulting.com
or 612.605.8799.
Circle 135
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March 2020
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