September 8, 2025 • 19 mins
Too many retailers still believe discounting is the only way to keep customers walking through the door.
In this episode of Retail Reckoning, I, Clare Bailey, will explain why that mindset is a fast track to collapse. From the real meaning of value in 2025, to the dangers of a “race to the bottom” on margins, Clare explores how economic uncertainty, squeezed supply chains, and outdated 9–5 trading hours are reshaping the retail landscape.
Discover how independents and big brands alike can compete on more than just price — with smarter stock strategies, customer reassurance, and creating moments of joy that build loyalty.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
In this episode, we're focusing on the real meaning of value,
how to maximize margins, the importance of
localization, and if you're trading
9 to 5, this one might make you rethink that.
Welcome back to Retail Reckoning. We're going to cut through the fluff,
(00:22):
confront the facts and say what many others might not. I'm
Clare Bailey and today we're diving into the murky waters of value
margins and what it really means to serve customers. Customers in
2025. This episode picks up right where our last one
left off. And if you haven't caught up on episode one, go and do that.
It sets the stage. Let's first dive into value.
(00:43):
As I said in episode one, it isn't just about price.
Yeah, retail reckoning.
Retail reckoning. No space for
dusty shelves. Cause retail
reckoning owns the floor.
The message hasn't landed enough people yet. Consumers aren't
(01:06):
just bargain hunting, they're prioritizing where they spend.
The share of wallet isn't just about the lowest
possible price. And quite frankly, often when I speak at conferences,
I say to the independent retailers in the audience, be more
stellar, reassuringly expensive. Because actually
value is a race to the bottom that only those with the biggest
(01:28):
pockets can achieve. That's where we call value. But we
don't mean it as value, we mean discounting. The real
meaning of value is a bit of a moving target as
consumer behaviors have changed and more and more people
are looking for ethical and sustainable options, especially
in the younger generation. That's one of the areas where you might be
(01:50):
able to compete on value. Made in the uk. Shorter supply
chains, fewer carbon miles. Others just want
speed, same day delivery. Only recently we
saw that John Lewis was partnering with, I believe it was
Uber Eats, not just to deliver food, but to deliver
all kinds of products, from lamps to bedding to who knows
(02:12):
what. That's real speed. It's not going to be in all stores,
it'll only be in those who've got a significant catchment. And it's a trial,
but it just goes to show how much instant
gratification is important to our consumers today. Think about
your own behavior. There are some who want the cheapest option
and that still feels like a reliable, dependable way forward.
(02:35):
I mean, I often talk about the fact that people cut
as much of their spending out of the boring basics
in order to be able to splash out a little bit on the
interesting additions. And actually that's been seen for
quite a few years now. The majority of us want
the combination of a fair price, not Necessarily the lowest,
(02:57):
but a fair price, quality products, it lives up to our
expectations and meets our needs. The service
we were treated well. And convenience. What are
the opening hours? Is there parking? Can I buy online, can I click and collect?
And all of those things, depending on what they're buying and when,
could have a different weight in the decision. So
(03:19):
really you can't apply this blanket approach that many people do.
And if you still think value is discounting
or a generic promise, then you're already behind the curve,
because it certainly isn't. And the retailers who are
successful have fully understood this.
Talking of discounting, we all know, as we mentioned last
(03:43):
time, that margins are being squeezed. All of the information
that we've heard from national Insurance, increased minimum wages,
very sticky inflation, business rates still looming, online
fraud, all of those things are still relevant. And
that's why consumers are still cautious. All the more so
with a lot of the global economic uncertainty, with what's
(04:05):
happening in the stock market, so Trump's
tariffs, wars, Gaza,
Ukraine, the world is full of bad news
constantly. And when the world is full of bad news, consumers
worry. They worry about their jobs, they worry about
what's going to happen to them. And they worry because
(04:27):
it's nerve wracking to hear all this bad news all the time.
So what they often do is even if they've got
spending power, they just hold back. They keep
the money with them, just in case.
And what retailers need to do, and what many do,
is attract more customers through the door, or to at least engage with
(04:49):
those customers who are cautious and reassure them. The problem is, far too
many think the only way to keep afloat in a time
of extreme consumer lack of confidence is to drop
prices, to maintain volume sell and to release the
cash tied up in stock. But what that doesn't do is generate enough
profit to pay the rent, the rates, the utilities, the staff, the
(05:11):
insurance. And of course, a lot of people complain when
the PLC retailers make profit. And I sort of think, what are you
complaining about? Most of the pension schemes and
investment trusts use PLC retail as part of
their portfolio. If they don't generate profit and shareholders value,
that actually degrades the actual income into a
(05:34):
lot of the major pensions and investment funds. So people that
declare the major retailers who've done well are just
greedy and profiteering from customers, are they? Or are
they being really efficient and delivering what PLCs are meant to do, which is
shareholder value? Because one day when we all come
to draw pensions and hopefully private pensions and so on,
(05:56):
funded by a lot of these stocks and shares will appreciate the fact that
they made a profit because it'll mean that our pension pot has kept up with
inflation and we're not actually going backwards. The other thing to consider
when it comes to discounting is the volume doesn't
equal viability. The smaller businesses can
reduce prices for only so long. But as
(06:18):
the buy in price for new stock is unfortunately rising
due to pressures upwards of the supply chain, what you're getting for the
product you once bought for, say £10, that product may
now be worth £12, 50 or more.
So if you haven't sold enough to generate
the profit now to rebuy stock, you find yourself
(06:41):
in a cash constrained position. And that's a serious
problem. And that's where quite a few small businesses unfortunately have ended up
in an insolvency position. So I really do urge people to
reconsider discounting, but to focus on what can
they do to bring customers back. If you're not making enough
money per transaction to be viable, what's the point?
(07:04):
What are you really gaining?
So looking at that in terms of the high street reality we've
seen over the last, oh, probably it's nearly 15 or
15 plus years now, retailer after retailer
falling into collapse. A lot of that has been to do with not
banking enough money in the golden quarter. So from now until Christmas is the
(07:27):
most important time for a huge amount of retailers if they
don't bank the profits now, and some of those might be looking to make
30% of their annual profit in this next quarter, others in
gifting and so on could be looking as much as 60% in the golden
quarter. And the reality is some of those retail administrations over the Last
more than 15 years have been as a result of a poor Christmas trading.
(07:50):
They then don't have enough in the bank because they've discounted and
they've not done well. They don't have enough in the bank to pay the quarterly
rent, to pay the staff, to buy new stock, and they hit the wall
as well as all that. We've got quite a lot of empty units. More and
more retailers have moved out of high streets and it's an interesting situation
because people are busily blaming the Internet. I actually look at this
(08:12):
from a point of view of what happened back in the 80s and 90s
to deal with housing. Lots of housing estates were built on the edge
of town or out of town and then to serve that community
who became car or public transport reliant to get high streets,
large out of town stores and developments started to pop up. That
meant that the community who'd moved out of the town centre to
(08:35):
the nice detached house with a garden where the kids
could play in a safe area versus living in a flat in the town
centre. But all those families were now not needing to go
into the town centre because of out of town developments. So we can definitely consider
that out of town became part of the reason why the high
street suffered. And we saw closures. Then we saw lots and
(08:57):
lots of car dependency because they were no longer able to walk to
things and public transport wasn't as accessible from housing
developments. And finally we're seeing some planning
reforms which hopefully address the problem of that drift
out of town, which I personally believe has got a lot more to do with
high street decline than the Internet. Because the Internet, even at the peak of
(09:19):
COVID was only ever 35% of total retail sales.
And it trickles along somewhere between 25 ish percent depending on the
ONS figures or whoever you look at. So it's not the Internet. If
there's 25% going through the Internet,
75% are still going through physical shops. Unfortunately, they're not
necessarily the ones in town centres. But luckily there has been
(09:41):
some planning reform that's, I think is a good idea because it's
made it easier to turn perhaps offices above shops or even empty
shops into housing, where it could be usefully used as housing.
That puts populations back on the doorstep of the
businesses. So yes, there'll be fewer businesses in the town centre, but it
brings the equilibrium back and puts a population in front of
(10:03):
the businesses that trade there, so that then they can at least
be viable. And over time, as the population is back in the
town centre, maybe more businesses will pop up. So
that's a good side of planning reform. The recently announced planning
reform doesn't make a lot of sense. As I covered in a previous
episode, we have to really look at the differences between
(10:26):
what's causing issues on the high street, what's causing
drops in footfall, and so on and so forth. And high streets
are less and less accessible. The first thing that local authorities
get when they walk into a dependent business is it's all about
the parking. It's all about this, it's all about that. Availability of
parking is a problem, Cost is not a problem if the offering
(10:48):
is right. But I also think that businesses are often
their own worst enemy. If we think about who have got the highest spending
power, it's often people who are working full time. They're working full
time, right? So they might be commuting back home and
reaching the town, getting off the bus or getting off the train and
walking home perhaps at exactly the time you're shutting.
(11:11):
So if the shop is shut and they need something, they're either going
to jump online when they get home or go to the large out of
town development who are open longer hours. I've always said
that retailers, if they want to open 9 to 5,
really ought to consider getting a different job because it isn't a 9 to 5
job if they don't want to work weekends and back, holidays and evenings and so
(11:32):
on. It's not the career for you, but the behavior and the
footfall that we've seen over the years has depleted during
the nine to five hours. But actually the best period
is the evening and nighttime economy. So that segue
from arriving home from work through into the evenings and you only have
to look at some European countries. Let's take Denmark. Very similar weather to uk,
(11:55):
arguably colder. I used to do some work in a town called Aarhus,
which is about on the level with Edinburgh. It's minus 10 in the winter,
but you see people al fresco dining and they provide blankets
and heaters and so on, and they're having fun and they're enjoying the
atmosphere and they're hanging out together until quite late into the evening and
all the shops are still open. Whereas in the uk, if you go
(12:17):
out for a meal, the only thing that's open is probably the pub
and the restaurant. Chances are all the shops are shut and
I believe that that's where we're missing out. So one thing I'd
say, if you take nothing else from this, reconsider your opening hours
and try to look at the flow of people around your town. Your council
might have footfall data that you could ask to see. And if it seems that
(12:39):
there's a peak of footfall in the evenings, perhaps when commuters come
home, then why not change your opening hours to suit them?
Other things that you can do We've talked about the range
and segmentation in the previous episode, but
it's also things like reviewing your suppliers.
(13:00):
If you consolidate the range and curate it down to
the things that people really buy in volume and which make you profit,
that might mean that you can then push more volume
through some products and negotiate better rates with suppliers. Because
if you think about it, if certain products on the range were actually proliferating
the range and cannibalizing the potential sales of another
(13:24):
product because it offered a similar alternative by
channeling all that demand through the best performer, you can
negotiate harder with the supplier to say, look, I'm going to be increasing volumes. Is
there anything you can do? You can also, whether you're large or small,
make sure you monitor actual supplier performance, because
failure to deliver impacts availability, impacts customer
(13:45):
experience. And actually you could be looking to your supplier
base and asking them for better performance and managing a couple of
KPIs that the supplier then thinks whether you're small or not.
These people are serious about being professional. And even the
biggest suppliers will be impressed by a small business
demanding the same level of performance as a large business. They may not
(14:07):
listen to you, but it's worth having a go.
I worked with an independent fashion retailer in Litchfield a few years ago
and it was her aim to sell business, which she now has. But she was
really working everywhere God sent. And her repos data showed
that she was overstocked on high fashion items and
selling out regularly on core basics. All we needed
(14:30):
to do was make a when it's gone, it's gone policy on high
fashion. Basically, if it's not sold by New Year's Eve, things like a
party dress, for instance, it's not going to. But making
it so I must buy it now because she'll sell out made
a sense of urgency around the product and of course it increased the
sales. So she got a higher sell through rate by saying, when it's gone,
(14:51):
it's gone. But similarly, because these things were core basics
that she kept selling out of, I just said, why don't you
buy slightly more than you think you need? Because
the demand had been constrained by lots of stockouts. So if
demand's constrained, it gives you inaccurate data to forecast from. So why
don't you just buy heavy on that? And if you've got this capacity for storage
(15:13):
and you've got the cash in the bank, why not buy a month and a
half worth of stock and make sure that you saturate
the sales. Never go out of stock, and then you'll know what your real
baseline is. Well, that transformed the business. Those two
key levers never be out of stock of the core basics
and make it an urgent purchase of the sort of
(15:35):
fashion items. She increased her profit by
£40,000 in the first year. And this is a small, independent
single store retailer that of course put her in a strong position to be able
to sell. And I don't think this matters whether you're large or small. You
cannot afford to be out of stock of the things that customers expect to find.
It's like Sainsbury's not having bread on the shelf. That would really
(15:56):
annoy people. They think, well, I'll go to Tesco's then. What if they
never come back? It's a really bad choice. Equally,
we don't expect certain high seasonable products to be available. You
don't want to buy a Christmas tree in February after all.
Finally, I want to pick up on the local intelligence
(16:17):
that I talked about in the previous episode. And I think
that the key to this is the empowerment. And I mentioned
that before, but going into this in a bit more detail, it's about
understanding the local market and demographic. It's about doing, as I
just said, going to the local council and getting footfall data to understand the
flow of people around the town and then requesting
(16:39):
changes to opening hours and trading hours. There might be licensing
limitations on that, but at least you can ask. And it's about
the personalization and the flexibility and the
adaptability that makes it feel like this
isn't just the same old, same old cookie cutter
template. This is a business that understands me. Even
(17:01):
though they've got a big brand name above the door, the staff
know me by name and they know what I like and they
recommend things to me. And it feels great because that's
exactly how the independents behave. It's really important to allow the
managers, and even the area managers as well, to
respond and agree to what's actually happening in store. And you give them
(17:23):
room to act, to surprise. For example, one thing I
always talk about at conferences as well is moments of joy in
customer experience. And I talk about loyalty and I talk
about disloyalty because in my wallet I must have six
coffee shop cardboard stamper cards. And I call them
disloyalty cards because quite frankly, depending on which coffee shop
(17:45):
I'm walking past now, if I want a coffee, I open the wallet and flick
through all the cards until I find the one that's that brand and I get
my stamp. And at some point down the line, I've got enough to get a
free one. Then I discovered what pret a manger do. They don't do that.
They actually had the opportunity at store level and
a budget to achieve this. That said, oh, it's on the house today. Now,
(18:05):
that happened to me once and I didn't know at the time that that was
common practice. And I turned to what then was called
Twitter and said, oh my goodness, my coffee's just been on the
house. What a wonderful surprise. And it was a moment of joy.
Now, if I can see a prep, I'll walk past the other coffee
shops to go there, even though I know that it's a policy
(18:28):
and they're allowed to do this. But I just hope that it might be me
again that gets the free coffee. I would definitely
recommend having room to create moments of joy.
So to wrap up, margin isn't a
dirty word, it's survival. It's about being able
(18:50):
to pay your staff, keep your rent commitments and provide
shareholder value. If that's the kind of organization structure you've got,
it means that you can actually invest in keeping
the service levels up. At the moment, we've seen staffing levels
drop because the cost of staffing is higher than ever before.
And of course that affects affects the service level. You need to know your
(19:12):
numbers, make tough range decisions,
invest in what's working and ditch what's not. Well, thanks
for tuning in. If this has resonated, please share it. If you've got topics
you'd like us to cover, drop me a message. And until next time,
keep reckoning with retail.
Reckoning. Retail reckon
(19:35):
no space for dusty shelves cause
retail reckoning owns the floor.
In this episode, we're focusing on the real meaning of value,
how to maximize margins, the importance of
localization, and if you're trading
9 to 5, this one might make you rethink that.
Welcome back to Retail Reckoning. We're going to cut through the fluff,
(00:22):
confront the facts and say what many others might not. I'm
Clare Bailey and today we're diving into the murky waters of value
margins and what it really means to serve customers. Customers in
2025. This episode picks up right where our last one
left off. And if you haven't caught up on episode one, go and do that.
It sets the stage. Let's first dive into value.
(00:43):
As I said in episode one, it isn't just about price.
Yeah, retail reckoning.
Retail reckoning. No space for
dusty shelves. Cause retail
reckoning owns the floor.
The message hasn't landed enough people yet. Consumers aren't
(01:06):
just bargain hunting, they're prioritizing where they spend.
The share of wallet isn't just about the lowest
possible price. And quite frankly, often when I speak at conferences,
I say to the independent retailers in the audience, be more
stellar, reassuringly expensive. Because actually
value is a race to the bottom that only those with the biggest
(01:28):
pockets can achieve. That's where we call value. But we
don't mean it as value, we mean discounting. The real
meaning of value is a bit of a moving target as
consumer behaviors have changed and more and more people
are looking for ethical and sustainable options, especially
in the younger generation. That's one of the areas where you might be
(01:50):
able to compete on value. Made in the uk. Shorter supply
chains, fewer carbon miles. Others just want
speed, same day delivery. Only recently we
saw that John Lewis was partnering with, I believe it was
Uber Eats, not just to deliver food, but to deliver
all kinds of products, from lamps to bedding to who knows
(02:12):
what. That's real speed. It's not going to be in all stores,
it'll only be in those who've got a significant catchment. And it's a trial,
but it just goes to show how much instant
gratification is important to our consumers today. Think about
your own behavior. There are some who want the cheapest option
and that still feels like a reliable, dependable way forward.
(02:35):
I mean, I often talk about the fact that people cut
as much of their spending out of the boring basics
in order to be able to splash out a little bit on the
interesting additions. And actually that's been seen for
quite a few years now. The majority of us want
the combination of a fair price, not Necessarily the lowest,
(02:57):
but a fair price, quality products, it lives up to our
expectations and meets our needs. The service
we were treated well. And convenience. What are
the opening hours? Is there parking? Can I buy online, can I click and collect?
And all of those things, depending on what they're buying and when,
could have a different weight in the decision. So
(03:19):
really you can't apply this blanket approach that many people do.
And if you still think value is discounting
or a generic promise, then you're already behind the curve,
because it certainly isn't. And the retailers who are
successful have fully understood this.
Talking of discounting, we all know, as we mentioned last
(03:43):
time, that margins are being squeezed. All of the information
that we've heard from national Insurance, increased minimum wages,
very sticky inflation, business rates still looming, online
fraud, all of those things are still relevant. And
that's why consumers are still cautious. All the more so
with a lot of the global economic uncertainty, with what's
(04:05):
happening in the stock market, so Trump's
tariffs, wars, Gaza,
Ukraine, the world is full of bad news
constantly. And when the world is full of bad news, consumers
worry. They worry about their jobs, they worry about
what's going to happen to them. And they worry because
(04:27):
it's nerve wracking to hear all this bad news all the time.
So what they often do is even if they've got
spending power, they just hold back. They keep
the money with them, just in case.
And what retailers need to do, and what many do,
is attract more customers through the door, or to at least engage with
(04:49):
those customers who are cautious and reassure them. The problem is, far too
many think the only way to keep afloat in a time
of extreme consumer lack of confidence is to drop
prices, to maintain volume sell and to release the
cash tied up in stock. But what that doesn't do is generate enough
profit to pay the rent, the rates, the utilities, the staff, the
(05:11):
insurance. And of course, a lot of people complain when
the PLC retailers make profit. And I sort of think, what are you
complaining about? Most of the pension schemes and
investment trusts use PLC retail as part of
their portfolio. If they don't generate profit and shareholders value,
that actually degrades the actual income into a
(05:34):
lot of the major pensions and investment funds. So people that
declare the major retailers who've done well are just
greedy and profiteering from customers, are they? Or are
they being really efficient and delivering what PLCs are meant to do, which is
shareholder value? Because one day when we all come
to draw pensions and hopefully private pensions and so on,
(05:56):
funded by a lot of these stocks and shares will appreciate the fact that
they made a profit because it'll mean that our pension pot has kept up with
inflation and we're not actually going backwards. The other thing to consider
when it comes to discounting is the volume doesn't
equal viability. The smaller businesses can
reduce prices for only so long. But as
(06:18):
the buy in price for new stock is unfortunately rising
due to pressures upwards of the supply chain, what you're getting for the
product you once bought for, say £10, that product may
now be worth £12, 50 or more.
So if you haven't sold enough to generate
the profit now to rebuy stock, you find yourself
(06:41):
in a cash constrained position. And that's a serious
problem. And that's where quite a few small businesses unfortunately have ended up
in an insolvency position. So I really do urge people to
reconsider discounting, but to focus on what can
they do to bring customers back. If you're not making enough
money per transaction to be viable, what's the point?
(07:04):
What are you really gaining?
So looking at that in terms of the high street reality we've
seen over the last, oh, probably it's nearly 15 or
15 plus years now, retailer after retailer
falling into collapse. A lot of that has been to do with not
banking enough money in the golden quarter. So from now until Christmas is the
(07:27):
most important time for a huge amount of retailers if they
don't bank the profits now, and some of those might be looking to make
30% of their annual profit in this next quarter, others in
gifting and so on could be looking as much as 60% in the golden
quarter. And the reality is some of those retail administrations over the Last
more than 15 years have been as a result of a poor Christmas trading.
(07:50):
They then don't have enough in the bank because they've discounted and
they've not done well. They don't have enough in the bank to pay the quarterly
rent, to pay the staff, to buy new stock, and they hit the wall
as well as all that. We've got quite a lot of empty units. More and
more retailers have moved out of high streets and it's an interesting situation
because people are busily blaming the Internet. I actually look at this
(08:12):
from a point of view of what happened back in the 80s and 90s
to deal with housing. Lots of housing estates were built on the edge
of town or out of town and then to serve that community
who became car or public transport reliant to get high streets,
large out of town stores and developments started to pop up. That
meant that the community who'd moved out of the town centre to
(08:35):
the nice detached house with a garden where the kids
could play in a safe area versus living in a flat in the town
centre. But all those families were now not needing to go
into the town centre because of out of town developments. So we can definitely consider
that out of town became part of the reason why the high
street suffered. And we saw closures. Then we saw lots and
(08:57):
lots of car dependency because they were no longer able to walk to
things and public transport wasn't as accessible from housing
developments. And finally we're seeing some planning
reforms which hopefully address the problem of that drift
out of town, which I personally believe has got a lot more to do with
high street decline than the Internet. Because the Internet, even at the peak of
(09:19):
COVID was only ever 35% of total retail sales.
And it trickles along somewhere between 25 ish percent depending on the
ONS figures or whoever you look at. So it's not the Internet. If
there's 25% going through the Internet,
75% are still going through physical shops. Unfortunately, they're not
necessarily the ones in town centres. But luckily there has been
(09:41):
some planning reform that's, I think is a good idea because it's
made it easier to turn perhaps offices above shops or even empty
shops into housing, where it could be usefully used as housing.
That puts populations back on the doorstep of the
businesses. So yes, there'll be fewer businesses in the town centre, but it
brings the equilibrium back and puts a population in front of
(10:03):
the businesses that trade there, so that then they can at least
be viable. And over time, as the population is back in the
town centre, maybe more businesses will pop up. So
that's a good side of planning reform. The recently announced planning
reform doesn't make a lot of sense. As I covered in a previous
episode, we have to really look at the differences between
(10:26):
what's causing issues on the high street, what's causing
drops in footfall, and so on and so forth. And high streets
are less and less accessible. The first thing that local authorities
get when they walk into a dependent business is it's all about
the parking. It's all about this, it's all about that. Availability of
parking is a problem, Cost is not a problem if the offering
(10:48):
is right. But I also think that businesses are often
their own worst enemy. If we think about who have got the highest spending
power, it's often people who are working full time. They're working full
time, right? So they might be commuting back home and
reaching the town, getting off the bus or getting off the train and
walking home perhaps at exactly the time you're shutting.
(11:11):
So if the shop is shut and they need something, they're either going
to jump online when they get home or go to the large out of
town development who are open longer hours. I've always said
that retailers, if they want to open 9 to 5,
really ought to consider getting a different job because it isn't a 9 to 5
job if they don't want to work weekends and back, holidays and evenings and so
(11:32):
on. It's not the career for you, but the behavior and the
footfall that we've seen over the years has depleted during
the nine to five hours. But actually the best period
is the evening and nighttime economy. So that segue
from arriving home from work through into the evenings and you only have
to look at some European countries. Let's take Denmark. Very similar weather to uk,
(11:55):
arguably colder. I used to do some work in a town called Aarhus,
which is about on the level with Edinburgh. It's minus 10 in the winter,
but you see people al fresco dining and they provide blankets
and heaters and so on, and they're having fun and they're enjoying the
atmosphere and they're hanging out together until quite late into the evening and
all the shops are still open. Whereas in the uk, if you go
(12:17):
out for a meal, the only thing that's open is probably the pub
and the restaurant. Chances are all the shops are shut and
I believe that that's where we're missing out. So one thing I'd
say, if you take nothing else from this, reconsider your opening hours
and try to look at the flow of people around your town. Your council
might have footfall data that you could ask to see. And if it seems that
(12:39):
there's a peak of footfall in the evenings, perhaps when commuters come
home, then why not change your opening hours to suit them?
Other things that you can do We've talked about the range
and segmentation in the previous episode, but
it's also things like reviewing your suppliers.
(13:00):
If you consolidate the range and curate it down to
the things that people really buy in volume and which make you profit,
that might mean that you can then push more volume
through some products and negotiate better rates with suppliers. Because
if you think about it, if certain products on the range were actually proliferating
the range and cannibalizing the potential sales of another
(13:24):
product because it offered a similar alternative by
channeling all that demand through the best performer, you can
negotiate harder with the supplier to say, look, I'm going to be increasing volumes. Is
there anything you can do? You can also, whether you're large or small,
make sure you monitor actual supplier performance, because
failure to deliver impacts availability, impacts customer
(13:45):
experience. And actually you could be looking to your supplier
base and asking them for better performance and managing a couple of
KPIs that the supplier then thinks whether you're small or not.
These people are serious about being professional. And even the
biggest suppliers will be impressed by a small business
demanding the same level of performance as a large business. They may not
(14:07):
listen to you, but it's worth having a go.
I worked with an independent fashion retailer in Litchfield a few years ago
and it was her aim to sell business, which she now has. But she was
really working everywhere God sent. And her repos data showed
that she was overstocked on high fashion items and
selling out regularly on core basics. All we needed
(14:30):
to do was make a when it's gone, it's gone policy on high
fashion. Basically, if it's not sold by New Year's Eve, things like a
party dress, for instance, it's not going to. But making
it so I must buy it now because she'll sell out made
a sense of urgency around the product and of course it increased the
sales. So she got a higher sell through rate by saying, when it's gone,
(14:51):
it's gone. But similarly, because these things were core basics
that she kept selling out of, I just said, why don't you
buy slightly more than you think you need? Because
the demand had been constrained by lots of stockouts. So if
demand's constrained, it gives you inaccurate data to forecast from. So why
don't you just buy heavy on that? And if you've got this capacity for storage
(15:13):
and you've got the cash in the bank, why not buy a month and a
half worth of stock and make sure that you saturate
the sales. Never go out of stock, and then you'll know what your real
baseline is. Well, that transformed the business. Those two
key levers never be out of stock of the core basics
and make it an urgent purchase of the sort of
(15:35):
fashion items. She increased her profit by
£40,000 in the first year. And this is a small, independent
single store retailer that of course put her in a strong position to be able
to sell. And I don't think this matters whether you're large or small. You
cannot afford to be out of stock of the things that customers expect to find.
It's like Sainsbury's not having bread on the shelf. That would really
(15:56):
annoy people. They think, well, I'll go to Tesco's then. What if they
never come back? It's a really bad choice. Equally,
we don't expect certain high seasonable products to be available. You
don't want to buy a Christmas tree in February after all.
Finally, I want to pick up on the local intelligence
(16:17):
that I talked about in the previous episode. And I think
that the key to this is the empowerment. And I mentioned
that before, but going into this in a bit more detail, it's about
understanding the local market and demographic. It's about doing, as I
just said, going to the local council and getting footfall data to understand the
flow of people around the town and then requesting
(16:39):
changes to opening hours and trading hours. There might be licensing
limitations on that, but at least you can ask. And it's about
the personalization and the flexibility and the
adaptability that makes it feel like this
isn't just the same old, same old cookie cutter
template. This is a business that understands me. Even
(17:01):
though they've got a big brand name above the door, the staff
know me by name and they know what I like and they
recommend things to me. And it feels great because that's
exactly how the independents behave. It's really important to allow the
managers, and even the area managers as well, to
respond and agree to what's actually happening in store. And you give them
(17:23):
room to act, to surprise. For example, one thing I
always talk about at conferences as well is moments of joy in
customer experience. And I talk about loyalty and I talk
about disloyalty because in my wallet I must have six
coffee shop cardboard stamper cards. And I call them
disloyalty cards because quite frankly, depending on which coffee shop
(17:45):
I'm walking past now, if I want a coffee, I open the wallet and flick
through all the cards until I find the one that's that brand and I get
my stamp. And at some point down the line, I've got enough to get a
free one. Then I discovered what pret a manger do. They don't do that.
They actually had the opportunity at store level and
a budget to achieve this. That said, oh, it's on the house today. Now,
(18:05):
that happened to me once and I didn't know at the time that that was
common practice. And I turned to what then was called
Twitter and said, oh my goodness, my coffee's just been on the
house. What a wonderful surprise. And it was a moment of joy.
Now, if I can see a prep, I'll walk past the other coffee
shops to go there, even though I know that it's a policy
(18:28):
and they're allowed to do this. But I just hope that it might be me
again that gets the free coffee. I would definitely
recommend having room to create moments of joy.
So to wrap up, margin isn't a
dirty word, it's survival. It's about being able
(18:50):
to pay your staff, keep your rent commitments and provide
shareholder value. If that's the kind of organization structure you've got,
it means that you can actually invest in keeping
the service levels up. At the moment, we've seen staffing levels
drop because the cost of staffing is higher than ever before.
And of course that affects affects the service level. You need to know your
(19:12):
numbers, make tough range decisions,
invest in what's working and ditch what's not. Well, thanks
for tuning in. If this has resonated, please share it. If you've got topics
you'd like us to cover, drop me a message. And until next time,
keep reckoning with retail.
Reckoning. Retail reckon
(19:35):
no space for dusty shelves cause
retail reckoning owns the floor.
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