Optimal Retail Part 2

This second Optimal Retail installment focuses on what I am calling ‘Sophisticated Leadership’. The word “Leader” or “Leadership” is bandied about today throughout society at schools, regarding sports teams, in boardrooms and throughout the ranks at all levels of corporate life.

Is he/she exhibiting leadership tendencies?

Is he/she an effective leader?

What style of leadership is someone employing?

There certainly can never be too much of a good thing called ‘leadership’ but what I have found is that the more ingrained the leadership qualities are throughout an organization, the more consistent the performance. When a company exhibits a certain level of leadership, it does not need to be constantly and overtly spoken about or critiqued on a daily basis. There is a sense of maturity about an organization that permeates all levels and all facets of the business when there is a healthy dose of sophisticated leadership.

Some of the telltale signs that an organization is demonstrating sophisticated leadership skill sets are as follows:

• The company has a focused set of goals and objectives that have been cascaded effectively to all levels
• Every employee at every level can articulate the mission or vision of the company
• Meetings throughout the company are effective, efficient and always relevant
• Employees feel engaged (see Part 1) and are enjoying their jobs and find their work rewarding
• Store contact from head office is frequent, supportive and positive – the store is always the priority
• Store visits are frequent, effective, engaging and educational for all parties – they are never dreaded
• There is a “delegate and develop” mentality that permeates the organization
• Everyone throughout the organization cherishes learning
• All levels throughout the organization feel a high degree of accountability
• The culture is positive and persuasive not demanding and authoritarian

Peter Drucker used to say that the no. 1 job of leaders is to develop other leaders. This is true of any organization exhibiting ‘Sophisticated Leadership’. This does not mean that every person needs to possess a post graduate degree, much less a university degree. It certainly doesn’t mean that there is an intellectual air to the people running the company. Most of the time it actually is to the contrary, where messages, goals and job descriptions are kept very simple and user friendly and everyone understands their role. Southwest Airlines would be an excellent example of Sophisticated Leadership without any intellectual overtones, just a real Texas/southern drawl to CEO and founder Herb Kelleher and very simple, understandable and executable messages.

There is a way to test and assess how sophisticated a company’s leadership is. First you have to walk the halls, sit in a few meetings, visit stores and observe behaviours. But it can be a real eye-opener. There is no way to optimize a retail business without continually optimizing the level of sophisticated leadership of the organization.

TheRetailTherapist:)

Optimal Retail Part 1

I am going to take a different tack for the next little while. I hope you will indulge me. Even though I am trying to make a living on some of the advice I am about to impart, I figured the retail scene could use some help from any and all corners to get through this tough environment.

I have compiled two checklists (because in retail, we all love our checklists ) to assess whether a retailer is maximizing their business and, if not, to identify some areas that retailers can look at in order to help them achieve “Optimal Retail” status. The second list is a “Top Ten Non-Negotiables in Tough Traffic Times” list (with apologies to David Letterman). This list will give you my own take on what cannot be overlooked in these softer times in order to help retain “Optimal Retail” status.

We will start with a few excerpts over the few entries from my basic “Optimal Retail” checklist and follow up with a few excerpts from the “Top Ten” List. I will pick and choose a few in each list. For the full list, please do not hesitate to hire me …

One common trait of any great organization, regardless of industry is an elevated amount of “Employee Engagement”. The more the employees of the organization at EVERY level understand the business philosophy, buy in to the direction and culture of the product and the brand and the more they are encouraged to participate in the communication processes set up for them, the healthier the organization usually is.

This is the first thing I look for when I assess an organization. How committed are the employees? What is the turnover like and at what levels? Do the front line employees understand the “mission” of the company? Why do the front line employees want to work for that company?

Some of the little engagement keys to look for are:

• Types and frequency of communication vehicles
• Do all employees have access to the information they need?
• Do employees feel they can make a difference in the company and that they have a voice?
• What is the ratio of HR professionals to the total employee base?
• Is there an annual employee survey?
• What is the compensation philosophy of the company ie. is there profit sharing or options available for ALL levels?
• What does the performance review process look like and more importantly, what do the employees think of the process?

The old adage of  “keeping morale high amongst the troops” doesn’t necessarily cover all the bases any longer. Employees need to be constantly stimulated and engaged in the inner workings, creative development and decision making of any company. If they feel like they have the ability to provide input and that their feedback is being heard and acted upon, their productivity will soar and the newest, freshest ideas will be unleashed to provide the company with a great competitive advantage.

Peter Drucker always used to say that companies should treat their employees as if they were volunteers. This simply means making them feel appreciated, making them feel special, expecting a lot but understanding that they are more prone to walk out on you today than ever before. A very well respected employee base is a productive one for sure.

I will leave you with one further thought…I remember when I ran a division for a big global retailer and I made sure I read every exit interview in the division. One comment resonates with me to this day: “My work was appreciated but I wasn’t”.  Those 7 words have stayed with me for over a decade and they inspire me improve every day in the area of employee engagement.

TheRetailTherapist:)

Brand Stories

With the opening of the 40,000 square foot Hollister “Flagship” store by the Abercrombie and Fitch group in the last week or so, it gave me pause to think of the relevance of investing in this type of brand experience.

Of course, Ralph Lauren pioneered this type of branding effort by deciding to create its own environment in order to increase brand presence, showcase exactly the way the Ralph Lauren brand should be merchandised to the public and increase awareness for their labels which were (and still are) carried by almost every department store in the country. I remember the hew and cry emanating from their wholesale accounts that these stores would cannibalize sales and that it would ruin the relationship. The end result was that business everywhere increased substantially as people became more familiar and comfortable with the Ralph Lauren name and brand and this led to every other designer opening their own stores to show off their true brand essence.

Nike was also at the forefront in opening their own homage to the swoosh and the sporting icons they had under contract and called it “NikeTown”. They opened usually in the highest profile areas in major metropolitan centres and created a buzz when athletes showed up for autographing sessions or product launches.

But what is the real purpose of these “Brand Stores” (usually built several stories high and at huge expense to the company)? What should the real purpose be?

As retailers know, most of the time, these stores cost almost twice as much to build per square foot (not to mention the footprint usually being at least five times larger than the average store – in Hollister’s case around 8 times), the rent is usually exorbitant as it is usually located smack in the middle of the highest profile metropolitan shopping hub and the operations of a store like this one is not only different than the company is used to, but takes that much more effort, staffing, security and inventory than any other store in the chain by a wide margin.

So, why bother? What, exactly, is the point?

Most wholesale brands do not have the retail capacity or mentality to operate stores profitably or properly, nor do they want or need to. To them, it is a sidelight purely for increasing their brand profile. Ralph Lauren is the exception, since he has been able to hire and develop a retail division and create a business model that works. But he has been an exception to the norm in many ways (his outlet, off-price channel is actually his most profitable channel in the entire company, but that’s a different story for a different day). I don’t believe NikeTowns have made money since day one. But I am not sure that really matters.

To my mind, opening a flagship, brand-illuminating store should be all about marketing and public relations. The store should be run independently of either a standard retail chain or a wholesale division with the goal of breaking even. Even if it does lose some money on an annual basis, it should be part of the marketing department’s budget as opposed to hanging the retail operations team with that burden. This way, everyone wins.

There is no better vehicle for showcasing exactly what your brand is about (be it retail or wholesale) than an actual store where your marketing department, your visual merchandising department, your buying teams and even your human resources department can create the ultimate brand expression. The downside is time and energy for sure, but if both those are compartmentalized and the emphasis on maximizing profits on these locations is not the driving force, these flagship stores like the 40,000 square foot Hollister “Soho Grande” can be successful at helping build brand loyalty and customer share of mind.

TheRetailTherapist:)

Postscript: I forgot to mention Apple stores for their brilliance and their ability to increase their market share almost instantaneously and creating awareness and the ultimate brand image for themselves. They are extremely profitable which flies against my theories above. They are a unique case though but worth mentioning. TRT:)