OPERATIONS

Controlling the Bottom Line

BY Robert Gordman

Now that the meaningful portion of the first half of 2007 is over, it is interesting to see the differences in compstore sales between similar retailers. All of the retailers in the following chart are national. They faced the same economic conditions, fuel prices, consumer confidence and other perceived business challenges. They had access to comparable sources of supply, information technology and logistics. Yet, the outcomes are very different.

It is always interesting to read the releases of the companies with strong results and then the others. The strong performers continue to attribute their success to:

Having the merchandise their customers want;

Inventories full of fresh merchandise; and

Being in stock.

The weak performers attribute their challenges to external factors such as:

Pressure on discretionary spending;

Fuel prices; and

Weak consumer confidence.

Comp-Store Trends for First Half of 2007

Source: The Gordman Group
Superior     Lagging  
Saks +16.1% vs. Macy’s +2.9%
Kohl’s +4.9% vs. J.C. Penney +1.8%
Dollar General +4.7% vs. Family Dollar +0.9%
Costco +6.1% vs. BJ’s +2.3%
TJX +4.1% vs. Ross +1.1%
American Eagle +9.5% vs. Abercrombie –3.3%
Famous Footwear +3.2% vs. DSW –1.3%
Best Buy +4.8% vs. Circuit City –2.5%
Hibbett +6.4% vs. Dick’s +2.0%
Walgreens +8.5% vs. Longs +1.7%
Target +4.6% vs. Wal-Mart +0.7%

There is no question that the challenges identified by the lagging performers are genuine. The real question is how much do these factors actually affect the consumer’s willingness to spend? At some point the lagging performers need to consider why the companies with strong results are better able to deal with the perceived challenges. It is also interesting to note that the lagging performers attribute their lack of results to macro factors they cannot control. The strong performers have identified factors they totally control.

To view the total report go to www.gordmangroup.com.

Robert Gordman is the president of The Gordman Group, Denver, and is the author of “The Must-Have Customer—7 Steps to Winning the Customer You Haven’t Got.”

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Whole Foods CEO Apologizes for Postings

BY CSA STAFF

Austin, Texas, Whole Foods Market announced Tuesday that its board of directors has formed a special committee to investigate CEO John Mackey’s postings regarding Wild Oats on the Yahoo! financial message boards.

Whole Foods also released the following statement from Mackey: “I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards. I am very sorry and I ask our stakeholders to please forgive me.”

Earlier this week, on the Whole Foods Web site, Mackey confirmed that he did submit a number of postings to the Yahoo! financial bulletin boards regarding Whole Foods and Wild Oats under the name “Rahodeb.” He added that the comments he made did not always reflect his personal views and that he was merely playing “devil’s advocate,” in order to stir up discussion on the topic.

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Survey: U.S. Shoppers Spend More Time in Stores

BY CSA STAFF

London, Sales employees of U.S. fashion retailers are engaging only with 5% of customers who enter the store, according to a survey conducted by U.K.-based Envision Retail, and it’s costing the retailers about $12 billion a year.

If those workers approached the additional 4% of customers who are looking for assistance, sales could increase 7%, the survey said.

“Retailers are very good at selecting products and merchandising them in a way that inspire customers to make a purchase, which is why over half the shoppers who enter a store with no clear idea of what to buy account for over 40% of sales,” said Jason Kemp, managing director, Envision Retail. “But if they want to make a big leap in sales, apart from just expanding the number of outlets, they need to get their staff selling.

The importance of the fitting room is also a major finding from the survey. On the sales floor 10% of customers are converted into buyers, whereas in the fitting room it is closer to 70%. Envision calculated that if staff provides quality service at the fitting room and assists customers with finding alternative sizes or items, sales could increase by 1%.

American shoppers spend 23% longer in a store compared with the global average and this is partly accounted for by the fact that 50% more customers use the fitting room.

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