What are the signs of a dying retail business?
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doctor’s blog.
Why is it employees often see the warning signs of a dying store before owners and managers? Because they see things through the lens of a customer and their own paychecks.
Here are six warning signs I’ve seen in businesses of all sizes:
- Reliance on discounts. Constantly teaching your shoppers to only buy when things are marked down ruins margins and morale
- KPIs falling. The most important metric everyone still looks at from smaller to larger stores is simply, did you sell more this year than last? Your average number of items sold per customer should also rise; it is the one metric your employees can most impact. A struggling economy may require a reassessment, but core KPIs should be improving.
- High employee turnover. Your number of W-2’s you sent last year shouldn’t be a huge increase from the prior year. When a job is seen as repetitive, stressful and/or not rewarding, good employees look elsewhere.
- Customers aren’t viewed as important. A struggling business looks at shoppers as a distraction from their tasks or their conversations. I kid you not, I had a buddy of mine go into a hardware store last week in his wheelchair, approach the counter, and ask for help. The guy simply replied, “I’m on break,” and walked away. The odd thing is, another employee had helped him so much the previous day that he went out of his way to return. Never again.
- Undercutting employees. I used to work with a coffee chain and we had spent months developing our version of Pumpkin Spice for the fall. Over the weekend, prior to giving the order for the products, the owner capriciously said he didn’t like the taste and demanded a change. Within 24 hours a new sample arrived that he liked but no one else did. The launch failed spectacularly and left the new products team demoralized.
- High costs to acquire new customers. Brick and mortar retailers often run sales and promotions to get shoppers to come in the door, but unless your average ticket can support it, you often are chasing your tail.
DISCUSSION QUESTIONS: What would land on your list of telltale signs that a retail business is failing? Would you add any to those mentioned in the article?