Year-End Thoughts

As the year comes to an end, I feel so grateful for the most amazing year of my professional life. I did another speaking tour in Australia and both consulted and presented to a group of Saudi nationals in London where I learned a different way of looking at the world. I saw the Retail Store Assessment I created for Microsoft used by more retailers than I ever could have imagined, spoke over 115 times professionally, and signed a contract with Wiley Publishing to publish my ecommerce book. My weekly tips are being read by more and more people every week and over 40 different national and international magazines are now regularly using my articles for content in their publications. I did my first public seminar, launched a Mentoring program, and started doing teleseminars — all of these will be continued in 2006.

The Retail Awards Program in Massachusetts, that we started 9 years ago, honored a record 10 deserving retailers this year at the annual star-studded program. But the best part about the year was touching the lives of so many people and receiving the most wonderful notes, letters, and emails. Sometimes I get embarrassed with some of the things that people write, but if I start to get to full of myself my wife says those 4 magic words that whip me right back into shape, “TAKE OUT THE TRASH!”

I love what I do and I am so very grateful for people like you who appreciate what I do. Next year we will be adding new programs and will be offering different ideas to help make a positive difference in your professional life. I will continue to offer my perhaps unique point of view with some down to earth sense about doing business today.

Having said all of that I got a question from a reader of my Staples.com articles that I thought I would share during this New Year period.

"I need something that makes my business stand out from the competition. What's a good way to update my company's image?"

Standing out from your competition can be done a number of different ways. The key operative word is different. Most businesses are built with word of mouth advertising. Everyone knows that. The part that businesses struggle with is if you want word of mouth advertising, you must give our customers/clients something to talk about. Therefore, different is good; unusual is good because unusual things are the things people talk about. The New Year is the perfect time to launch a new image initiative because the New Year is always full of promise and expectation of a better year.

The best ways to capture attention is with the three Cs. When you buy a diamond they say it’s color, clarity, and carat. Almost the same rules hold true for image initiatives:

Color — What colors do you use? What is your Trade Dressing? Your trade dressing include the colors you use, the fonts you select, and the graphic enhancements to your image, logo, or signature lines. Color is only a part of your trade dressing but it is one of the most crucial parts. It sets the tone. (Beside trade dressing didn’t start with a C.)

Copy — I believe that copy is king but I'm a writer so I have my bias. I have seen a few short words create brand excitement. "That was easy" has been a brilliant initiative by Staples. Can you imagine giving a button with a companies advertising initiative for a Christmas gift? (I gave 5 for gifts but a friend of mine gave out almost 75. He loves the concept.) Copy is king. I could go on but space doesn't allow it.

The last C is for Content. Does the image change mean something in the mind of the customer? If it is a change for the sake of changing, it might not work. But if it has meaning behind the attention grabber, then it makes sense. "That Was Easy" is not only fun, short, brightly colored, playful, but it means that the business is hassle-free, time saving, and convenient. It's easy.

One last word of caution — “don’t throw the baby out with the bath water.” That means be careful about radical changes. You might be tired of your image but some customers might still like it. Enhancement and improvement could just be enough to make the difference.

The Disease of More

As a retail specialist, I am supposed to be celebrating the seemingly insatiable desire for more. More clothes, more new cars, more electronics, more remote controlled gadgets, more new appliances, more new golf clubs, more new spas, more pools, more homes, more computers, and so on and so on. The consumer has fueled our economy for the last 10 years regardless of war, rising interest rates, attacks on our soil, Y2K, and a country split right down the middle politically.

This has been a boom time for retailing. Not for everyone, but for those clever enough to carve out their unique niche of the market. Certainly, the retail giants have thrived during this time period where more is good. They answered the more hungry consumer with more stores, more concepts, more locations, more channels to buy goods. Retail careers have been built on more. More business means more money, more promotions, and more bonuses.
I have made a living teaching people how to get more business, more out of their employees, more out of their advertising, and more out of their locations. I am dedicated to continue to do this but during the holiday season maybe it’s time to appreciate what we have, rather than what we want.

I have seen people and businesses make great strides this past year, but instead of being happy, they are focusing on what’s next, the more. Instead of focusing on what they did right, they are focusing, on what they did wrong or only on areas to improve. Whatever you are doing well, recognize it, celebrate it and expand it. Yes, do more of it.

Do I say these things because I just saw the original version of “The Christmas Carol” and like old Mr. Scrooge found my Christmas cheer? No, I say it because of a sobering thought that scares me about our retailing future. One of the major factors that fueled the economic engine was the housing market. It has fueled this economic boom. Speculators are buying and “flipping.” Two of my kids have each made well over $100,000+ on their real estate transactions over the last 5 years alone.

But I believe that those days are over. The real estate bubble has finally popped. Prices are actually coming down. Just go to any suburban community in the Northeast. There is a glut of homes on the market and a scarcity of buyers. Sellers are becoming very realistic about asking prices and are reducing their asking prices faster than ever before.

This is not a time for gloom and doom but it is a time to appreciate what we are doing and before we look for more, let’s first look for ways to secure what we already have. It will come back — it always does, but I think a little belt tightening is the order of the day.
I speak from a personal basis because I have had my home on the market since Labor Day without an offer and with $50,000 worth of price reductions. This was on a house that was priced appropriately to start. My community in suburban Boston and it has more than twice the inventory of homes on the market today than a year ago.

This has to have an effect throughout the economy. Be prepared and don’t get caught saying, “I wish we had more of the good old days”. Have a wonderful and prosperous season with more than you ever thought it could be.

Happy Holidays to all!

What's Your Brand Worth?

I got a call this week from a retailer who wanted to retire and sell his business. He was very profitable, the store was up to date and had a strong customer base. But no one wanted to buy it. He wanted to know why.

Instead of answering the question directly, I answered it by asking him a question. I asked him why do you think that’s happening? I knew he was sharp enough to know and he did. He answered with a lesson we can all learn from. He said, “I built a store that was dependent on me. I never delegated any important decisions to anyone. I was the store. Plus we prided ourselves on carrying only the top name brands.” Then he said, “Why would anyone want to buy a business like that? Without me, there is nothing. And as for the labels I carry, you can always buy them, and if not, they can be replaced. There are other resources that are just as good.” My heart went out for this man as we planned a going out of business sale.

The most important brand you carry is the name above the door. It can’t just be about you. The brand must have its own identity. Yet so many independent retailers don’t believe this. It is the difference between being able to sell your business or going out of business. Please don’t misunderstand me — the Going Out of Business Sale can make lots of money. However, if the name by itself (without a person attached to it) has value, then the business has value. The name must mean something in the mind of consumer. It must represent something. It might be dependability, reliability, being familiar with the customer, quality, or service. Just ask yourself — what business would you rather buy? MacDonald’s or Joe’s Burgers. You might be saying that McDonald’s was named after two brothers and you are right. But it took Ray Kroc to turn it into a brand that is worth billions.

There are two parts of branding. One is creating a separate brand identity for the business and the second part is creating your own brand of merchandise, your collection.

Let’s go back 100 years to fully understand the concept of brand. Around the turn of the 20th century, the largest retailers in America were A & P and Sears Roebuck & Company. What products did they carry? Their own brand — A & P products and Craftsman from Sears being the most famous. The richest people in America were the retailers. But then companies like Kellogg’s, Proctor & Gamble, General Mills, and even Black and Decker started advertising directly to the consumer. This advertising initiative forced the retailer to carry their merchandise because customers were coming in demanding it. The shift was on. The purse strings or profits were moving from retailer to manufacturer.

Les Wexner and The Limited are the perfect example and model to follow. Wexner opened his first store in 1963 but didn’t start his expansion explosion till the 70’s. The 70’s were a time in the apparel industry when discount stores were the rage. Stores such as Marshall’s, TJ Maxx, and Hit or Miss were the hot retailers. Discounting was coming to mainstream America. Brand Names For Less and 20-to-40% off everyday was the advertising mantra. Wexner decided to go in another direction. He didn’t carry the brands that the discounters were going to carry. He created his own brands so that he competed only with himself. He had manufacturers make merchandise and put his name on it, not theirs. He created his own uniqueness and consumers had to go to one of his stores to get this unique merchandise.

Today The Limited has grown to 5,300 stores and 9 retail store brand names such as Express, Structure, Lerner New York, Lane Bryant, Victoria Secret, Bath and Body Works and The Limited, just to mention a few. Wexner created some of these names while others came from companies that he bought. But nevertheless, he worked his magic on the name. The one concept that remains constant with Wexner is brand. He gets it. If you go to The Limited’s web site, you will see this wonderful quote for all of us to follow. “We continue to build a family of the world's best fashion brands that creates sustained growth of shareholder value by focusing our time, talent and capital on the highest return opportunities.”

Are you creating a great brand? Does your brand have brand equity? What is brand equity? Yes, it's the value of the brand, but a better definition is the extra amount of money that someone is willing to pay for the exact same product.

A store that focuses on building their brands is saleable. Without a strong name, the most you will ever receive upon selling your business is the amount of business generated from a going out of business sale. Focus on your brands.

What's Better? Billboard Advertising or Direct Marketing

I got an inquiry this week from a reporter who asked me some questions on direct mail but inadvertently switched the term billboard for direct mail. I thought at first it might have just been a mistake (which it was), but I then thought maybe she wanted me to do a comparison as to which form of advertising was more effective. The more I thought about this, the more I realized what an interesting iceberg question it was. (An iceberg question is one that might seem small or simple at first glance but can have a deeper or more revealing quality.) I think this is one of those issues.

First let me first define the difference between two terms – direct mail and direct marketing. Direct marketing is any form of marketing that pinpoints a specific group of customers via the mail, email, telephone calls or faxes. Direct mail is when you just use regular mail as your vehicle.

Now that we have taken care of that bit of housekeeping, let me say that retailing over the last 15 years has focused on one-to-one or pinpoint marketing where retailers send advertising messages only to those individuals that have an expressed or shown some interest in their business. It might be directed to someone who signed up to be on the mailing list, an existing customer, or any other targeted group. That concept has been fueled with the successes of preferred customer programs, loyalty cards, and store clubs. The theory behind this focus is to take care of the people who already like or love you and they will create plenty of word of mouth advertising.

Having said that, the billboard concept is an awareness type of advertising. It builds a business’s brand. It creates the “I’ve heard of them” comment. It also rarely focuses on price. The problem is that it doesn’t work immediately. It’s hard to track, it works longer than you ever expect, and the amount of wasted advertising is enormous. What I mean by that is how many eyes that look at that billboard have the ability to buy from you? Does the item you are selling have sufficient margins and price levels to justify the waste? For example, jewelry stores have done very well with billboards.

I look at it as an iceberg issue because the businesses that have a business/brand building mentality are generally stronger businesses in the long run. No, they won’t get that quick price fix. But it’s about building a business and not being a slave to sales peaks and valleys. Of course I am making one giant assumption--I am considering that all or most of the direct marketing is only about price. It doesn’t have to be but our tendency is to make price offerings through one-on-one advertising. We can save that topic for another day.

The bottom line is billboards work! They build businesses but only limited groups of creative independent retailers ever use them. The ones that use billboards also do other things that build their business as well. How are you building your business?

The Truth About Thanksgiving Business

If there is any one time out of the year that retailing takes top billing with front page news, it is during Thanksgiving. After all, one major department store even has a parade that’s broadcast nationally. (There goes my constant mantra — if you want word of mouth advertising, give them something to talk about. But that’s another topic.) So now the whole world is curious about how busy retailers are.

You see the crowds on TV, and then you hear retailing gurus being interviewed by all the fill-in reporters who are covering for the regular reporters who are all with their families over the holidays. These retail gurus answer the same questions every year. And every year one guru is raving about business conditions while others predict the end of retailing as we know it. However, most years the stock answers generally say things like, “Business is good but not quite as good as expected. The stores that are being aggressive are doing well.” Then they generally highlight one or two industries that are obviously doing exceptionally well and one that isn’t.

I can say that because I am one of those gurus that these reporters always call. I have been fielding these questions about Christmas business after Thanksgiving for the past 20 years. With that perspective, let me share some thoughts about this media focus, what it means, and what can we all learn from it.

1. When you hear a mall or shopping center manager interviewed, you will usually hear him say that business was great. Remember if he says business was bad, he will either be fired or will have a VP from a chain store tenant threatening his life because of the negative comment.

2. There is always a hot category and there is always a slow category. This has nothing to do with business and more to do with fashion. Wallpaper is going through a depression but that’s because paint has been promoted by most of the home décor pros on TV.

3. There is always someone doing business. Accept it.

4. Christmas has become a sale time and a time for “door buster” price offers. All that glitters isn’t gold. Just because someone does a lot of business doesn’t mean that they are making any money on it.

5. Christmas flat out depresses many retailers because they all want to be a Christmas store and have all that traffic. But it just doesn’t happen for everyone.
6. Remember one very important simple truth. The key to great retailing is still having the hot item. Just ask any gift shop that carried Beanie Babies in their prime. The shoe business is strong now because there are some great looks.

7. Christmas is a time when the big stores and malls still rule for one reason — convenience. We are living in a time-starved society where going to a place that you can buy more than one present can save an additional shopping trip and the time associated with extra travel.

8. The day after Thanksgiving is not the busiest day of the year for most retailers. It’s a leading barometer but the busiest day is usually the last Saturday before Christmas. However, even that can change depending on the year.

9. Lastly, we hear the reports of the growth in internet sales and how it is going to put the brick and mortar retailer out of business. Yes, it is very important that every retailer be a multi-channel retailer. Besides that, the internet represents only 6% of total retail sales although the percentage is increasing. So get a piece of it, but the brick and mortar stores are here to stay.

So I am asked, “How was business over the weekend?”

Well, the stores that played the “loss leader card” had traffic and did business. It was great for some and terrible for others. Would you agree with that assessment? That’s what I told a reporter in 1986. Things really haven’t changed much other than the excuses we use. Keep the faith, there are only 26 more days until things get back to normal.