The 2010 Retail Survey - Part 2

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Here are the rest of the results from the 2010 Retailers Survey. There are some definite surprises especially in the areas of compensation.  You'll see that I did not comment on the question about how many of the Google tools are being used. I am going to write a complete report on Google within the next couple of weeks.  I will also be writing an article about creating promotional plans as well. (There is a real need there!) I didn't create this survey to stimulate topics to write about but it certainly inspired some great topics.

 And this brings up an interesting idea. If you have any topics or situations that you would like discussed in this column, please send me your ideas. (I love real life situations, especially ones where I can get my readers to comment.) Thank you for responding to this survey and for all of the comments and encouraging words.

Question #9

I am impressed with the responses to this question. I say that because I believe 20% is the right discount to take on the first markdown. All professional liquidators will start cash raising or going out of business sales by marking everything down by 20%. The fact that 27% opted for 25% is still within a normal range.

The scary part about these results is that there were 14% that believed that the first markdown should be between a third off and half-price. I struggled trying to understand why anyone would want their first markdown to be so deep. However, there is another side to justify those deep markdowns. If the store can sell regular priced merchandise, then the only reason they would mark anything down would be to free up space. If you want merchandise to move quickly, then take the deep markdown immediately. The only question is how do you know if a 20 or 25% markdown wouldn't have worked as well?

My goal has always been  to keep your inventory as fresh as possible. But I also hate to leave money on the table. Taking a markdown that deep takes some of the joy out of the challenge of retailing. But I am just an old retail purist who believes you sell as much at the highest possible price, as fast as possible.

Question #10

The days of having manufacturers sell exclusively to stores in a territory are quickly coming to an end. Business conditions are so tough for many vendors that they will take orders wherever they can get them. This  includes the store across the street, the big-box retailer, and also selling it direct themselves.  That is the reason why you cannot be that dependent on any single vendor!

A major bridal manufacturer decided to open up their own stores and even in locations where the best accounts are located. I don't think that's quite fair but that is the new reality. I agree with just about any response here with the exception of the last one which said to buy more and discount it deeply. I think all of us would love to do that but we are just cutting off our nose to spite our face. Are you doing this because it's sound business practice or for revenge?

There were plenty of great vendors out there that you can use so that no one needs to be dependent on any particular vendor. Remember the most important brand you carry is the brand that is seen above your front door. Have your customers become loyal to you and your store, not a particular brand or the prices you charge. Trust me, in the long scheme of things, it is a much healthier way to build business. But don't stop complaining to the sales rep sales manager and president of the company. After all we're retailers-- we have right to complain.

Question #11

These numbers are good news and bad news because 65% of the stores reported that the sales were either the same as last year or up between 5% and 10% from last year. That part is encouraging in the part that over 50% of the stores are experiencing modest increases is also pretty good even though last year was not that strong a year. The fact that almost 45% of the stores experienced sales decreases in between 1% and 10% is scary but of course we  had one of the worst winters on record.

Of course any politician could read these numbers differently depending on the point of view. I could have said that 60% of the stores reported their sales were the  same as last year to 10% behind. The bottom-line is some stores are doing business and we need to find out what they're doing and how they're doing it.

I would love to hear from the the people who are reporting substantial sales increases. If you are in that group, I invite you to call or write me at Rick@RickSegel.com to share how you doing it. This could be fun!

Question #12

This is the one question that shocked me.  49% of the stores that responded are paying their full time salespeople $10.50 per hour or less.  It's hard to believe because $10 per hour translates into $400 a week which is only a little bit over $20,000 a year. I do realize that full time people  will work overtime and that will bump up their take home pay but it still seems low.  

Having said all of that, the trend is away from the full-time employee to more part-time employees. The biggest issue here is the issue of benefits. The effects of the cost of  healthcare plays a major role in the total compensation package. I won't comment on the current healthcare debate but the state of Massachusetts has a universal healthcare in place and the rates have skyrocketed. Maybe paying $10 per hour is not so bad afterall.

Question #13

This question substantiates the fact that retailing is not a highly paid profession unless you're either the owner, the manager, or crack salesperson who is earning a substantial income from bonuses and/or commissions. Having said that, we also have to realize that many of the people working part-time in the retail store are not necessarily working there because of the income that they can earn. They're working there because they want small part-time jobs to supplement their income because they retired from another profession. Or because they want something to do and like the products or category that you sell.

You must understand it is not always about the money-- the things that motivate people to take and keep a job vary widely. Remember the number one reason why someone will take a job for less money and stay there is because it's convenient to where they live.

One of the things that skews up this question is the geographic area that the reporting stores are from since you have to pay more for help in certain areas of the country. But I think this question gives a good perspective and maybe even a sense of confidence when you offer someone a job.

Question #14

As you can see, this question has an overwhelming response. I am thrilled with this response because I don't see where paying commissions make a substantial difference in the performance of the average retail employee. I do believe in giving incentives sometimes referred to as  "spiffs" on slow selling merchandise. The reason being is if you were going to mark it down you would make less money. So why not give some of that money to your employees if they can sell it before you make the deep markdown. This works well in the shoe industry and it forces the salesperson to show merchandise that they might not normally show.

Having said all that, if a person can earn livable wage from commissions then the system works. At Nordstrom's, commission salesmen in any of their better departments such as shoes, coats, men's wear can earn substantial income and can consider themselves professional salespeople. But for the rest of us, commissions are unnecessary.

Question #15

OOPS! Here is in the area we need help and I promise to write one and possibly two articles about the need for promotional plans and how to do them. We are living in the age of proactive retailing. We can no longer sit idly by and wait for customers to come in. We need to build our businesses through events and let our customers know that there is always something going on at the store. These events do not all have to be price or sale events. There are lots of contests and awards ideas that need to be incorporated in every retailer's promotional plan.

I don't totally understand why 17% of the stores had promotional plans that  only employees and management could review.  My guess here is that the majority of the promotions are price related and it wouldn't be prudent to publish that list in fear that customers might wait.  The way around that is to publish a calendar of events  and title the sale events with a generic name such as Special Savings Event. The goal is to create events that will bring customers in the store that are not neccearily about price.