THE 6R 'SIX RIGHTS OF RETAIL'
There is a base formula for running a successful retail business. You will have heard or even said it yourself at some point the old adage or a variation of “the right products, at the right place, with the right promotion, for the right price.” In addition we believe that the right quantity of those products is makes a huge difference in managing margin and controlling inventory. Holding up all the other ‘rights,’ are the right people. The right retail people are going to make every difference to your retail business.
Today, retail is presented with unique challenges that require the capacity to adapt (continuously). The hectic pace of business, fierce competition on a global level, working with savvy shoppers who have done their homework, and keeping up with the ever-changing preferences of consumers. We are living through turbulent times, socially and economically; we are seeing four generations in the workplace, these are macro level changes in how we operate at work and in the world.
We have found through our years of working with businesses, that the “6 Rights” of retail, while changing and evolving with the digitalisation of business, are as true today as the first time they were declared.
At 6R we use the lens of the ‘six rights’ of retail to improve business process, deliver projects and continuously improve the overall experience for both the end customer and the internal customers of the business.
The 6 Rights
You will find the word ‘People’ features throughout our website, to us, it is the foundational ‘right’ that you should consider.
People are the key to EVERYTHING. Get that RIGHT, and everything else is easier.
When we think about “People” and the ‘Rights of Retail’;
People refers to the chain of individuals that make the whole retail business hum. The people;
that make the product
the designers, the developers, the manufacturers
that get the product to the customers
the buyers, planners, the allocators
the supply chain and logistics specialists
that talk to the customer
the store associates and back office customer support
and everyone in between
tasked with supporting the product.
Business is evolving all the time, and teams need to evolve too, not just to meet the needs of the company but also the aspirations of the people in the team. In what feels like a world of increasing dis-interest, dis-satisfaction and disengagement in the workplace, what if, we invested in our people as assets that will appreciate their value through development and learning?
In our project work, we work with teams who are at varying stages of development and evolution. Making sure that as your project comes to life you’ve considered how the people plan will evolve is a critical part of your success.
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While your stores may contain many products, are they the right ones? It is an important question to address since the most significant working capital investment is most often inventory.
All products follow a lifecycle, and if planned well, retailers can adapt to the challenges that each stage of the cycle presents.
Technology has given greater access to creativity for more people over a broader range of mediums than ever before. We can take advantage of technology to organise filter and categorise all this information and get the creative juices flowing.
In businesses, designers work to a brief. It’s part of the challenge of the design process. The brief needs to combine the exciting new ideas of the season but within a budget. This is where an assortment planning tool that works between design and planning is incredibly helpful. Being able to manage and plan how many designs are required and keep the bridge between design and assortment planning.
However, that is just part of the lifecycle. What about when it hits the stores, virtual and bricks-and-mortar?
We are constantly being told that consumers are so much better informed and savvy than ever. What does that mean for retailers? It means retailers need to help customers navigate, without getting lost, through the onslaught of choice. Remember “A confused mind says no!”
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Place is about meeting the customer in their most comfortable place and ensuring that no matter where your inventory is, it’s available to a customer who wants to buy it.
If you’re a multi-store retailer, part of the key to having your products in the right place is to establish the product requirements for each store individually, and also as part of your store network.
There’s the consideration of physical place and also of merchandising and placement within a store.Most retailers measure gross profit generated, the size of your various stores, and the customer demographic each one serves.
Increasingly, the retail store is evolving to be a place where customers collect their orders, come to return an online order or check size and fit as they have already seen the product online.Finding the right place for products in an online store is equally important. This is about ensuring your products appear on all relevant pages, and that filters help to refine search, so customers will find them easily. When setting up your online store, it is important that products are classified in all the ways that customers could be looking for them.
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Australians report that price is a factor for nearly 70% of their purchasing decisions. This demonstrates the obvious influence price has on what customers choose to buy. If you can put some effort into understanding at what price your customers see good value it makes selling a great product just that bit easier.
There are several factors to consider when setting the right price for your products. These include purchase price and other costs associated with a specific product, the number of competitors who sell the same or similar products, and your market position. You also need to understand what’s included with your merchandise, which currency you are paying in and how it will be paid, the terms and timing when paying for merchandise, coming up with a plan for when currency values move, and any additional services that need to be performed once the product arrives. These include things like ticketing, packing, storing etc.
Price is not a set a forget kind of thing. End of season mop us analysis, a new competitor entering the market or a supplier adjusting their prices will trigger a price review.
Furthermore, when you know how items previously performed you will be familiar with questions such as: can I increase price while maintaining strong sales, should I lower the price to achieve the right sell-through rate, and when should I mark the item down in order to clear the product before its time runs out?
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One great way to boost product sales is through Promotions, promotions have many personalities, sometimes being around a specific event or time of year or to clear aged inventory.
According to Salmat 2019 Marketing Report, Australian consumers are heavily influenced by promotions. Marketers know this and are discounting products on a regular basis. In fact, 26% are doing so weekly, and 28% are discounting products each month.
This constant promotional activity can lead to, ‘discount fatigue’ setting in. Retailers can find themselves on the unprofitable treadmill of revolving promotions if they don’t plan and manage their inventory and promotional calendar.
It’s a good practice to run promotions for a limited time and try to align promotional offers with other events. We are now seeing more exclusive offers for brands where membership of a loyalty program offers the customer an exclusive event, or deal that’s not available to everyone.
The key is to stand out. Having a plan in place to encourage consumers after their initial purchase takes place will help them return to your brand. When consumers were asked about their top concern when purchasing products from a particular brand, value for money won out by far, at 85%. This is why brands should focus on offering and demonstrating the biggest bang for the buck.
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Once you know which products are netting you a profit, you can begin making important changes that will increase your return on investment. The key is to choose products that will regularly move, thereby tapping into what customers really want and need.
An Enterprise Resource Planning (ERP) solution will give you the insight you need to understand your Open to Buy (OTB) and keep cashflow moving smoothly through your retail business. Having good disciplines in place to manage inventory, evaluate pricing and maintain margin is critical to establishing what quantity of each product is needed.
From the customers perspective, where the product is should not matter but making sure you’ve bought right for your customer is still key. The lack of ‘Quantity’ that is of particular note. Out-of-stock items have been an issue for retailers and consumers alike since the first doors of retail opened. These days consumers want to know instore availablity, not just instock or out of stock but quantities.