The 2 solution
This presentation is the property of its rightful owner.
Sponsored Links
1 / 22

The 2% Solution PowerPoint PPT Presentation


  • 27 Views
  • Uploaded on
  • Presentation posted in: General

The 2% Solution. Average Store Scenario. A Look Back. Moving from –1.67% to 2% Three Strategies. Combining All Three Strategies. Increasing Sales. Bring More Customers into the Store Develop a plan for advertising using co-op dollars Implement a public relations plan

Download Presentation

The 2% Solution

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


The 2 solution

The 2% Solution


Average store scenario

Average Store Scenario


A look back

A Look Back


Moving from 1 67 to 2 three strategies

Moving from –1.67% to 2%Three Strategies


Combining all three strategies

Combining All Three Strategies


Increasing sales

Increasing Sales

Bring More Customers into the Store

  • Develop a plan for advertising using co-op dollars

  • Implement a public relations plan

  • Build a customer database to

    • Bring in new customers

    • Bring back former customers

    • Bring existing customers in more frequently

  • Use your web site as a marketing tool

  • Use e-mail as a marketing tool

  • Do more in-store events

  • Use out-of-store events to reach new customers

  • Reach out to underserved markets and special interest groups

  • Add amenities that build traffic (e.g., a cafe, a magazine/newspaper section

  • Improve the store’s visibility (signs, window displays, lighting)

  • Form marketing alliances with other businesses

  • Join Book Sense


Increasing sales1

Increasing Sales

Sell More to Customers in the store

  • Re-model the store to improve traffic flow and displays

  • Improve merchandising

  • Introduce a customer loyalty program - customers will spend more of their book dollars in your store and you will build a customer database with purchase data

  • Bring in other merchandise (cards, gifts, etc.) for “add on” sales

  • Sell more gift cards/gift certificates


Increasing sales2

Increasing Sales

Sell more Outside the Store

  • Do out-of-store events

  • Incentivize Web Sales

  • Sell to corporations and institutions


Increasing margin

Increasing Margin

Bring in higher margin merchandise

(e.g., remainders, sidelines, used books)

Move high margin merchandise to high traffic areas

Give high margin merchandise more space

Increase purchasing discounts

  • Buy more direct from publishers

  • Plan ordering to maximize discounts

  • Order electronically to receive EDI discounts

  • Take advantage of stock offers

  • Take cash discounts from wholesalers


Increasing margin1

Increasing Margin

Reduce freight costs

  • Plan buying to meet free freight minimums

  • Use vendor of record programs to get free freight on books from smaller publishers

  • Participate in ABA’s freight program?

    Reduce inventory shrinkage

  • Use security systems (cameras, security gates)

  • Change store layout to deter theft

  • Train staff in security procedures

  • Take steps to reduce employee theft

  • Prosecute thieves

    Promote & Sell more gift cards


The 2 solution

Increasing

Margin


Reducing payroll costs

Reducing Payroll Costs

Use payroll budgets

  • Set a payroll budget for the whole company and for each department

  • Set budgets as a percentage of sales

  • Match schedules to payroll budgets

  • Budget by the month or season


Reducing payroll costs1

Reducing Payroll Costs

Schedule efficiently

  • Schedule according to store needs, not employee preferences

  • Use a written schedule showing all staff so that you know exactly how many staff are available at all times

  • Use overlapping shifts to cover peak hours and lunch breaks

  • Use “back office” staff to cover peak hours and lunch breaks

  • Replace 8 hour shifts with shorter shifts

  • Judicious use of part-time staff

  • Cross training - No specialists

  • Design a user friendly physical layout

  • Outsource specialized functions

  • Adjust store hours during slow seasons


Reducing payroll costs2

Reducing Payroll Costs

Control pay rates and raises

  • Set pay scales for different positions, with a pay cap for each position (no more raises once someone reaches the cap)

  • Make sure that raises fit within the budget

  • Tie raises to increased responsibility or cuts in overall staffing

  • Replace raises with profit sharing


Reducing payroll costs3

Reducing Payroll Costs

Control overtime

  • Insist that all overtime be pre-approved

  • Put managerial staff on salary

  • Schedule full-time employees for less than 40 hours a week

  • Use more part-time staff

  • Use “on call” staff to cover employee absences and special events


Reducing payroll costs4

Reducing Payroll Costs

Make your staff more productive

  • Use technology to improve productivity

  • Streamline purchasing, receiving, returns and accounting systems

  • Cut out unnecessary or duplicative procedures

  • Limit sales calls from reps

  • Training is the key


Reducing occupancy expense renegotiating your lease

Reducing Occupancy ExpenseRenegotiating your Lease

Know that rent is going to be a problem before it becomes a problem

  • Project sales for the coming year based on current trends and known future changes (e.g., a superstore opening)

  • Know how much rent you are supposed to pay in the coming year (check your lease for scheduled rent escalations)

  • Calculate how much rent will be as a percentage of projected sales. Remember to include additions to rent such as common area maintenance (CAM) charges

  • Know how much rent you can afford to pay (make a projected P&L for the coming year)

  • Refer to Industry Standards ( ABACUS)


Reducing occupancy expense renegotiating your lease1

Reducing Occupancy ExpenseRenegotiating your Lease

Calculate exactly how much of a rent reduction you will need

  • Remember to check your lease for scheduled rent escalations – you don’t want to be going back to ask for another reduction in a few months time

    Give your landlord plenty of notice that you will need a reduction

  • Property owners tend to plan their finances well ahead and don’t like surprises

  • It can take a long time for a property manager to get approval from owners

  • Giving notice shows that you are a responsible tenant


Reducing occupancy expense renegotiating your lease2

Reducing Occupancy ExpenseRenegotiating your Lease

Do your homework

Find out the market rate for your space

  • Ask real estate brokers what comparable spaces are renting for

  • Ask neighboring tenants what they are paying

    Find out if your landlord has given rent concessions to other tenants

  • Ask neighboring tenants and real estate brokers

    Collect articles/studies on the retail environment in your area


Reducing occupancy expense renegotiating your lease3

Reducing Occupancy ExpenseRenegotiating your Lease

Make your case

If sales are down, explain why

  • Focus on causes that are outside your control (e.g., a superstore opening)

  • Focus on causes that are within the landlord’s control (e.g., you are in a mall that has gone downhill)

    Explain what you are doing to help yourself

    (e.g., bringing in new merchandise, advertising more, cutting expenses)

    Show how much rent you can afford to pay

  • Use industry studies such as ABACUS to show how much rent bookstores pay

  • Use a projected P&L to show that you need a rent reduction to stay in business

    Stress how responsible you are being in addressing the issue before it becomes a “problem”

    (Landlords live in fear of tenants who declare bankruptcy in order to renegotiate rent or get out of leases)

    Mention the cost of finding a new tenant if your business fails

    (e.g., lost rent while the space is vacant, brokerage fees, “build-out” costs)


Reducing occupancy expense renegotiating your lease4

Reducing Occupancy ExpenseRenegotiating your Lease

Be realistic

Don’t ask for an unrealistic rent reduction

If your landlord won’t reduce the scheduled rent, ask for a “temporary abatement”

Know whether your problem is temporary or permanent


Reducing occupancy expense renegotiating your lease5

Reducing Occupancy ExpenseRenegotiating your Lease

Offer something back

  • Offer to pay percentage rent if sales are better than expected

  • Offer to pay a higher percentage rent over a fixed “break point”

  • Offer to “back load” rent if you think that business will improve

  • Offer to give back some space if you have more than you need

  • Offer to make improvements to your space


  • Login