Discovering what separates your best and worst stores needn’t be based on guesswork - there are tools available that can expose the gaps in performance and provide a template for future best practice
Find out how Kurt Salmon Associates has helped leading retailers reduce labour costs by 7.5% and improve customer service and loyalty by 20%. Read about the tools and techniques — and the results — that can be achieved by reducing the variability of performance between “the best” and the “rest” of the stores in your portfolio.
One of the enduring challenges for all consumer-facing businesses is trying to get the levels of profitability delivered by your weakest branches as high as those of your strongest. But to do that, first the business needs to understand what it is that makes the better branches so good.
Very often, the answers come down to the detail of what’s being done at the store level in terms of customer service and staff engagement. And in an environment where selling requires a high level of customer interaction, those factors become even more important.
Multi-brand Scandinavian hair and beauty business Raise derives its turnover from a mixture of services - largely hairdressing - and retail. But the work it has done in understanding the differences between its most and least profitable branches has wider lessons with relevance to retailers in many different sectors.
Tools of the trade
Raise - which trades the main brand of Nikita - introduced a web-based system from a supplier called Maze in 2006, combining three different elements measuring client satisfaction, employee satisfaction with their managers, and a self-evaluation tool for its managers respectively.
Prior to this, the company used a variety of tools including mystery shopping and a client survey, which worked reasonably well but were unsophisticated, with the findings being sent back to head office by fax.
Using the Maze system, it was much easier to make comparisons. The stores were looked at in terms of their profitability, and then the behaviours of the best and worst managers were examined to attempt to define best practice. The customer and staff survey elements of Maze were used to check if these behaviours were being followed.
“What we found was very, very interesting,” says Raise chief executive Rita Broch, who adds that relatively small behaviours could make a difference. “We found, for example, that small pep talks by the manager every week really worked in our most profitable stores.”
These behavioural changes were then incorporated into group staff training sessions. This combination of the findings of the research carried out using the Maze system and the social pressure of the training sessions helped cement the best practice. The self-management tool allows managers to score themselves as how they are doing each week, and gives them a way of understanding the areas they need to continue to work on.
Broch says the system has had a clear effect in dragging up the performance of the weaker branches so that there is less of a gap with the stronger ones. Since it started using the tool in 2006, profitability has grown steadily, and the profit margin has grown from 8% to 13%.
Next on the agenda for the company is growing its retail business. At present retail only accounts for 30% of sales with the other 70% coming from its services like hairdressing. But with the strong retail discipline imposed by the Maze system, Broch is more than hopeful that retail sales can be grown significantly.