Experts:

Carolee Colter Consultant at CDS Consulting Co-op based in Nelson, British Columbia

Laura DeWitt and Karen Greenway
co-owners of three natural products stores—Brooksville Natural Foods, Inverness Natural Foods and Spring Hill Natural Foods—on Florida’s west coast

Frances Drennenco-owner of Manna Grocery & Deli in Tuscaloosa, Ala.
 

Ed Jonesowner of Nutritional World in Chattanooga, Tenn.

Joe LaRocca senior adviser of asset protection with the Washington D.C.-based National Retail Federation
 

Debby Swoboda Stuart, Fla.-based natural products marketing and merchandising consultant and founder of askDebby.com

Operations may not be glamorous, but retailers spend most of their time on these nitty-gritty details that keep stores running smoothly—or not. How can you improve your store’s bottom line by enhancing inventory systems, appearance, employee management and marketing? Here, retail experts share their best solutions for top operational concerns.

Inventory management
Problem: How can I work with manufacturers to get better prices on products?

Solution: Ed Jones, owner of Nutritional World, negotiates deals on at least 80 percent of the products he sells. “I do almost all the negotiating because it takes practice to accomplish this goal, and most of the time you only have one opportunity to make the deal,” he says. According to Jones, it’s often easiest to get discounts through brokers “because they know who and how to ask at the companies they represent.” It also helps to make it clear to brokers that any discount is passed on to customers to increase product sales, Jones says.
To ensure that the discounts—and sales—keep coming, remain vigilant; use a combination of point-of-sale and a sharp receiving person who will notice if a previously negotiated discount hasn’t been applied. “If we see our margins slip, we either negotiate a better deal or discontinue the product if there isn’t room to raise the retail price,” Jones says.

Problem: What’s an effective shoplifting policy for stores?

Solution: Frances Drennen, co-owner of Manna Grocery & Deli, admits that even though her store has security cameras, thefts sometimes aren’t noticed until after the fact, when the tapes are reviewed. “If we actually catch someone red-handed, we do a thing called a ‘trespass warrant,’ where we will warn them not to come back in the store or they’ll be arrested and prosecuted [at that time],” she says.

Drennen finds that it’s rarely worthwhile to prosecute shoplifters. “If someone stole a $40 bottle of vitamins, and you have to do a warrant and get the police in and go to court, it’s a lot of time and energy, so we always have to weigh the benefits.”

Jo LaRocca, senior advisor of asset protection with the Natural Retail Federation, says the key to successful prosecution, if you decide to go that route, is policy consistency. “You never want to be accused of singling out one type of person as it could set you up for some pretty bad results in court.”

Before apprehending a shoplifter on the spot, consider whether you have resources—staff, security personnel, training—to back you up. If you must detain someone, LaRocca recommends adhering to the following procedure: “Approach them confidently and identify yourself. Keeping them under constant observation, ask them to return inside the store with you; then ask for the merchandise back. While this process is under way, ask another employee to contact the police department.” If the suspect resists or becomes abusive, do not be a hero. “What all retailers have in common,” LaRocca says, “is the safety concern for their employees, customers and even shoplifters. While it is difficult to observe a shoplifter getting away, nobody wants someone injured for stealing merchandise.”

Problem: How can I compete with stores with bigger inventory?

Solution: Not every department in the store will perform equally well, so focus on your strengths. “We were losing money in our small produce section because the new [nearby] Publix had a great section,” says Laura DeWitt, co-owner of three natural products stores. Because that department accounted for only 1 percent of store sales, she and her co-owner Karen Greenway decided to cede that battle by spending less on produce. Rather than eliminate the section entirely, DeWitt says, “we decided to just stock the things that would have a longer shelf life, like carrots and apples. We don’t have the same wastage we used to have.” Another way to make use of surplus fruits and vegetables: DeWitt uses excess produce in the store restaurant.

Employee management

Problem: What are some effective methods for employee education?

Solution: In the job interview, Jones asks prospective employees about their interests and their specialized knowledge. A few months after a worker starts, Jones offers in-depth trainings in employees’ areas of interest. “I really focus on them becoming the experts on gluten free, weight loss, body building or inflammation—so we have a go-to person most of the time,” Jones says. Then he checks in every few weeks to ensure the information offered is on target. “I respect their knowledge but I don’t want them to say things that are radically different than what comes from me.” He also has a manager gather a basket of new products each week, and educate the rest of the staff on their use.

Problem: How should I handle poor-performing employees?

Solution: Don’t wait for the performance review to provide feedback, says Carolee Colter, CDS Consulting Co-op consultant. Instead, offer observations and pointers frequently. “Say, ‘I hear you complaining a lot, dragging around with low energy, not working as productively as you used to.’ Whatever it is, name the behaviors,” she suggests.

Keeping communication lines open can lead to a dialogue about solutions, such as new responsibilities or a different schedule. Keep the bottom line clear: “Say, ‘Even if you don’t enjoy the job, you still have to perform at the same standards as everybody else,’” Colter notes.

Problem: What can I do to keep employees from stealing?

Solution: LaRocca recommends you start by asking tough questions at the interview, like: “If you saw someone stealing merchandise, how would you handle it?” This way, “you have a greater chance of hiring someone who’s honest; you understand who they are and that they respect your store and merchandise,” he says. He also suggests conducting background checks on potential employees.

Once hired, be sure to provide adequate employee training—on where merchandise belongs, how to manage money and keys, and the combination to the safe. “You never want an employee to say, ‘I didn’t know I couldn’t borrow from the register,’ or ‘I didn’t know I couldn’t give my friends a discount,’” LaRocca says.

Drennen tries to minimize the time employees are unobserved with cash and merchandise. “People have to come in and out the front door—they can’t go out the back door, which is a big hole for employee theft sometimes.” When employees purchase something, a manager has to ring it up for them. Cash drawers are reconciled every day. And cameras are everywhere, she says.
Also, perform occasional audits. LaRocca suggests giving an employee expensive merchandise to put in the stock room; later, see if it’s there or if it ended up in a locker or a shopping bag next to the back door instead.

Problem: What incentives should I offer to keep good employees?

Solution: Even in a tough economy, Dewitt and Greenway offer pay raises, added responsibility, even profit sharing to staffers who’ve earned it. “You can’t afford not to,” Dewitt says. “It costs so much more money to have substandard service and always be training new people because you’ve let expensive people go.”

In addition to annual wage increases, Drennen offers flexible schedules and steady hours. “People are trying to live. Because my employees have put all this energy into training so they can do a good job for the business, I’ve found other places to cut—not payroll,” she says. “Consequently, I think the staff is really willing to go the extra mile.”

Appearance
Problem: When’s the best time for “fronting” the store?

Solution: Most retailers wait until the end of the day to have their evening crew “front” the store—that is, to pull product forward on the shelves where customer purchases have left empty spaces. But Swoboda suggests training staff to front shelves every time they walk down an aisle. “When an endcap or display is filled, you create more sales,” she says.

Problem: When, by whom and how should bathrooms be tackled?

Solution: Daily upkeep should include a check of appliances—confirm that all toilets, sinks, hand dryers, even light switches, are in working order, Drennen says. Jones appoints a person, on a rotating basis, who is devoted to bathroom upkeep, making sure restrooms are clean and stocked with toilet paper, soap and other necessities. “People judge a business so often by the dust in the corner or the lack of paper towels,” he says.

Beyond daily maintenance, consider a bathroom remodel. When Drennen revamped the 20-year-old bathrooms in her store, customer satisfaction improved. “There wasn’t a lot of room for baby changing, and even though they were handicapped accessible, they were tight,” she says. People weren’t encouraged to stay in the store when nature called. The new restrooms—with tile floors, granite countertops, tall stall walls and a third family-friendly bathroom—have been a hit. “People have come out of the woodwork with stories of how important that is to them,” Drennen says.

If you can’t afford a bathroom remodel, Debby Swoboda, a natural products marketing consultant, suggests doing an annual spring cleaning. “Remove clutter—don’t let the restroom feel like a stock room.” If you must store items there, hide them in a cabinet or on shelves behind a curtain. And make a positive impression with a fresh coat of paint and pictures on the wall.

Problem: What’s the most effective method for cleaning liquid spills?

Solution: If you spill a bottle of olive oil or apple juice, it’s a mess to clean up with a mop, according to Drennen. “We get Spilltrol—the generic is alumina silicate—through Ecolab, one of our suppliers,” she says. “It soaks up the spill and then you can just sweep it up.” And, she adds, it’s environmentally safe and nontoxic.

Marketing
Problem: How can I market my store on a limited budget?

Solution: Embrace free technology. Don’t worry, you don’t need to know how it works—you just need an enthusiastic employee who does. Swoboda uses Twitter to communicate with followers about events, advocacy or hot deals (follow her at twitter.com/askDebby). Send out a tweet offering a short-dated product at 50 percent off for one day. “You may get customers into the store an additional time during the month due to that one tweet,” Swoboda says. Designate an employee to Twitter for your store and give him or her a “tweet plan” for the month. It “can really make a difference,” she says.

Swoboda says it’s easy to move up from Twitter to Facebook. “Facebook allows retailers to post more information, with pictures—like what’s in our deli today, or info about hot new items or employee picks, community partnerships and more.” With customers’ comments and retailers’ responses also visible, a Facebook page can even serve as a sort of online customer-service counter, Swoboda says.

Problem: What’s the most effective marketing strategy for my store?

Solution: “It’s really a mistake for retailers to say, ‘OK, in this bad economy, I’m going to stop my advertising,’” Swoboda says. Instead, take this opportunity to reconsider where you’re advertising and whether you’re getting a good return on your investment. For example, she says, many retailers have long relied on phone book ads and just sign the contract year after year, even if it’s no longer a source of referrals. “My fingers don’t go walking through the Yellow Pages anymore; my fingers go walking through Google,” Swoboda says. She suggests advertising in media outlets that offer an added value.

Drennen says her store does exactly that. “We pay for advertising on a radio station but also get to be on a talk show with them once a month. That has been one of the best marketing tools. People always come in [to the store] wanting to get information on products they heard about on that show.”
For DeWitt and Greenway, community engagement is important. “We do lectures at hospitals, schools and different community organizations,” Dewitt says. They also bring speakers into their stores for lectures. “It brands us as people who really are into information and knowledge and empowering the customer to make better decisions about their health purchases.”