Tower Systems helps small business retailers every day better understand their businesses and through this better manage their businesses. One service we offer is a business health check where we look at a couple of terrific reports in our retail management software and provide feedback on what we see.
Here is advice we sent last week to one of our customers, a newsagent, who asked us to look at their year on year performance numbers. We are sharing our response here with their permission:
Thank you for the opportunity to look at your Monthly Sales Comparison Report. I offer the following comments:
SALES: 6% growth. The downside is that the majority of this is lottery business. While the 104% year on year growth is terrific, it is a significant risk. You need to drive lottery business to include other sales for the future viability of your business.
CARDS: Excellent growth. 12% year on year is a good result. I’d urge you to produce a Card Performance report – your software has this – it’s industry standard card performance reporting. Look at the categories which are performing best. This data will guide other business decisions. I see no reason in your current card performance data to consider introducing cheap cards as you had asked about – your current range is performing well.
CIGARETTES: I am concerned that 20.78% of your sales are not categorised. This makes assessing performance challenging. You need to fix this.
CONFECTIONERY: With gum accounting for 20.85% of your sales yet growth lower than the average for the department I wonder if you could life the profile in some way. Look at where it is and how it is merchandised. Darrell Lea is also a concern – under-performing. I am guessing you have a movable stand. Move it. Try new locations and chase impulse purchases.
GIFTS: Based on your card sales you should be doing at least $3,000 a month in gifts. You seem to focus on cheap and cheerful gifts. I think you could carry more premium gifts. I’d start with one or two collectible ranges: Beanie Boos (selling very well) and Beanie Kids. Look at the TSK range too – they have gifts which could work with and for your male shoppers. You need to work on gifts and know that YOU ARE NOT YOUR CUSTOMER. You need to develop a gift strategy. This should be based on card and magazine sales as your category data from these two departments informs you about interests of your customers.
MAGAZINES: What an awful operator the last newsagent must have been – they sold magazines without scanning them. Dumb! Your crossword titles should be doing better, 1.72% of total sales is too low. Put a column with weeklies, place a new title at the counter or with newspapers. I wonder about your magazine layout too. Is it the same as when you bought the business? If so, change it, urgently. This will help you own the department. With your overall year on year growth of 3% you are certainly influencing magazine sales in the right way.
NEWSPAPERS: With foreign language newspapers accounting for 12.15% of your newspaper sales I wonder if you could lift this even further. This is a segment of news[papers where I am seeing good growth. Chase it. Foreign language newspaper customers are very loyal.
STATIONERY: Sales are down 16%. What’s going on? Why? I hope this is concerning for you. Pens would be where I should start. In your case, they account for only 5.28% of your sales. The average I see elsewhere is 25% of stationery. I bet people use pens in your area. Look at your range and where it is located. Something is not working for you and I bet some changes in-store could fix that. I see fixing stationery as your top priority. GNS could help you with a range review.
TRANSPORT TICKETS: Wow, a big increase. But why? Are yo chasing this convenience business? If so, what’s the plan? Hopefully not for the sake of convenience business itself as that is not a good plan given the slim margin. There has to be companion business. Make sure you have a strategy for that.
Thanks for the opportunity to look at your numbers. You have a good business with growth potential. I’d be wary of chasing too much low margin agency type business without a strategy for leveraging this traffic into purchases of higher margin items. You can do this with professional queue management and bordering this with up-sell opportunities.
Remember that everything you do in your business needs to reflect what the business stands for – your USP. Make sure that you and your team know what this is as it will guide your business decisions and actions.
Hopefully others reading this get value from my comments.
Any retailer using our software is welcome to ask us for a business check check. We only ask that the advice is taken is good humour. While sometimes harsh, it is not intended to be personal.
We want what our customers should want – stronger, healthier and more valuable retail businesses.