MEDIA |
FEBRUARY 2023
The Year In Review...Planning The Right Path
David Brown
The “Busy Season” is now behind you, it’s time to relax, put your feet up and unwind from the hectic days you have just been through… it’s all downhill from here!
If only! I will remove the tongue from my cheek long enough to mention that a new year of work has just begun. Top of the list of things to get done is a look back at the last twelve months that we have just completed and determine the accolades and bouquets you will hand yourself for the results you have achieved.
Too often, many store owners get caught up in a new year of activity without taking time out to re-evaluate the business’ performance. Not reviewing your results and processes at a time like this can lead to a repeat of the same outcomes for the new year – fine for those things that are going well; not so good for those that aren’t. Regardless of how good your results are, there are always areas that can improve.
There are two principal areas where your efforts can be concentrated:
1. Financial results
2. Processes
STEP 1- FINANCIAL RESULTS
Starting with financials provides you with the pointers for where your actions need to change. This is the “Looking Back” part of the process. As you may not have completed your full year’s financials, your main source of information will be your reports. You will be able to focus on your department, inventory and staff reports as a means of determining your results. You can then compare the key areas against industry benchmarks, and previous year’s results, tosee how you are tracking. The most important areas to look at in terms of your results are:
1. Total sales dollars
2. Units sold
3. Mark up achieved
4. Average sale
5. Stockturn
These can be viewed across the whole business and by department, concentrating primarily on the key departments that provide you with most of your sales. Inventory reports will show you not only stockturn, but fast seller status, and which items have been non-performers for you. Salesperson data can include:
1. Sales dollars per staff member
2. Units sold per staff member
3. Average sale per staff member
4. Discounting as a whole and per staff member
5. Mark ups achieved
Your financial review will have highlighted the areas where you have underperformed, relative to your budget/previous year/benchmarking results from other stores.
The financial data you do have for the year can assist with determining whether your controllable costs are in line with expectations, including:
1. Marketing to sales ratio
2. Wages to sales ratio
3. Rent to sales ratio
Reviewing each of these areas will provide you with the information you need to change your processes. The numbers will provide you with indications of the areas that need change.
STEP 2- PROCESSES
Your financial review will have highlighted the areas where you have underperformed, relative to your budget/previous year/benchmarking results from other stores. It’s time to implement new processes in each of those areas.
Let’s say you discovered your average sale in diamonds was lower than the benchmark across other stores, and it’s an area you want to improve. Firstly, is your inventory holding average value enough for what you want to sell? If you’re targeting an average retail sale of $2000 but your average retail value of inventory is only $1800, you don’t have sufficient options to achieve your target, as you are lighter in the average value of product you need, to achieve your objective. You need to review your buying procedures for new product, to ensure it lifts that average inventory price. You need an average inventory holding at least 20% above your average retail sales target if you hope to achieve that goal.
Jewelry Innovations
Serinium beveled band
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If your inventory is at the right level, then it may be time to look at your salesperson reports. Who is achieving the average retail sale target in diamond rings? If some staff are, then these may be your best people to sell diamond rings. Are they the first to serve customers in this area? If not, then you need to review your policy as to who serves customers first. For those not achieving the target, what training processes do you have for them around diamonds?
You will need to review this area and determine whether the gap in their performance is due to product knowledge (if their average sale in other areas is strong then it possibly is) or if they need better training at closing sales (there may also be a mindset attitude here, around what they consider to be “expensive”).
This is a walkthrough of just one area you can review your processes. Your review of your reports should highlight other areas where similar actions can be taken. Is your mark-up achieved too low? Again, this may be a case of not enough mark up being put on when pricing (your inventory reports will show this), or too much discount being given away by some or all staff (your department and salesperson reports will show if this is the case and by whom). The procedure to correct it should be simple from there.
Hopefully these two clear-cut illustrations will show you what’s required. Once you’ve reviewed these processes you should be able to set new targets across each area, which will be the basis for your sales plan for 2023. Working your way through each area will provide you with the ammunition to instill the changes you need.
Samuel B
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birthstone necklace in emerald
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Hopefully these two clear-cut illustrations will show you what’s required. Once you’ve reviewed these processes you should be able to set new targets across each area, which will be the basis for your sales plan for 2023. Working your way through each area will provide you with the ammunition to instill the changes you need.
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