Finally, let's look at some misconceptions about using the most popular yardstick: return on investment (ROI). That is annual gross profit made on your money put into stock item or product group. If products are judged only on percentage gross profit made per month on own money invested in them, you could easily end up with a shop filled with big, low value products needing lots of selling attention - from suppliers giving long credit lines!
Intuitively we know customer satisfaction is really what keeps a hardware store going. One of the fundamentals of a satisfied customer is having in stock what he or she needs! Customers are satisfied if 'their' hardware retailer has the products available they expect him to stock. Undeniably this temps the retailer to stock too many low value, low profit, slow-moving, time-consuming and even space-wasting products that don't make enough money!
This is unacceptable if your goal is to keep the customers happy and make money. So far we've discussed guidelines to judge whether a product/range is good or bad (value-adding or destructive) to have in your shop.
Walk through your store and identify the characteristics of each product: the enablers with low margins, the slow-movers with high-value, the self-servers, the fast popular products with good margins just walking onto and flying off the shelves, the add-ons, the impulse lines and so on. You will also realise that without these guidelines it is impossible to make sensible decisions about the optimal range for you.
Talking of money: money is an animal that regularly changes shape. We tend to use 'money', 'profit' and 'investment' to sometimes mean the same and some quite different things.
Return on Capital Employed (ROCE) means you differentiate between how you invest and where you get the money to finance the stock. If you invest a relatively small amount of your own capital but get a large %, or even 100%, it might look like a jolly good decision because of the high return on investment. In real life there is no free lunch - and so there is no free capital! If you borrow too much, cost of capital goes up - and of course there is a limit to how much can (safely) be borrowed
To make the best decision, calculate the return on the total amount invested, including money borrowed from the bank or financed by supplier credit (ROCE) - and not only on your own money (ROI). Only if you have extremely severe limitations on getting credit/capital (meaning you are in serious trouble and should not take out more debt!) is ROI the single or best norm to use when making stock range decisions. Typically consignment stock always gives you infinite ROI - because you don't invest any of your own money any profit will be an infinite return! But we all know this is patently not always a good idea - the cost of money is usually a very small expense compared to the cost of space utilised or the cost of the staff needed to sell the item.
Measuring ROCE instead of only the ROI means that you are making better decisions about the profitability of different retail products
Combine the insight you get from considering the ROME, ROSE and ROCE you get from different product groups and you are closer to a highly profitable hardware retail environment. Instead of sacrificing the return you get on time or space in a effort to optimise only the ROCE, or even worse ROI, you should try to balance all three.
As rule identify, stock and assertively sell products that score high on all three these benchmarks, but especially those giving you the best return on your most expensive and limited resources such as your time and your shop space.
The perfect mix for a hardware store is therefore the best mix of products to satisfy most of your customer's needs and make you the most Rands profit per month taking into account the time, floor space, own capital and credit you have available
Thursday, March 26, 2009
Monday, March 23, 2009
Space - or Return on Space Employed (ROSE)
In physics time and space are intimately connected - strangely enough, also in business. Location is critical, as is the amount of space available - and space really costs money! Most stores are restricted by space as resource.
How you manage space in a hardware retail store will determine which and how many customers you can satisfy and how much money you make. You utilise the space to stock those products you feel will satisfy your customers needs, whilst ensuring maximum profit. Some carry a higher margin; others turn over faster; some need more time and effort to sell; others' sell themselves'; some don't make much profit but customers expect you to have them and so on.
This delicate mix determines the success of your business. Think of fast moving, low-profit, space-wasting cement and slow moving, low-profit power tools (taking up a little space): both products lead to other sales that are more profitable such as builder's tools, paint and power tool accessories
Your mix of products and your store layout determines what you are for your market. Most store and department managers design the layout and determine the mix based on intuition, experience, a touch of common sense and crossed fingers!
The winners in the retail game measure the product's efficiently by its ROSE (Return on Space Employed). That is Gross Profit per month compared to the amount of space it uses. Certain products generate considerable profit within the space utilised; others are regarded as enablers - they hopefully bring customers into the shop, but they don't pay their own way.
In order to accurately compare apples with apples (and know how to choose the best apple) gross profit per square meter (GP/m²) is critical measure. How much gross profit/m² does the dump bin with high margin multi-plugs on 'Special' give you versus the shelf with plumbing accessories? Which ranges should be stocked in width and depth and where should you just keep enough to satisfy basic demands?
You cannot have everything everyone needs - but almost anything you keep will sell - sooner or later. Only ruthless weeding out of products and ranges with low ROSE and replacing them with good margin products that sell fast enough to give you higher Monthly Gross Profit in Rands per square meter will result in a more successful store.
Next to staff, space is the most valuable and expensive asset you have to make money with and is the most difficult to get more of. Sell more per square meter and your shop does better.
Rather than thinking of ways to improve the whole shop, it is easier to look at each individual shelf or square meter (or running meter - see box) and compare its sales and GP to the rest of the shop. To do this is much easier than most people think and far more effective than they realise! Just do it.
How you manage space in a hardware retail store will determine which and how many customers you can satisfy and how much money you make. You utilise the space to stock those products you feel will satisfy your customers needs, whilst ensuring maximum profit. Some carry a higher margin; others turn over faster; some need more time and effort to sell; others' sell themselves'; some don't make much profit but customers expect you to have them and so on.
This delicate mix determines the success of your business. Think of fast moving, low-profit, space-wasting cement and slow moving, low-profit power tools (taking up a little space): both products lead to other sales that are more profitable such as builder's tools, paint and power tool accessories
Your mix of products and your store layout determines what you are for your market. Most store and department managers design the layout and determine the mix based on intuition, experience, a touch of common sense and crossed fingers!
The winners in the retail game measure the product's efficiently by its ROSE (Return on Space Employed). That is Gross Profit per month compared to the amount of space it uses. Certain products generate considerable profit within the space utilised; others are regarded as enablers - they hopefully bring customers into the shop, but they don't pay their own way.
In order to accurately compare apples with apples (and know how to choose the best apple) gross profit per square meter (GP/m²) is critical measure. How much gross profit/m² does the dump bin with high margin multi-plugs on 'Special' give you versus the shelf with plumbing accessories? Which ranges should be stocked in width and depth and where should you just keep enough to satisfy basic demands?
You cannot have everything everyone needs - but almost anything you keep will sell - sooner or later. Only ruthless weeding out of products and ranges with low ROSE and replacing them with good margin products that sell fast enough to give you higher Monthly Gross Profit in Rands per square meter will result in a more successful store.
Next to staff, space is the most valuable and expensive asset you have to make money with and is the most difficult to get more of. Sell more per square meter and your shop does better.
Rather than thinking of ways to improve the whole shop, it is easier to look at each individual shelf or square meter (or running meter - see box) and compare its sales and GP to the rest of the shop. To do this is much easier than most people think and far more effective than they realise! Just do it.
Eureka - New Quality Control Manager
Eureka has employed a new quality control manager, Ken Gray. He spoke to Johann Gerber about his career at Mercedes and the excitement of being part of South Africa’s most buoyant industry
Ken Gray, quality control manager, Eureka.
DIY: Morning Ken. Please tell me more about your background.
KG: I am a born and bred Johannesburger. I grew up on the West Rand and attended Saints High School. After matriculating I went to Wits where I studied Industrial Engineering.
I completed my studies in 2005 and joined the Mercedes Group in South Africa. I was immediately sent to Germany where I was trained as a Quality Run-in Controller. This enabled me to be involved in the checking processes for the launch of the new C-Class Mercedes.
At the beginning of 2007 I moved to East London where I swapped to campaign management. Here I looked into identifying problems so that Mercedes could deliver better service and offer higher quality. At the end of the year I joined Eureka as quality control manager.
I am very happy with the move into hardware and enjoy the fast pace of the industry. The motor industry is somewhat boring and basically follows a seven-year cycle.
DIY: What challenges do you see for the hardware industry?
KG: The biggest challenge will be to control China. The influx of grey products, low quality products and sub-standard products is something which companies should rather try to help solve than to drop their prices.
The next challenge is to then adapt to the changing economic climate which we are seeing in South Africa at the moment.
DIY: How do you control China’s influence?
KG: Well, the Chinese are very enthusiastic, but the people there need knowledge and skills. The other problem is that there is no legislation in place which forces the businesses there to look after the environment.
Almost none of the companies there are ISO compliant. At the end of the day, the help offered to China should not just be in terms of standards and improving quality, but also to assist in the country taking better care of the environment.
Companies that have a relationship with China should invest in helping them to build companies based on best practice principles. It is a concern to see the other powerhouse, India, following a similar route.
DIY: What are Eureka’s strengths?
KG: Eureka has very strong physical logistics. It is one of the few companies in South Africa which can deliver to the small stores in the far outlying areas of the country.
From a sales perspective, the company boasts flexible sales people that are willing to help when a customer is in dire need of assistance.
DIY: What inspires you?
KG: I am self-motivated and very ambitious. I am an outdoors-type person and enjoy mountain biking and getting in touch with nature.
DIY: Looking at the next 3-5 years, what are the challenges Eureka and other South African companies will face?
KG: For us, the price of steel is a big concern. Steel prices have jumped 60% during the first half of 2008. The problem herein lies that all fasteners are made from steel. This is followed by direct supply and quality of the products supplied. With petrol prices continuing to climb, transport costs are also expected to shoot through the roof.
DIY: Where is Eureka’s next opportunity for growth?
KG: We are investigating the viability of solar energy. There seems to be some potential. Personally I am driven by bio-fuels and would like to investigate the possibility even further.
DIY: What is the secret to your success?
KG: Vasbyt! For some odd reason I’ve always been thrown in at the deep-end. For example, when I went to Germany, I went to a little town where no one spoke, or wanted to speak, English. They were happier with me speaking really bad German!
I think another attributing factor is my ability to make decisions and to adapt to certain situations.
DIY: How would you describe quality control?
KG: In one word – measurement. It is the identification of the critical variables and measuring them, thus controlling them. However, one has to take the market’s perception into consideration.
It is not only about giving the people the right product for the task at hand, but meeting their expectations. It can be quite challenging as sometimes I spend quite some time trying to work out what the designer’s intentions were with certain products.
In the hardware industry this is even tougher as the maturity of quality control in this industry is fairly unknown.
DIY: How can quality control be improved?
KG: It is definitely going to take a mindset shift. It is about producing the correct product for the consumer and not about the volumes which can be produced. It all boils down to manufacturers producing the correct product at the right time at the correct quality.
DIY: What are Eureka’s plans for the future?
KG: We are looking into upgrading the Fort Knox range – the range needs a bit of a facelift. When people think about Fort Knox, they shouldn’t think screws, nails and bolts, but rather locks and handles.
The range has a very good name in the industry and we now want to expand on this. Fort Knox should become an entity in its own right. With this in mind, we are embarking on a period now, where we want to separate the identities of Eureka and Fort Knox and will even move the Fort Knox merchandising away from the Eureka merchandising.
DIY: What impact will the changes have on quality at Eureka?
KG: It will definitely make life simpler. The great thing about upgrading certain ranges is that one gets to be part of the selection process from the beginning. This will help us to select the right supplier, delivering the right products. It makes controlling the critical points much simpler.
DIY: Where do you see yourself in five years?
KG: I would like to move into the world of manufacturing consulting.
Ken Gray, quality control manager, Eureka.
DIY: Morning Ken. Please tell me more about your background.
KG: I am a born and bred Johannesburger. I grew up on the West Rand and attended Saints High School. After matriculating I went to Wits where I studied Industrial Engineering.
I completed my studies in 2005 and joined the Mercedes Group in South Africa. I was immediately sent to Germany where I was trained as a Quality Run-in Controller. This enabled me to be involved in the checking processes for the launch of the new C-Class Mercedes.
At the beginning of 2007 I moved to East London where I swapped to campaign management. Here I looked into identifying problems so that Mercedes could deliver better service and offer higher quality. At the end of the year I joined Eureka as quality control manager.
I am very happy with the move into hardware and enjoy the fast pace of the industry. The motor industry is somewhat boring and basically follows a seven-year cycle.
DIY: What challenges do you see for the hardware industry?
KG: The biggest challenge will be to control China. The influx of grey products, low quality products and sub-standard products is something which companies should rather try to help solve than to drop their prices.
The next challenge is to then adapt to the changing economic climate which we are seeing in South Africa at the moment.
DIY: How do you control China’s influence?
KG: Well, the Chinese are very enthusiastic, but the people there need knowledge and skills. The other problem is that there is no legislation in place which forces the businesses there to look after the environment.
Almost none of the companies there are ISO compliant. At the end of the day, the help offered to China should not just be in terms of standards and improving quality, but also to assist in the country taking better care of the environment.
Companies that have a relationship with China should invest in helping them to build companies based on best practice principles. It is a concern to see the other powerhouse, India, following a similar route.
DIY: What are Eureka’s strengths?
KG: Eureka has very strong physical logistics. It is one of the few companies in South Africa which can deliver to the small stores in the far outlying areas of the country.
From a sales perspective, the company boasts flexible sales people that are willing to help when a customer is in dire need of assistance.
DIY: What inspires you?
KG: I am self-motivated and very ambitious. I am an outdoors-type person and enjoy mountain biking and getting in touch with nature.
DIY: Looking at the next 3-5 years, what are the challenges Eureka and other South African companies will face?
KG: For us, the price of steel is a big concern. Steel prices have jumped 60% during the first half of 2008. The problem herein lies that all fasteners are made from steel. This is followed by direct supply and quality of the products supplied. With petrol prices continuing to climb, transport costs are also expected to shoot through the roof.
DIY: Where is Eureka’s next opportunity for growth?
KG: We are investigating the viability of solar energy. There seems to be some potential. Personally I am driven by bio-fuels and would like to investigate the possibility even further.
DIY: What is the secret to your success?
KG: Vasbyt! For some odd reason I’ve always been thrown in at the deep-end. For example, when I went to Germany, I went to a little town where no one spoke, or wanted to speak, English. They were happier with me speaking really bad German!
I think another attributing factor is my ability to make decisions and to adapt to certain situations.
DIY: How would you describe quality control?
KG: In one word – measurement. It is the identification of the critical variables and measuring them, thus controlling them. However, one has to take the market’s perception into consideration.
It is not only about giving the people the right product for the task at hand, but meeting their expectations. It can be quite challenging as sometimes I spend quite some time trying to work out what the designer’s intentions were with certain products.
In the hardware industry this is even tougher as the maturity of quality control in this industry is fairly unknown.
DIY: How can quality control be improved?
KG: It is definitely going to take a mindset shift. It is about producing the correct product for the consumer and not about the volumes which can be produced. It all boils down to manufacturers producing the correct product at the right time at the correct quality.
DIY: What are Eureka’s plans for the future?
KG: We are looking into upgrading the Fort Knox range – the range needs a bit of a facelift. When people think about Fort Knox, they shouldn’t think screws, nails and bolts, but rather locks and handles.
The range has a very good name in the industry and we now want to expand on this. Fort Knox should become an entity in its own right. With this in mind, we are embarking on a period now, where we want to separate the identities of Eureka and Fort Knox and will even move the Fort Knox merchandising away from the Eureka merchandising.
DIY: What impact will the changes have on quality at Eureka?
KG: It will definitely make life simpler. The great thing about upgrading certain ranges is that one gets to be part of the selection process from the beginning. This will help us to select the right supplier, delivering the right products. It makes controlling the critical points much simpler.
DIY: Where do you see yourself in five years?
KG: I would like to move into the world of manufacturing consulting.
Eureka's Positive Outlook On The Economy (May 2008)
Johannes van Rensburg, national sales manager from Eureka, looks at South Africa’s current economic climate (May 2008), however, he does not complain about our situation, but rather focuses on the opportunities. Johann Gerber (DIY Trade News) reports.
It is a dismal May morning in Johannesburg, rain all over town, something uncommon in these parts of South Africa. I arrive at Eureka’s premises to interview Johannes van Rensburg, the company’s national sales manager and a shareholder in Eureka.
Johannes is as bubbly as ever and his positive attitude fills the room with an excitement South Africa has long forgotten. We are troubled by rolling blackouts, high interest rates, xenophobia and high fuel costs, all of which does not concern Johannes too much. “We have had an excellent first quarter,” he says.
This is interesting as most companies have been battling to show growth. “We have given retailers purchasing from our competitors facts as to why Eureka would be better for their business, and the result is that many have decided to rather stock Eureka,” he explains.
This drive has led to hundreds of enquiries as to how retailers can get their hands on Eureka products. “I hopethis trend will continue,” he says. Wait, I have to let him know that South Africa is facing some major problems over the next 24 months:
Steel prices are up.
Delivery costs are up.
Aluminium is more expensive.
Brass is more expensive.
Petrol has sky-rocketed by 70%.
Interest rates are sitting at a prime lending rate of 15% – the highest it has been in years.
It is then that he smiles at me and explains South Africa’s current economic climate as follows: “We are part of a cross-country race, however, our competitors are breathing down our neck and no matter what we do, we cannot shake them. But, there is a very steep hill ahead and only those geared properly will be able to climb this hill. This is our competitive advantage. The strength of your business will come through in this climb, but one needs to be prepared for the challenge, and afterwards, the company will be better equipped to deal with other challenges which may arise.”
Van Rensburg explains that the road to 2010 is still positive and that there are many good situations about to arise out of the current economic demise. “I’ve identified a pattern with countries hosting major sporting events. After each major sporting event, that country has been better off. Why? Infrastructure gets a major boost, international retailers enter the country and, looking specifically at 2010, South Africa is going to benefit from a major broadband network to make the broadcasting of High Definition (HD) signal possible.”
So, South Africa is just experiencing some growing pains? “Correct. Why are we struggling with rolling blackouts? Why is there traffic congestion on certain highways? Why do our roads have potholes? They are being tested, and then being improved,” he explains.
Van Rensburg is excited about current developments in South Africa and believes that after 2010, the country will have an infrastructure better than any other country in Africa. “After the Sydney Olympics, business, property prices and tourism continued to increase for two years,” he explains.
Tourism makes up roughly 8% of South Africa’s GDP and has an indirect impact on the DIY market. “The better our tourism industry, the better for the DIY industry,” says van Rensburg, adding, “The situation is playing straight into our hands.”
Every bed and breakfast, hotel or resort does maintenance. Most of them will be doing improvements to their facilities to ensure visitors return for another visit to South Africa. The maintenance and upgrades require DIY products and as a result stimulate the DIY-sector’s growth. “Unlike Europe and the United States, South Africa’s economy is still growing. We continue to move in the right direction. Maybe at a slower pace, but it is moving,” he says.
If one compares the current situation with 50 years ago we are facing different challenges, but the bigger picture is definitely better. “We are experiencing growing pains, but at least we continue to grow,” he says.
In conclusion, we need to get rid of the doomsayers and stop complaining about our current situation. Rather become part of the solution. “If every business tackles one aspect of a problem in the country, it will be solved much easier,” he concludes.
It is a dismal May morning in Johannesburg, rain all over town, something uncommon in these parts of South Africa. I arrive at Eureka’s premises to interview Johannes van Rensburg, the company’s national sales manager and a shareholder in Eureka.
Johannes is as bubbly as ever and his positive attitude fills the room with an excitement South Africa has long forgotten. We are troubled by rolling blackouts, high interest rates, xenophobia and high fuel costs, all of which does not concern Johannes too much. “We have had an excellent first quarter,” he says.
This is interesting as most companies have been battling to show growth. “We have given retailers purchasing from our competitors facts as to why Eureka would be better for their business, and the result is that many have decided to rather stock Eureka,” he explains.
This drive has led to hundreds of enquiries as to how retailers can get their hands on Eureka products. “I hopethis trend will continue,” he says. Wait, I have to let him know that South Africa is facing some major problems over the next 24 months:
Steel prices are up.
Delivery costs are up.
Aluminium is more expensive.
Brass is more expensive.
Petrol has sky-rocketed by 70%.
Interest rates are sitting at a prime lending rate of 15% – the highest it has been in years.
It is then that he smiles at me and explains South Africa’s current economic climate as follows: “We are part of a cross-country race, however, our competitors are breathing down our neck and no matter what we do, we cannot shake them. But, there is a very steep hill ahead and only those geared properly will be able to climb this hill. This is our competitive advantage. The strength of your business will come through in this climb, but one needs to be prepared for the challenge, and afterwards, the company will be better equipped to deal with other challenges which may arise.”
Van Rensburg explains that the road to 2010 is still positive and that there are many good situations about to arise out of the current economic demise. “I’ve identified a pattern with countries hosting major sporting events. After each major sporting event, that country has been better off. Why? Infrastructure gets a major boost, international retailers enter the country and, looking specifically at 2010, South Africa is going to benefit from a major broadband network to make the broadcasting of High Definition (HD) signal possible.”
So, South Africa is just experiencing some growing pains? “Correct. Why are we struggling with rolling blackouts? Why is there traffic congestion on certain highways? Why do our roads have potholes? They are being tested, and then being improved,” he explains.
Van Rensburg is excited about current developments in South Africa and believes that after 2010, the country will have an infrastructure better than any other country in Africa. “After the Sydney Olympics, business, property prices and tourism continued to increase for two years,” he explains.
Tourism makes up roughly 8% of South Africa’s GDP and has an indirect impact on the DIY market. “The better our tourism industry, the better for the DIY industry,” says van Rensburg, adding, “The situation is playing straight into our hands.”
Every bed and breakfast, hotel or resort does maintenance. Most of them will be doing improvements to their facilities to ensure visitors return for another visit to South Africa. The maintenance and upgrades require DIY products and as a result stimulate the DIY-sector’s growth. “Unlike Europe and the United States, South Africa’s economy is still growing. We continue to move in the right direction. Maybe at a slower pace, but it is moving,” he says.
If one compares the current situation with 50 years ago we are facing different challenges, but the bigger picture is definitely better. “We are experiencing growing pains, but at least we continue to grow,” he says.
In conclusion, we need to get rid of the doomsayers and stop complaining about our current situation. Rather become part of the solution. “If every business tackles one aspect of a problem in the country, it will be solved much easier,” he concludes.
Wednesday, March 18, 2009
Do you have the perfect mix in your hardware store?
Put time in the bank
Look for any product or system that helps you spend more time with customers and requires less time to be spend on the enablers. Focus every aspect of the operation on good use of time. 'Put time in the bank' by proper pricing of products, making shelf-talkers, merchandising for self-service or assisted service and keeping products that have to be sold together close to each other. This allows you to either serve more customers in peak times or spend more quality selling-time with serious buyers, planning, training or negotiating with important suppliers.
Time - or Return On Management Effort (ROME)
They say time is money, but think about this: Time is the most perishable resource you have - you have all there is; you will always spend it, but only once. You can't save it; you can't get it back or re-use it. But you can use it wisely or not, you can create value or you can destroy value.
Time is scarce resource and you have to manage time like any other resource to make the most of the resource. If you have to do more than you have time for - you buy someone's time - the snag is you always get the person with his time!
Sometimes time costs you more or less, depending on the person's value adding skills, experience and abilities. The single most important skill for managers is to manage their staff in such a way that they create the most value with the resources and opportunities they have in the time available - manage their time to make more money. (as an aside: this means that anyone who isn't worth more than he is paid should not be kept!)
Time in a store environment can be spent on: Enabling Tasks and Value Adding Tasks. Spending time with a customer adds value; solving her problems, selling in other words, is the only activity bringing money into the business - that is what business is about!
Unfortunately without enabling activities like ordering merchandise, checking stock, pricing, labelling, packing, cleaning, bookkeeping, tax returns, paying bills and so on you won't have anything to sell your customers.
Balance and focus make the difference
Any time-management consultant will tell you that it is all about prioritisation. You have to 'spend time'; otherwise you 'waste time'. To optimise the amount of value created in time it sometimes means letting someone less skilled do Return On Management Effort (ROME) refers to what you get for your own personal time - that one thing you can't buy or get more of. Hardware retailing is people intensive - customers regard sales people as sources of information and advice. Selling and customer service is interwoven - meaning that your ROME will increase if you spend more quality time with your customers on the floor: but only if your shop is attractive, well stocked and consumer friendly. How you spend your time is how successful you make your money.
Unfortunately, like the other really important things in life, such as love, friendship, health and so on, it is not easy to quantify or measure. Generally though, you will know whether you are putting a lot of effort and time in for a small advantage or the other way round.
Look for any product or system that helps you spend more time with customers and requires less time to be spend on the enablers. Focus every aspect of the operation on good use of time. 'Put time in the bank' by proper pricing of products, making shelf-talkers, merchandising for self-service or assisted service and keeping products that have to be sold together close to each other. This allows you to either serve more customers in peak times or spend more quality selling-time with serious buyers, planning, training or negotiating with important suppliers.
Time - or Return On Management Effort (ROME)
They say time is money, but think about this: Time is the most perishable resource you have - you have all there is; you will always spend it, but only once. You can't save it; you can't get it back or re-use it. But you can use it wisely or not, you can create value or you can destroy value.
Time is scarce resource and you have to manage time like any other resource to make the most of the resource. If you have to do more than you have time for - you buy someone's time - the snag is you always get the person with his time!
Sometimes time costs you more or less, depending on the person's value adding skills, experience and abilities. The single most important skill for managers is to manage their staff in such a way that they create the most value with the resources and opportunities they have in the time available - manage their time to make more money. (as an aside: this means that anyone who isn't worth more than he is paid should not be kept!)
Time in a store environment can be spent on: Enabling Tasks and Value Adding Tasks. Spending time with a customer adds value; solving her problems, selling in other words, is the only activity bringing money into the business - that is what business is about!
Unfortunately without enabling activities like ordering merchandise, checking stock, pricing, labelling, packing, cleaning, bookkeeping, tax returns, paying bills and so on you won't have anything to sell your customers.
Balance and focus make the difference
Any time-management consultant will tell you that it is all about prioritisation. You have to 'spend time'; otherwise you 'waste time'. To optimise the amount of value created in time it sometimes means letting someone less skilled do Return On Management Effort (ROME) refers to what you get for your own personal time - that one thing you can't buy or get more of. Hardware retailing is people intensive - customers regard sales people as sources of information and advice. Selling and customer service is interwoven - meaning that your ROME will increase if you spend more quality time with your customers on the floor: but only if your shop is attractive, well stocked and consumer friendly. How you spend your time is how successful you make your money.
Unfortunately, like the other really important things in life, such as love, friendship, health and so on, it is not easy to quantify or measure. Generally though, you will know whether you are putting a lot of effort and time in for a small advantage or the other way round.
Purpose of this blog
This blog was created by EUREKA with the stockist in mind. We will puplish postings with specific focus on what retailers need to be succesful in their business.
Topics of discussion will be: return on floor space and maximising profit per square meter; return on management effort; labour effectiveness; stock density and the importance of maximising space; home branding and private labels.
You are welcome to comment and we would very much like your opinion on these topics. Regards, Eureka Management
Topics of discussion will be: return on floor space and maximising profit per square meter; return on management effort; labour effectiveness; stock density and the importance of maximising space; home branding and private labels.
You are welcome to comment and we would very much like your opinion on these topics. Regards, Eureka Management
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