Retailing tips with The Retail Guy – Kristian Mahony

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Today I caught up with Kristian Mahony from TheRetailGuy.com.au at the Hive co-working space in Redcliffe.

Kristian works with retail businesses to identify and fix areas of their operations where they are not following best practise, profits have been suffering or staff just aren’t engaged and performing to a high level.

Listen in as Kristian covers off some of the main frustrations of small local retail businesses and gives some steps you can take.

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Mick: Welcome back. It’s Mick from Redcliffe Marketing Labs. Today I am talking with Kristian Mahony. Kristian is from the TheRetailGuy.com.au. Kristian, tell us how you got to be the retail guy?

Kristian: Gee, that’s a long story, but to keep short for the sake of time purposes, I got to be the retail guy because I chose to be, but I’ve always been in retail since I was 19. I took a brief hiatus into the world of franchising, which was an interesting beast on its own, but I’ve stepped back away from franchising and stepped back into retail and more specifically around coaching and development, sales training and those sorts of things, which are the areas that I seem to like the most about it.

Mick: Awesome. Alright, well Kristian, pretty much the audiences is going to be small business owners who are set up in sort of small shopping centers around the main street in retail, looking to improve their retail sales and just make life easier as a retail business owner. So what are the keys or takeaways? How do you start improving your business as a retailer?

Kristian: Again, that’s a big question. The first step to takeaway I believe just I suppose admitting or coming to terms with the fact that there is room for improvement and sometimes trying to find those things within your own store. You’ve got the blinkers on, you walk in and out of it every day and just having someone come in that’s franchised and being able to look at the store and the business as an external I think can add a lot of vision into what’s happening and put through a bit more of a worldview on “These are the things that you’re doing and potentially these are the things that our people are doing getting some success. Maybe we should look at exploring some of those scenes. So the first step to answer your question, Mick, is to start to explore getting external views on your shop.

Mick: Alright. And give some examples of where you’ve previously walked into a retail store and things that would stand out to you. Can you give an example of, you know, there was staff not coming out and meeting their customers. What are the keys things where you normally walk in that you notice?

Kristian: Yes. That’s probably you hit the nail on the head, I think. At the moment when I walk into retail stores, as an example on New Year’s Day, I got convinced into going for a shop with my wife – which was a bad decision – but anyway, we went to Westfield and the more and more shops we went into, it was a really common trend that the staff that were in the stores were just not engaged with what they were doing. Whether that’s a fact that it was New Year’s, I don’t know, but you almost got the impression from all the big retailers that it was more of a hindrance to being in the stores at the time. That can draw down to local businesses and small retailers as well. I think it is a syndrome of walking into the same shop every day. Retailers, whether it’s big, small or medium, you’ve got to, I guess, keep staff engagement high and by doing that, you need to look at providing variety of coaching technique, different little things that you can do to spice things up in the same shop every day.

Mick: As a couple of just, I don’t know, starting from midway, for someone who’s listening to this and they want to go back to the store this afternoon and implement one change with their… “This answer made a difference,” what’s one quick and easy thing they can do to start the battle or change with the staff behavior?

Kristian: I think just sitting down and having a chat to them and letting them know that it’s okay to speak freely and ask them for feedback about how their enjoying their position. Do they see themselves progressing with what they’re doing at the moment? Is it a short-term thing? Is it a long-term thing? And aligning the goals, so with the individual staff team member, maybe they want to go overseas in 18-months’ time, finding that out now is a better thing than to let it drag on when they just start to procrastinate and time kill and maybe the person enjoys the ride that way. The first thing to do with your team is to sit down one on one as a business owner and have a chat to them about what their objections and goals are.

Mick: Okay. What are the other areas?. Obviously, there are fairly common factors across retail. Every store is going to have different aspects of layers of that, but staffing is a pretty common factor. What else is a retail store involved in?

Kristian: In terms of challenges?

Mick: Yes. Again, every store is maybe different, but you’ve got to layer it?

Kristian: Yes. Generalize it. So staffing engagement is one. I think the common one out there would be a lack of cash flow, lack of customers. That’s always the one. If I was to talk to any retailer, a key frustration, you know, “The market’s down,” “The global financial crisis hit five years ago and we’re still feeling the aftermath of that.” That’s not necessarily the reason. The culprits are deeper than that and it comes down to start the engagement. Otherwise, it’s lack of cash flow to be able to put together a sustainable marketing program to bring customers back. As I said, staff engagement. The other one’s having the cash flow to then be able to support stock levels and take risks on some potential new things that might start to bring people in. Imagine if you were the first retailer to start ranging GoPro, those sorts of things. To be the first is a risk there and you need the cash flow to take that risk away as a retailer. To summarize there, the big three are, the common trends within any retail, big or small, lack of cash flow and customers, lack of staff engagement and backing a marketing campaigning crew.

Mick: Alright. So a bit of chicken and egg there, because obviously the cash is needed to do many of the other things. Is there easy quick wins folks can look for in their cash flow?

Kristian: Well, there’s no easy way. The first point always is to look, just to be able to dissect your business back down to is it a global thing or is it “Am I carrying stock is redundant? Is it too old? Do I need to move my range slightly or augment it in a certain way?” I can’t really generalize that for everyone, because it’s hard to generalize a handy hardman’s store with a pushbike store. But each store is going to have their fundamental basics that they build their store around and then there’s going to be the fringe stock that they help package up the fundamentals. So is it a fundamental range issue and do you need the fringe stock to be more complimentary? Does that need to change?

Mick: Can you give some examples, like just for different industries without naming stores? Can you give a more concrete sort of example of that?

Kristian: Yes. From a previous retail environment that I worked in for many a year, being able to identify a core problem, so is it the lack of range that they had in licensed products, so NRL jerseys, NFL jerseys, those sorts of things, and at one stage it was. We had a limited range, it was doing really well, but to take it to the next level, we had to actually expand the range to cover all teams, all things, all sizes. That then changed the scope of what Rebel at that time was seen for. Prior to that, it was predominantly an equipment retailer and then all of a sudden the Socceroos made the World Cup and things changed on its head. It was just being able to realize that and then take the plunge. I know that is a big retail story, but scaling that back to the little person, the little guy on the street, knowing that there’s a change in the market and then being able to augment your range so that you can back it bigger, then hopefully supply the masses a bit more or you tribe a bit more and they’ll keep coming back. I talk a lot about ant trails and knowing what your ant trail items are. An ant trail item is something as an example where you’re never out of stock. You’re always the cheapest. Jerry Harvey used to make sure that he was never out of stock of printer cartridges. They’re always the cheapest, even if they lost money.

Mick: So you almost talking about a loss leader, just to get people back in.

Kristian: Yes. So his theory is if you put a drop of honey on a kitchen, the ants will keep coming until the drop of honey is gone. So he made sure that that drop of honey was never evaporated. It was there so the ants keep coming back. Knowing that as well is a key thing, knowing what your customers want. That really needs to be itemized per retailer. You cannot apply the same… It could be a big item for a bike store. It could be a specialized bike that is the thing that people are after. Business owners need to stay attuned to what their customers are telling them as well. That could be just staying behind the registers, getting out on the shop floor and talking with their customers more frequently.

Mick: Okay. So you mentioned a couple words there. You talked about tribe and niches, and in fact maybe having that one particular item or an array of items that you specialize in. How have you seen retail sort of move between small retailers, medium retailers and the large retailers? What is happening in that space as far as focus of shops and product lines?

Kristian: We talked about this just before we clicked record, but I think this morning there was a big announcement around retailing, especially small retailers taking some steady increases backed on the fact that niche products, niche markets are becoming more sought after. It might be soap retailers that just does a really lavish range of soaps. Now all of a sudden that’s a commodity that the tribe, as we call it, would want and keep coming back for, whether it’s seen as the flavor of the month, I don’t know. I think that people are tuning off from retailers trying to do everything and anything delivered substandardly. They would rather a retailer do something really, really well and give them an excuse to come to that store. Because as a retailer, we know with online shopping becoming such a beast that it is, you’ve really got to give them an excuse to come to your shop and to keep coming back. The service, the range, the experience has to be theatrical, mind blowing almost. Anything below that, it gives your customers an excuse to go and buy online. With regards to the small niche market of retail versus what we call the mini majors, or the majors, the mini majors are feeling the squeeze, because they’re trying to do all things to all people, but not getting any of it right to some extent. Obviously the big guys are doing what they can because of purchase prices, mass media marketing; they’re just the big players. I think now is as good a time as any for people to niche down and really become a specialized retailer in a very niche area and do it really and flourish as a result of that.

Mick: Okay. So niche-ing down there to see if I can do a little of the geographic product range or sort of intangible service-type thing, so what ways can a store develop on that if they were thinking “Okay, I’m too broad, too general and don’t have a really focus set.” Where can I look at trying to become more specialized?

Kristian: Well, I think doing some competitor analysis and the way your retail shop fits in with the market mix. I would try and keep it local because we are taking I believe to a Redcliffe local market here, so for the Redcliffe or the northern suburbs of Brisbane looking at how your particular store fits into the market and what piece of the pie do you have that. You are not probably going to be able to get some categoric data on that. It’s going to just be talking to people, asking around, getting online and having a look at ranges, going in and doing mystery shopping on your competitors if you want to. You may even be friends with some other people who retail the same product that you can just go and talk to and get a vibe from. That’s going to give you some really good I suppose, not domain knowledge, but some sound knowledge about where are the opportunities that you can start to identify to niche down; so not trying to be all things to all people, finding one product or a range of products that you can really become deep on. I say deep because you can range deep so you can carry more stock of it, not run out, the old ant trail theory. You can train your staff better to be able to sell that product.

Mick: So that they can know more about a smaller range.

Kristian: Exactly. So you go from 100 products down to say 20, that becomes dynamite knowledge around those 20 products versus becoming okay knowledge around 100. You can leverage off supply relationships a lot more because you might be able to buy more quantities off a supplies and therefore be able to negotiate whether it’s marketing co-op allowances, getting them to come and support you in store on a busy time during a Saturday and sell for you, in-store setup, promotional activity, getting them to batch your retail side as a supplier, a stocker, stock that particular item, so there are a lot of different things you can do as a result of being able to go deep versus be going thin and wide.

Mick: And that getting the wholesaler or supplier support, do you think a lot of businesses don’t chase it up? Should they be going back and trying to ask for more support from their suppliers?

Kristian: Yes. I think the little guys ask once and they get a “No,” and then they don’t go back again. For anyone who doesn’t know the time back when Jerry first started retailing computers, just walked away from Apple and stopped because they weren’t prepared to play the game. Now that’s a different beast, but the theory was he had principles and he knew what he wanted and he had to start small and work up. Eventually the Toshibas and the bigger brands came around, but he had to range other brands. Taking that story and applying it to the smaller retailers in Redcliffe, with the negotiating and talking to your suppliers, it really comes down to how well you can connect with them on a one-to-one level, how much stock you are buying from them – obviously that carries weight- but also how prepared are you to just keep going back and asking and seeking a handout, because these guys will support and often do support the bigger player and it’s because the squeakiest wheel gets always the oil. You have just got to become the squeakiest wheel, so keep going back and pushing. And any win is a good win. So whether it’s negotiating, taking a higher order quantity, but saying “Look, if I don’t hit a sell through of 70% on this within three months, can you take the stock back or can we do a stock swap,” so taking the risk out of the purchase. For a little retailer, that’s a big win, because then all of a sudden if you don’t hear that and you can swap the stock or better yet return it for credit, you’re freeing up your cash flow again.

Mick: So stock is not sitting on the shelves and getting old. Online shopping. Again, the council here in the last couple of years has done several sort of business confidence surveys and things like that and one of the factors that always comes up is fear or complaints from owners about eroding sales just due to online shopping. Should small businesses be trying to fight that or should they be joining that and getting in with online stores to compliment their bricks and mortar business? Is it one or the other? Is it both? What should folks be doing?

Kristian: My gut tells me that if you’re a small retailer with a niche product or a range, sure have a website. I wouldn’t encourage e-commerce. I think when you go e-commerce, then it becomes about price. It’s two dimensional. So you buy the product online, there’s no face-to-face interaction. As I said earlier, there’s no theatre. For small retailer and way people are succeeding now is being able to provide a three-dimensional shopping experience – Brad Smith from Braaap, being able to teach kids with MS how to ride motorcycles – those sorts of things. Looking at that, if you go into e-commerce, it’s drifting yourself back away into a 2D and the Zappos and the Amazons are just going to win war based on price. That’s not what you want to be.

Mick: We’re really arguing that we can actually open up, that way you’re open 24 hours. Folks can still come into the store and maybe pick it up and then they can actually order outside of normal business hours. Genuine argument? I don’t know. Are you seeing any sort of figuring that as a possibility?

Kristian: There are certainly business owners that will say “Well, what about that?” My, I guess, rebuttal to that is “Why do you have to be open 24 hours. You’re a niche market retailer in Redcliffe or in Melbourne somewhere. Do you want to be trying to sell stock to someone in Denver? Is that really what you want to be doing or do you want to be talking to…” So getting back in line with what your end goal is, if you want to build a business that’s local and holds local power and has that dream of becoming a commodity within your local market, then I don’t know if the e-commerce is the answer. I think it’s more about being just great brick-and-mortar retailer. You’re still going to need a website, as I said, just to be able to leverage marketing power. When you start going into e-commerce, there’s additional costs that come into that as well. If it starts to become a bigger thing, then you’ve got to put someone on also to do that. I wouldn’t say don’t do it. I would just say make sure that it’s in line with what your vision is, what your end goal is. If you want to be selling all the time to everyone around the world, well then e-commerce is an option. But if you just want to be a retailer that nails it in your local area, probably not.

Mick: Okay. What sort of services can folks get off you guys? The retail guy. What sort of things are you looking at? How do they engage you? What should they sort of do next after listening to this interview?

Kristian: Well, the website, obviously TheRetailGuy.com.au, that’s my main touch point. That’s got my mobile phone number on it. Feel free to give me a call directly there or send through an inquiry. I’m providing a 45-minute free retail audit where I come in and have a look at the shop and talk to the business owner, I suppose flesh out the frustrations and fears and look at where they want to head with their business, and be able to provide at least one to five steps that they can start to take. That’s all obligation free. It’s just me walking in and having a chat. If they’re in other states of Australia, via Skype I suppose, so it’s a little bit more communicated based. That’s where you can find me, obviously the website and the phone number. The services I provide outside of that, selling and sales training, coaching, leadership development, group presentation, group training for how to sell products, services, those sorts of things; one-on-one coaching as well with retail owners.

Mick: Alright. Cheers Kristian. So you folks have been listening to Kristian Mahony from TheRetailGuy.com.au. He’s actually got a free report on the website if go and download the Eleven Levers of Retail Conversion, so pretty worth your while checking that out. Look, if you do take Kristian up on the offer and he comes in your store and gives some good tips, I’d love to get the feedback and leave a comment on the website at RedcliffeMarketingLabs.com.au. Until next time, thanks for listening in and I’ll talk to you soon. Cheers.