A lack of customers should not be an excuse

Have you ever been at the Monday morning retail team meeting and heard the following?

“Well, sales were down this weekend due to lack of customers”

Comments like that are especially compelling in the current marketplace, where talking it down is fast becoming a national pastime.

I recently visited five retail stores – 15 minutes per visit – to observe firsthand the malaise of retailers not having enough customers.

Here are the impromptu results from my observations:

• Over the five 15-minute periods there were an average of 24 customers in each store.
• The average staffing number was three.
• The average customer-to-staff ratio over the period was therefore 8:1.

Given that 15 customers could likely be adequately served by the three staff leaves nine customers whose needs could not be properly addressed, even with all the best intentions from the staff. Those were therefore lost sales.

Those nine prospects over five separate periods are equal to 45 potential customers. At a hypothetical average spend of $50 each that equates to a potential $2250 that wasn’t spent in the five stores.

Extrapolate that number across the retail sector and we start to appreciate the impact that losing existing customers has on a business.

The best positioning strategy in the world does not amount to a lot if retail conversion is not seamlessly delivered.

These findings are consistent with research by our partners at Beonic, who found that on average fewer than 20% of customers in specialty retail are converted into buyers, which means that 80% of your customers and likely to be buying from your competitors.

How to capture those potential sales and make money

• Measure transaction counts closely. Every transaction forecast should be based on historical counts and is generally a reliable predictor.
• Link those to staff rosters.
• Change rosters to accommodate surges and changes in transaction numbers.
• Employ staff based on facts and pick up those extra sales, which is a much better outcome and far more positive than merely reporting on what wasn’t achieved.
• Place even more emphasis on employing motivated, well-trained people whose product knowledge underpins their service excellence.

Remember that somewhere between 70-80% of purchases are impulse buys and effective “retail magic” combined with exceptional customer service is critical when it comes to turning those impulses into profit. The “fitter” the business is the higher the conversion rate will be.

The adage of worrying a little less about the customers that you wished you had rather worrying about the customers you have applies in this example.
They are out there and today’s fiscal stimulus package by all forecasts will deliver them with money in hand.

Brian Walker is Managing Director of Australasia’s leading retail consultancy, the Retail Doctor Group. For more on Retail Doctor Group’s Fit for Business program email businessfitness@retaildoctor.com.au or phone 02 9460 2882.