If you're in retail, you've heard these gems:
"Your customer service people are your lifeblood."
"Location, location, location."
"Brand awareness is everything."
We can't deny that each has an element of truth, but on their own they're incomplete answers to the complex puzzle of retail performance. To identify new opportunities and remain competitive, you need to have a holistic understanding of many factors that can move the needle on business results. Start by reading about seven of them right now.
What Does Retail Performance Really Depend On?
We said that some of the above phrases had an element of truth to them. And because a site's location has such massive impact, it actually deserves the 'three-peat'. The geographic placement of a store will determine the site's visibility, access, amount of traffic and competition.
As Robert E. Bainbridge wrote for Convenience Store News, "(Based on a 21-variable model) Stores that were in over-supplied markets with poor customer demographics and hypermarket competition were priced at $700,000, while stores in good locations were priced at $2 million. For a convenience store, it can truly be said: location can be worth a million dollars."
If your location is subpar, what can you do short of closing it? Consider your forecourt inertia and how to capitalize on what you have. What does your forecourt look like? How safe are your customers in the parking lot? Do they feel comfortable entering the store? It may be worth refurbishing less-than-ideal locations by focusing on some of the other determining factors in retail performance, such as environment.
And next time, urge your organization to invest in data analytics to determine better site locations before you buy or build. It's worth it in the long run.
The environment that your facilities create at a site need to provide customers with choice, convenience and comfort. Merchandise should offer a compelling range of choices, and the shopping environment should feel welcoming and clean.
Not only should merchandise be varied and targeted to the demographic that most frequents your location, but the actual, visual presentation of your merchandise also needs to appeal to your shoppers. Focus on a strategy that values eye movement, in-store walking patterns, stocked shelves — and even those little aesthetic elements, like color.
Strictly speaking, price itself is a determining factor, but we're focusing specifically on fuel prices. If your retail value chain includes fuel, then its price is paramount to your success. If you sell gas, it's critical that you stay up to date on price changes and your competition, which brings us to our next determining factor.
In addition to considering competition's impact on location, you need to stay in touch with how competitors' expansions or rationalization activities can impact your sales. Their operational efforts, brand, pricing strategies, merchandise promotions and speed in reacting to market changes can also affect your performance.
Your brand equity, especially related to local competition, can significantly impact your overall retail performance. Understanding the value of your store brand can help you better price SKUs during other brands' in-store promotion periods and maximize the impact of your brand promotions, as well.
Your brand is much more than your logo. The values your brand stands for should be carried through each aspect of your operations, including both merchandising decisions and the experience customers get from your staff. That gets people talking, and word of mouth builds brand awareness and brand loyalty.
The value of site-specific management and customer service cannot be overstated. That starts with smart recruiting and hiring practices. Employees are the literal face of your brand. Their attitude and service are what customers remember. As Christoph Preuss details in "Retail Marketing and Sales Performance," four external models have found that the sales clerk is the most important factor for customer and shop visitor loyalty. Satisfied customers are a result of well-trained, satisfied sales staff — a defining aspect of healthy operations.
Addressing Performance Factors Using Data
Though widely varied aspects of your business can have widely varied impacts on retail performance — and that may seem overwhelming — there is good news. You don't have to figure all of this out alone, or even with minimal input from your team. There's just no need to rely on your gut feelings or instinct anymore. Data analytics can help.
For example, how can you understand the impact of and ultimately adjust to your competitors' pricing strategies, expansion activities and more?
How can you determine brand value and the impact of advertising and promotions on your overall retail performance?
By creating a strong hypothesis-and-test structure, data analytics can help you understand which factors are impacting your business, then allowing you to make the move toward optimization. With clean, accurate, up-to-date information in hand, you'll already be ahead of the game.
Take a deeper dive into the 7 Elements of retail performance by reading our 7 Elements of Fuel and Convenience Retail Success white paper.