Tesco cuts back it's 24 hour operation - what can retailers of all shapes and sizes learn from this?

A story caught my eye in the news this morning. It is regarding the fact that Tesco is paring back it's 24 hour operation in a large chunk of their stores. The reason quoted in the article is the fact that online shopping is eroding their in-store customer base.

I can see that an upturn in online shopping (with a similar downturn in customers physically visiting their stores) can have an effect on how long you need to keep the doors open. I know that big retailers have been backwards and forwards will having their stores replenished overnight or not. But this is more like a complete change in strategy for Tesco rather than a tweaking of a few opening hours.

The 1990's through to the last couple of years have been all about expansion got the big retailers, particularly the supermarkets. They bought up land, drove into new markets and employed more and more (often part-time) staff. The recent scandals and the competition from the discounters has put Tesco on the back foot. It has also given them an opportunity to assess where they are and where they want to be. 

Expansion for the sake of it means nothing.

If it's not an area that makes money then why bother with it?

And that brings me to your business. I'll ask the exact same question-

If it's not an area that makes money then why bother with it?

It's time to assess all aspects of the retail business that you work in and decide whether they are all pulling their weight. Your business needs to be as efficient as it can be. Unless an area generates footfall that you need. The National Lottery is an example of this. The income it generates is poor but it drives people through the door that may buy other things.

The best way to do this is to break down your business into different areas and attribute costs to each of these areas. This can be staffing costs, materials, energy use or whatever resources this part of the business consumes. Then measure this against the income it brings in. You will soon generate a list of the performance of every aspect of your business. From there you can see the top performers and those that aren't quite doing so well. Assess the likely impact of removing some parts of your business and moving the resources into others.

• Does this work?
• Will it being more income?
• More profit?

It is by analysing everything that you do that can make the difference between profit and loss. Don't wait for a major event to hit you like Tesco. Act now.

See why the entrance to your retail store should shout about your claim to fame

I'm in a local garden centre today and as I walk through the first aisle from the entrance to the café I am a little dumbstruck. I walk no more than 40 yards and I am confronted by-

• Christmas decorations
• Alcoholic drinks
• Books
• DVD's
• CD's
• Jigsaws
• Toys
• Food items
• Non-alcoholic drinks

And then the café itself

I'm struck by a retailer that doesn't really know what it wants to be and what it stands for. I've used this phrase in my blogs before and it means so much-

Decide what you want to become famous for.

Now I'm not talking about the celebrity type of fame that seems to float the boat of so many people today. I'm talking about the famous part of your retail business that customers will talk about and return for. It's been referred to as your USP or your diffetentiator and it's what makes you a success. Woolworths was the prime example to me of a retailer that didn't know what it wanted to be. It tried to be all things to all people and became unimportant to many. I've also blogged about Tesco trying to do everything but ending up doing everything worse than their rivals-

http://mytimeinretail.blogspot.com/2014/06/tesco-sales-drop-is-about-more-than.html

I don't necessarily think that a retailer shouldn't sell more than one type of product, but the initial message should scream from the rooftops about what you stand for. This retailer I'm in today states that "we do all sorts of stuff." It's not a sparkling message.

Looking around the garden centre, there are places of interest, areas where they do stand out from the competition. The café is very busy and the food looks great quality. The Christmas decorations are vibrant and have a great mark-up. The indoor plants are well-priced and different varieties to other garden centres I've been in. One of these areas should be the absolute focus of the attention as the part of the business that leads customers to walk through the door and return.

For your own business you need to look at what you are doing and make a decision. The decision needs to be around what you think you should be famous for. Once you (and your team) know what this is then position your store so it talks to your customers in those terms-

"Mr and Mrs customer, this is what we do."

See how to turn the plastic bag charge to your benefit

We are now a month on from the start if the charge for plastic bags in shops in England.

http://www.bbc.co.uk/news/uk-34346309

As people start to settle into the routine of bringing their own bag or paying, it's worth taking a look at the charge and seeing how it works and how it can work for you. There are quite a few exclusions to the plastic bag levy and some may apply to your business-

https://www.gov.uk/guidance/carrier-bag-charges-retailers-responsibilities#bags-you-dont-have-to-charge-for

A main area that you don't have to charge is if you employ less than 250 full-time employees.

Many of my readers are small independent retailers but the exclusion doesn't mean that you can't charge for bags - it means that you don't have to. I think that a large part of the charge is to educate customers to the dangers of disposable carrier bags so a small retailer can be as much a part of this education as a large one. Customers won't necessarily know which shops have to charge and which shops are exempt. So this is your opportunity to help a charity of your choice by charging for bags and donating the proceeds to them. If it's communicated in the right way then your customers will feel positive about the charge rather than negative.

Your alternative is to advertise that you are one of the retailers that don't (have to) charge for bags. It feels like a strange strategy but it could give you a small competitive advantage as bag charge fatigue sets in.

And it's by looking at your structure when changes like this happen that helps you assess your business plans. Having plans set out for your business and regularly assessing them keeps you on track. I suggest that you set out business plans annually, reassess quarterly and monitor progress monthly. Changes to legislation, the trading landscape or your competition will prompt a further review and assessment. As a business, you will need to know where you are and where you are going. Getting to grips with it all can transform what you do.

In my next blog I'll take a more detailed look at business planning.

See how converting loyal customers into into brand advocates increases your income

I've worked with retailers over the years and a recurrent theme is the question of how to reward customers. I've looked in this blog at different ways of rewarding your team but having ways of rewarding your customers can help to transform a retailer. This is a large subject so I've split it into two blog entries. The first one is today.

A constant theme of my blogs is turning customers into loyal customers into brand advocates, so it's probably best to start here and explain what I mean by these three categories-

Customers

This is simply people who buy something in your shop. They may be passing by and see something in the window, they may be a visitor to your town and come in to have a look around. They may shop with you once and never again. This doesn't mean that these customers are unimportant. You will need one-off customers and irregular visitors to help your sales. They can be attracted to your door by promotions, a great window display or word of mouth. However they arrive is unimportant. The fact that they got to you gives you a chance to impress them and get them coming back time and again. This turns them into the next level, the loyal customer.

Loyal customers

A loyal customer is one that chooses you over another. You may have one or more stores in your town that sell the same thing but your loyal customer will buy from you over your competitors. You can create loyalty with price, promotion or excellent customer service as well as other means. Supermarkets in particular fight for loyalty and this has sparked the loyalty card and the price matching over the years. A loyal customer will return to you over and over again unless something happens in their relationship with you to break the loyalty. It's a well-worn phrase that it costs so much more to win a new customer than to keep an existing one and that's the relationship that loyalty projects attempt to protect. Many businesses stop here. Having a band of loyal customers spending good money with you in a regular basis, plus the odd infrequent customer can be a lucrative proposition. But I propose looking to the next step.

Brand advocates

And I strongly believe that brand advocates are the next step for a retailer to increase success, and in a more interesting way. The ways in which you can achieve this will be the subject is the second part of this topic and my next blog entry. Today I'll describe what a brand advocate is and the effect they can have on your business. A brand advocate is someone who goes out of their way to tell other people about you. It may be one of several ways of doing this-

• Bringing their friends into your store
• Talking about you on their blog
• Positive social media comments about you
• Telling people face-to-face about how great you are

The brand advocate is a marketing tool that you can rely on to bring you more business and all it costs is a great relationship with them. Having several brand advocates starts the cycle off again for the next set of customers. They arrive at your doorstep because of a brand advocate, and you will hopefully turn them into loyal customers and the next brand advocates. How you start this relationship and maintain it can be interesting and fun, and we will take a look at that in the next blog.

Are Tesco set for more pain?

Tesco have issued a second profit warning, the share price has taken a hit and the new chide executive has cancelled his holiday to start a month early.

Are we seeing the fall if the retail giant?

I have made my feelings clear in this blog about Tesco's major failings in respect if their customers. They try to be all things to all men and end up doing none if it well. In the case of the profit warnings, I think that we are seeing stock market tactics and a chief executive that wants to lay a lot if the blame at his predecessors - "look at the mess I inherited" - before a turnaround that looks oh so much better when/if it happens.

We are still seeing it with the banks, where they report trading figures that don't add up to the performance. There are always hundred of millions of pounds put aside for potential future bad debts and misselling claims. For me, this is double accounting, as the bad debts and claims are accounted for in the present but don't happen until the future. At a certan point, the banks won't have these future potential losses to put in their balance sheet and presumably some of the money they have put aside will have to reappear for losses and claims that didn't materialise.

Things aren't always as accounts make then seem

Tesco's next step is to look at their operation and decide where they want to be experts, and where they want to step back from. Offering opticians, pharmacy, tech experts, cafés, mobile phones, etc on top of their wide-ranging food offering is diluting the quality of service and advice they can offer their customers.

Online and 'Click & Collect' can provide answers

Some services Tesco will want to be able to offer in every store, but some have a better foothold online, where the expertise can be pooled and not spread so thinly. Tesco had a functioning website and a reasonably good Click & Collect offering, so these can take the strain of the expertise, whilst try get back to basics in the areas they can lead on in store. Great customer service will never go out if fashion.

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Tesco sales drop is about more than price

I'm just reading about Tesco's figures and the fact that their sales dropped by 3.1% over the last quarter - the biggest drop since records began in 1984.

My wife and I were in Tesco yesterday and the problems became more obvious to me as we sat in the café overlooking the store.

The problem is that they get nothing right

Now this isn't an anti-Tesco rant. It's true. Look at the facts-

• They don't do quality as well as Waitrose
• They don't advertise as well as M&S
• They don't do cheap as well as Aldi
• They don't do mobiles as well as Carphone Warehouse
• They don't do cafés as well as Costa
• They don't do toys as well as Smyths
• They don't do tech as well as, well anyone really

This adds up to a poor showing overall. The growth of Tesco has come from the "all under one roof" philosophy but this has come at a price to consumers. The reality of the philosophy is "all in one place, but only 60% as good as if you bought it elsewhere."  The idea of training staff up to be as good as their competitors in each field wpuld take a huge investment. The model of the department store, with market leaders delivering each sector, stands up better than Tesco's current plan.

It is my belief that consumers in the UK tolerate standards that would be unacceptable elsewhere in the World.  For example, I conduct mystery shopping programmes for some major restaurant chains and the question regarding food quality is "was the food rancid or spoiled in flavour?"  Now is this a standard we find acceptable?  In most European countries poor restaurants close because people won't pay good money for something below par.

It's the same with Tesco - customers are starting to find them out. Why pay higher prices for less-informed service on technology? Why buy their Finest range when, for a comparable price, you can buy M&S?

There is a bottom ground for discounters and there are already a few in the market. Why are Morrisons rushing for the lowest price ground? Why are analysts urging Tesco to join them?

A company that ploughed some of their vast profits back into a living wage for their staff, more staff available for customers and a higher standard of service would win every time.

Not everything can be bought on the High Street - MP3 version of The Hunting Party by Linkin Park on pre-order