I am here in Nashville, TN visiting my friends at Soles4Souls and I had the great pleasure of meeting John’s daughter Laura and musical partner, Tofer over breakfast. They are incredibly talented, kind, intelligent and I believe they will have an amazing career in the music industry.  I was speaking with John a few months back regarding the charity events that I am involved with and how they always incorporate music and he sent me the link to his daughter’s MYSPACE page. I was blown away and was so excited for the opportunity to meet the two artists! They call themselves “The Family Tree” and basically they said they came up with name thinking of the way relationships work and grow. I saw today that John’s greatest accomplishment is not his respectable career, but raising such an amazing daughter. Please keep your eye on this dynamic duo….I have a feeling they will be making their way quite successfully! I know I am certainly looking forward to working with them!    John sent me the below article for this week and it timed just perfectly with my meeting with Laura!

 Retail Operations – Controlling Costs  

I was asked by Julia to consider contributing again to shoebizness.com so I thought I’d expand upon one of the segments from my previous article, “Independent Retail – Surviving and Thriving in 2009”.

In this article, I’ll be focusing on two of the largest expenses for a retailer: inventory and payroll.

In my previous article for shoebizness.com, I noted that analyzing inventory levels was critical during this tough retail environment. It’s even more critical now, post-Easter, as it’s time to shave inventories prior to fall receipts scheduled for July. Broken runs and non-performing spring styles should be marked down immediately and highlighted in a high traffic area of the store. It’s beneficial, particularly in this economy, to have a permanent section of the store devoted to clearance goods. I’m not an advocate of racks or sales tables, except during your two or three major sale events. I think they deter from the premium appearance that you’re trying to achieve in the store, reducing the positive in-store experience. Instead, I’d recommend using discreet signage which calls out the clearance area. Update your price tags with sale prices written in red.

Additionally, utilizing PMs, or “push money” incentives, can also be a very effective way to move outgoing seasonal merchandise. Pay your salespeople a dollar amount that you determine for each shoe you’re trying to move out. Usually 10% will motivate an employee to show and push that particular shoe, hopefully as a second pair option. The 10% is less of a markdown than you’d normally have to take as well. In some cases, it makes sense to use PMs in conjunction with shoes already marked down to ensure that you clean them out. Remember, cash is king in 2009 and you just can’t afford to carry over spring product. Inventory is your largest expense and asset – I can’t stress enough the importance of prioritizing this key aspect of your business operation. Turn that inventory into cash!

Not far behind in importance is payroll. People, along with product, will make or break your business. If you haven’t done so in a while, rank your people from top to bottom. Now is the time to recognize and acknowledge your top people, those who truly drive your business. Make sure that these employees are working as many hours as they’re willing to and working the hours that they prefer. Of course Saturdays are non-negotiable, but make sure you’re working with them to maximize their quality of life. While raises aren’t prudent or even expected during this economy, finding other ways to show your best employees how much you value them is. Hours for lower ranked employees should be cut back at this time to make room for the additional hours being given to salaried (management) employees and your top performers. Make sure you’re sitting down with your employees and conducting performance evaluations. Those that are underperforming need direction and clear expectations need to be set. There are very qualified candidates looking for employment right now, so take a hard look at your staff and don’t miss out on opportunities to upgrade.

Focusing on these two critical aspects of your business, inventory and payroll, will enable you to more profitably drive sales, manage costs, and ensure that your staff is the best in your market. One last point – as a business owner, district manager, store manager, or assistant manager, it’s more important than ever for you to be on the floor. Observe your people in action, converse with your consumers, lead by example. A store, district, region, or organization is only as good as its leaders; your people are watching you and looking for leadership, particularly during these uncertain times.

John Licata

VP Sales – Independent & eCommerce Channels

Stride Rite