Nordstrom for example have reduced their back stock to 1/3 of pre-GFC levels. The retail giant GAP inc with 3,100 stores is also pushing efficiency into their 1000 plus Old Navy stores. They have recently refurbished 250 stores at $800,000 each but are reducing their store size by a third (25,000 sq ft to 17,000 sq ft). Better store layout and merchandise planning have seen store sales increase with more than a million sq ft in rental savings. Speaking of refurbishments, McDonalds are spending $3BILLION (yep, billion) on converting their stores worldwide to a new design which parallels the group’s changing image from a kids concept, to where adults go to enjoy an environment that is simple, easy and effortless.
The premier department store Bloomingdales revealed their San Francisco store was doing well in cosmetics, men’s fashion and women’s accessories and while women’s apparel was still slow, they were on target to see 2011 numbers climb back to 2007 levels. But with stock levels reduced by $12million, a leaner, better run business will see profits significantly up on 2007. Interestingly the majority of their floor staff work for 100% commission. In summary this means the 275 store staff receive a “draw” of $12 per hour, but this is then deducted off the sales commissions they earn for the week. If their sales commissions don’t cover their draw, they start the next week in debit and have to “repay before they earn”. Staff who get too far in debt are moved on, and while you don’t have to repay the draw, if you were to ever rejoin the company you do! One other point of interest was the first week of the job – 40 hours of classroom training, role-playing and understanding the culture.
Michael Kors is one fashion chain that is seeing huge growth with 300 plus stores across the States as well as internationally and are about to open another 40. They view a big part of their success to be their people, culture and high levels of customer service. All store staff go through a 4 interview hiring process – 1st with immediate supervisor, 2nd with the supervisor’s boss, 3rd with both of them together and finally, a trial on the floor! Once hired, everybody quickly learns what MICHAEL really stands for: M –meeting the customer, I – interaction with customer, C – create the desire (talk about Michael himself), H – hype up the sale (multi-sell, up-sell – dress them head to toe), A – always seal the deal, E – ensure loyalty (build the relationship), L – life after the sale (follow up with a phone call and ask were they enjoying their purchase). I got to visit 4 stores while I was there and the MICHAEL approach was underway each time, however not in a tired scripted way. It was clear that each staff member believed in and embraced the brand with passion and enthusiasm.
But in terms of culture and service Apple as we all know sets the benchmark. A visit to their head office revealed how their revenue has quadrupled since 2006. Now with 324 stores across 11 countries, they plan to open an additional 40 stores per year. But for me, their $ sales per square foot was a statistic that hit home. Macys average $154, Target $294, Best Buy (consumer electronics) $711 while Apple average $4333 per square foot - and with an average store size of 6000 sq ft, that’s a lot of sales. Microsoft have obviously taken note of this and have just opened their 8th store – which we visited – which looks remarkably like an Apple store in terms of store design and layout – even the staff wear similar coloured T-shirts and encourage you to play with the products. The only real difference was the lack of customers we equate within an Apple store. When asked what was their store rollout program they responded “within 3 years, Microsoft will have a store in every location that Apple has a store!” Sounds like catch up, but it should be interesting to see when it arrives in Australia.
