Sunday, January 18, 2009

Retail Audits: Helping your Local Businesses Survive the Recession

The small mom-and-pop businesses in our commercial districts, along with almost every other retailer, are struggling these days. Consumers have less cash to spend, and if they do have cash, they are increasingly cautious about spending it. And we know that retailers are clearly feeling the crunch. December was a dismal month. With the holiday season now over, many retailers are taking a look at store receipts and in some cases deciding to close shop. How do the stores that remain make it through these difficult economic times?

Commercial district managers sometimes find themselves in a difficult position when they see a retailer in distress. They may notice things like service, cleanliness and poor merchandise issues that may be driving customers away. But sometimes telling the manager or owner about a problem just doesn't work. Instead of being open to constructive criticism, the owner becomes defensive about their store. But in this market, owners can't afford NOT to address the reasons why customers aren't walking in the door or returning for a second visit.

A few months ago I was in Florida working with a client on a leasing plan for their commercial district. The district was adjacent to a local hospital with over 5,000 employees. As part of our work, we conducted a roundtable with the employees to get their impressions of the district and the retail mix. Within the past year, a well known BBQ placed had opened up in the district. However, the response from hospital employees was surprisingly negative. With relatively short lunch hours, they didn't have time to stand in long lines to order and wait for food. Not only that, but they also didn't like the level service and cleanliness of the place. One participant told me that they went with a group of 8 or so people - and all of them agreed that they would likely not go back. The district manager told me that she had spoken to the owner about the concerns, and had gotten resistance. The last thing the district manager wants is for this restaurant to close. So, what to do?

While one-on-one feedback from a perceived 'outsider' may not work, there is another tact. Developing what I call a 'Retail Audit' program is one way to engage businesses in assessing their strengths and weaknesses in a way that is less confrontational. Retail audits are sort of like secret shopper programs that malls and large retailers do on a regular basis. In fact, many years ago I worked at Starbucks where quarterly assessments by secret shoppers played a critical role in ensuring quality control across their many stores. The inherent competition between stores to score high on those assessments helped to motivate managers and employees, who would sometimes receive rewards and bonuses as a result.

Engaging retailers who voluntarily agree to participate, and getting 'secret shoppers' to assess their impressions of the business is a valuable tool in helping businesses become more competitive. It works like this - businesses and 'shoppers' are recruited by the district management organization to participate in the program. Shoppers are then asked to visit each store and fill out an on-line questionnaire after their visit. This questionnaire helps identify the array of problems that may be keeping customers away. The assessment identifies immediate problems, and includes a series of no- and low-cost solutions to addressing those issues. In some cases, the problems may be more programmatic and require funding, training, etc. In these cases, linking businesses to a financing or training programs for small businesses becomes part of the recommendation. The district management organization can choose to work closely with a certain category of business (home goods stores or restaurants, for example) depending on what kind of marketing niche they occupy in the local marketplace.

In this economic climate, this is an exciting, relativley low-cost way to help your businesses remain competitive in the marketplace.

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