Today it’s fashionable to talk about business process optimization, automation, digital technology and the digitalization of sales. We listen to speakers and read the news of the retail, we are surprised at modern technologies, we are at war with marketplaces and ... WE DO NOT UNDERSTAND HOW TO CHANGE YOUR OWN SHOE SHOPPING STORE, how to make it successful and how, in the end, to attract customers to your point of sale. Where the key to success is hidden, says SR expert Natalya Chinenova.
First, let's deal with the terms. What is “optimization”? In fact, there is nothing terrible or incomprehensible in this process. Optimization is cutting off all that is superfluous and inefficient. Unnecessary and inefficient are our unjustified costs of doing business and maintaining a point of sale. What is the cost of maintaining a retail business? First of all - the purchase of goods, the most money-intensive article. The second item by weight is the lease of retail space, the third is the maintenance of the company's personnel. We’ll talk about how to optimize these three cost items in this article.
1. OPTIMIZE PURCHASE OF GOODS
Nowadays, goods are not in short supply. The level of consumption of clothes and shoes in Russia has decreased almost twofold compared with the previous five years. The average number of pairs of shoes that one consumer buys per year is 1,8 pairs. Moreover, modern consumers prefer comfortable, “sports” models to all types of shoes. According to NPD Group's Retail Tracking Service, sales of high-heeled shoes are reduced by 11-12% annually, while sales of sneakers are growing by 37%, and according to the Obuv Rossii company for 2018, sales of shoes without heels make up more than 70% of all shoe sales. Simply put, sneakers are our everything. Accordingly, the first thing you should pay attention to when buying shoes is not beauty and compliance with trends, but comfort and convenience in wearing, lightness and durability of the model, that is, the consumer properties of each particular pair.
In order to understand how many pairs of shoes need to be purchased for each season, we will use the rules for the turnover of goods on the trading floor:
For example, if there are 1 pairs of shoes on our trading floor on July 000, then in June we should have sold at least 1 pairs (about 500-16 pairs of shoes, on average, per day).
It remains to understand how these pairs that are on the trading floor are visible and visible to our customers. And now we are not talking about visual merchandising at all, but about the rules for calculating the capacity of the trading floor of each store. At the same time, in the shoe business, occupancy is measured both in linear and in square meters:
It turns out that for 1 square. m of retail space, we should have from 35 to 70 pairs of shoes. It is believed in the world that in order to increase sales efficiency (so that buyers can pay attention to the model and consider it), the distance between pairs of shoes cannot be less than 30 mm and more than 100 mm. It turns out that 7 pairs per linear meter is a more effective presentation than 14.
Thus, taking as standard, the number of 7 pairs of shoes per 1 running meter of commercial equipment and 35 pairs - per 1 square meter, we can calculate the planned number of pairs for a store of any size.
For example, for a store with an area of 50 square meters. m, the estimated number of pairs of shoes for the first filling of the store should be equal to 1 750 pairs, or 218-219 boxes of shoes (one standard box, as a rule, consists of 8 pairs of dimensional slide). If we want to achieve a variety of models, then most likely these 218 boxes will consist of 218 models. Well, in the case when we are confident in the sale of any article, the number of boxes per model will increase, and the total number of models on the trading floor will decrease.
Using these two basic rules, we can calculate the purchase in quantitative terms both for the season and for the whole year. In our example, for a store of 50 square meters. m, 1 pairs of shoes are needed, respectively, for a month of sales we must sell at least 750 pairs of shoes (876 pairs per day). There are only 29 trading months in a season, so in five months we should have time to sell 5 pairs of shoes (4 pairs are multiplied by 380 months). We will sell the remaining shoes during the sale period. If we add all the data, we get the following standards FOR OUR EXAMPLE:
But we will be realistic. There are not so many regional stores where you can sell 29 pairs of shoes per day. As a rule, sales range from 10 to 22 pairs per day. In order to effectively invest money in the procurement of goods, we need to implement FIVE MAIN TERMS:
- reduce the number of pairs presented by 1 square. m of retail space (odd amount: instead of 7 pairs, you can present 5, and on some shelves even 3);
- reduce the trading area (move to another trading platform in the same shopping center, supplement the assortment of shoes with any accessories, such as bags or move to another shopping center).
Now let's talk about the purchase price and trade margin on shoes. The mark-up generally accepted in the Russian footwear market at the beginning of the season is 120-150% and at the end of the season at least 80%. It is clear that some stores charge even shoes at 70%, but such a mark-up is possible only at a very low rental rate, otherwise the business becomes unprofitable, the profit at the end of the season will be less than 10%, that is, lower than the bank deposit rate summarized with the inflation rate. It turns out that at a margin of 70% it is more profitable for us to close the business and put money in the bank.
Given the rationalism of modern consumers, the cost of one pair, for example, men's leather shoes in retail, cannot exceed 6 rubles, and the average retail price of one pair of shoes should not exceed 000 rubles. Consequently, the average price of one pair of shoes for the spring-summer season for a store with a target audience with an affluence of “average” and “average minus” in the purchase should be approximately 4 - 000 rubles (divide the average retail price by the average mark-up coefficient at the beginning of the season).
For our example, a virtual store with an area of 50 square meters. m - investments in seasonal purchases will amount to approximately 7 million rubles, subject to the sale of at least 29 pairs of shoes, on average, per day.
The main thing is not to buy more, so as not to freeze money, and give buyers the opportunity to consider shoes.
2. WE OPTIMIZE THE COSTS FOR RENTAL AREA
Optimizing the cost of renting a retail space implies that we get a certain income from each rented square centimeter.
From what area we DO NOT RECEIVE income? We do not receive income from the following leased retail store space:
- from a non-sales area: auxiliary premises, cabinets, showcases, zone of a settlement center, ventilation chambers, etc .;
- from the area occupied by unclaimed goods: single balances, off-season goods, re-purchase, etc .;
- from the area in which the buyers DO NOT SEE the goods, that is, from the area that is overloaded with goods.
The shoe business has its own standards for the ratio of trade and non-trade area, while the ratio of the sum of all the auxiliary premises (storerooms, shop windows, zone of the settlement center) and the sales area should be as follows: 40% to 60% if half pairs are displayed on the trading floor . If on the trading floor shoes are presented simultaneously with boxes (for example, boxes on shelves behind shoes, on upper shelves or below shelves), then the ratio will change and will be 20% to 80%.
Thus, the first thing to check is the ratio of the trade and non-trade area of the store, depending on the presentation technique of the shoes.
The second thing we will consider is the number of pairs of shoes on the trading floor. Here we use the formulas from the "Procurement Optimization" section. If there are more shoes than should be in accordance with the calculations, it is better to remove them from the trading floor than to use the store as a warehouse.
Third - and what, in fact, do buyers see on the trading floor? How much does your equipment and the passages between it allow you to consider the entire range? How much does your assortment correspond to the season or even, more correctly, the seasonality, which changes in shoes every two weeks? How competitive are the prices in your store and do they meet the needs of the target audience of this particular shopping center?
After we are convinced that we are using the retail space efficiently enough, it is important to consider the share of the cost of renting a store in relation to turnover. In world practice, the cost of renting a store for turnover should not exceed 15%. It is clear that finding an ideal trading platform with an ideal rental rate is quite difficult, therefore, in Russian practice, the rental rate can reach 20% of the turnover.
If this is not the case in your case, then you must either increase the turnover, or find a site cheaper, or think about the conformity of the assortment of goods you purchase to the target audience.
3. WE OPTIMIZE PAYMENT OF PERSONNEL LABOR
Optimization of staff remuneration is not at all a reduction in salary or bonus, it is a calculation of the sales load per seller in quantitative terms per day. Let's decipher the sentence. When we hire a seller, we tell him: “Your task is to sell. For overfulfillment of the sales plan you will receive a bonus. " And what is a sell? How many pairs a day do you need to sell to earn a salary? And how much do you need to sell to earn a bonus? It’s us who are used to operating money in business, but when we become customers ourselves, we don’t go to the store to spend money, we go after a specific ONE PAIR OF SHOES.
A shoe sales plan for each seller should be set for every day and in kind (in pairs). In our example, for a store of 50 square meters. m - we need to sell 29 pairs of shoes per day. Serving one customer takes, on average, about 30 minutes. It turns out that with a 10-hour working day, at best, one seller can serve a maximum of 20 customers. This is a very high load. In practice, the seller cannot serve more than 15 buyers. So, we need three sellers per shift. Two in the trading floor and one at the checkout. And even better - if the store also has an administrator to replace the seller, help during peak hours and resolve issues with returns or exchanges when they arise.
But we clearly understand that 15 pairs per day is a salary. But all that’s on top is already a bonus. The seller works 15 days a month. So the sales plan for one seller for one month is 225 pairs of shoes. For this, the seller receives a salary. For each pair over and above the plan, the seller will receive a bonus. Accordingly, the store works both efficiently and we pay wages also efficiently.
In international practice, the norm of the payroll fund (salary fund for the staff of a retail store, together with all taxes, bonuses and salaries) should not exceed 11% of the turnover. For the simplified tax system (simplified tax system), such an indicator cannot exceed 7%.
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