Sanitize Your Business With A Sanity Check

What do COVID-19 and Retailers have in common?

Business as usual feels good…but it won’t cut it in 2020 (and a lot more than you might think).

The first news in my day comes from the ABC News feed. Unfortunately, there is hardly much good news. New deaths arising from COVID-19 and another famous retailer closing the doors seem to be trending. Business as usual is dead!

There are no easy answers to most problems. But please let’s take a Sanity Check about these two issues. For everyone’s sake.

In 20,000 conversations with business owners understanding and resolving problems has become my craft.

Problem identification means determining the root cause. It includes determining how big the pain i.e. number of people or users or systems impacted. There are many techniques to identify a problem, such the 5 whys, customer/user interview and even running experiments to validate the problem — often people can make assumptions or can have a biased assessment of the problem. Getting to problem identification is important and its why many entrepreneurs say “Fall in love with the problem, not the solution”.

Sanity Check yourself, I say.

The problem with any problem is:

1. Recognising what it is
2. What it costs now
3. How its costs will escalate with inaction (business as usual feels good)
4. How to approach it
5. Exactly where we are in relation to the goal, (often called a ‘gap analysis’)

A plan with conviction and courage is required to solve anything.

Let’s look at COVID-19 and then what it has in common with Retailers. Not click bait.

Step 1 — Identify the problem

Firstly, like climate change, HIV, SARS and Spanish/Swine/any Flu. It compromises or takes human lives.

Step 2 — Consider the costs

What does it cost now? Travel is down, conferences are closing, sports events are being cancelled (except The Cronulla Sharks Game). Flight Centre closed its doors. Jobs are being lost. Valuable companies are being destroyed. The economic impact is already significant.

Step 3 — Cost of inaction

When airlines are empty, it impacts a lot of other businesses. Catering companies, taxi drivers, tourism, restaurants, farmers supplying fresh produce and ultimately everyone suffers as there are no islands any more with 7.6 Billion people. We all feel the pressure. Less fuel is sold, events are cancelled and then pressure on public health reaches breaking point. Sounds expensive, but business as usual is even more expensive.

Step 4 — Best approach

Business as usual might dictate that politicians should decide our strategy on this issue. After all it’s a national issue and politicians need/crave looking strong in a crisis. Um, did I mention going to watch the Cronulla Sharks?

When we wanted to make it to the next level at the world cup, we didn’t choose an Australian, we said let’s spend up and get the best qualified person for the job. Guus Hiddink was a famous Dutch Football Coach who helped Australia qualify and perform well in the 2006 Football World Cup. We swallowed our pride for the greater good. We spent up big and got the prize we were looking for.

In fact, we could even look north to Singapore and follow their path to how they managed to contain COVID-19. Despite being one of the busiest airports in the world and enjoying tourism, they just get problem solving and it’s not business as usual.

Step 5 — Assess where you are and what the goals are

Recognising where we are in relation to this problem is critical. We have already begun to suffer. The human and economic costs are high. My playbook would be:

1. Hire the experts and hand the reins to them
2. Explain the story to everyone, the costs (now)
3. Estimate the impact of containment, and upside of bringing forward a conclusion to this problem
4. Deliver benefits to those who need it, not just some additional tax deductions — invest hard and plentifully and
5. Remember, above all, people are craving leadership, not those who mask actual bad news and downplay risk. It is not business as usual… ever again.

So what do COVID-19 and Retailers have in common?

The commonality is simple, Retailers have a major problem, so business as usual is not an option.

Retailers need to get better and smarter.

Taking positive steps to beat the odds in retail. Here is DK’s Sanity Check Playbook.

Step 1 — Identify the problem

What is the major problem facing retail? Customers want a better experience.

Are you doing the following?

1. Leveraging technology in store (finding, styling, tagging, cross channel promotion)
2. Finessing ‘the last 5 yards’, in store with training and cleverly incentivising staff to engage and care for customers?
3. Making the buying decision simpler with multiple ways of paying

Step 2 — Understand the current costs better

Understand the extent of the problem but fight back. With falling margins, increasing rents, and less foot traffic this is not the end. But what can retailers do to fight back?

1. Get better at inventory management
2. Improve supply chain management and
3. Optimise distribution efficiency

Step 3 — Costs of inaction

Retailers may well consider that they need to conserve cash. But getting better doesn’t need to cost the earth.

Consider Hivery. Take for example something as simple as stacking the shelves of a vending machine. As Hivery states, “data has a better idea”. Using Machine Learning and Artificial Intelligence to make better decisions on how to stack a vending machine to maximise sales and return on investment by

1. Selling more product
2. Reducing the costs of running out of stock, or refilling stock levels

All doable with Hivery.

Thinking bigger — stacking the shelves of a retailer across multiple locations, with different customer demographics and buyer personas reacting and learning more about your customers is possible.

How is the game changing for retailers? Learning more about your customer’s preferences and being able to respond in real time to buyers to create a better buying experience is possible and needs to be embraced by retailers. A great Australian company selling to the world, helping retailers fight back. Jason Hosking and Franki Chamaki are the Founders.

Step 4 — Humanise your brand and care about your customers

Sally A Illingworth can help you truly connect and listen to your customers. LinkedIn is a real thing in business. It is only getting bigger and more powerful. Sally is the Empress of LinkedIn and her unique insights come from a gift she has in listening, understanding trends and speaking to anyone at any level.

Humanise your workforce and care about them. The truth is there is no business as usual, but John Hardy knows people haven’t really changed. John has been the CEO of BBQs Galore, Amart and Godfreys. He has had more conversations with sales teams and customers than anyone I know. He has written a playbook for training and incentivising workforces by treating them as family. Bringing salespeople up to speed to relate and care about your customers and rewarding them fairly. This goes against the grain of cutting costs but your business is sustained by caring first about your staff.

Step 5 — Assess where you are and what the goal is

This is a two-step process:

Part 1

1. What are your margins
2. How many skus do you have and carry
3. What is your distribution cost and return ratios
4. Sales per square metre
5. Sales per employee
6. Cost of customer acquisition
7. Cash conversion cycle

Part 2

Track your ratios, but start with these 4 things and watch the results:

1. Audit your team, look at how you can help them or replace them if they want to stay in a business as usual mode
2. Audit your technology
3. Seek expert help with both 1) and 2)
4. Act now as the costs are only escalating

In summary, don’t underestimate the value of a sanity check for you, your leadership, your resources and your business. Share your comments below on this important conversation. If you’re a retailer wanting to chat I’d love to hear from you, reach out.

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