The Australian Retail Golf Day 2011 involved about 100 golfers participating at the Yarra Yarra Golf Club and was sponsored by Retail Directions, PCEftpos, Time Target, Datalogic Mobile, GiveX and Toshiba Tech.

Children’s charity Variety Club Victoria co-funded the bus for Burwood East Special School using the proceedings from the event, which was held earlier this year.

Andrew Gorecki, MD of Retail Directions, said the initiative “was an excellent opportunity for retailers and retail services providers to network, play some great golf, and support a worthy cause”.

“We are proud to be associated with the Variety Club in helping children in need,” he said.

The school educates students between the ages of five to 18 years old with moderate to profound intellectual disability, sensory and physical impairments.

Students need regular access to community based programs – and what is now called the “sunshine coach” bus will help to get them there.

Following its success, the charity initiative will be held again next year in March.

Good-cause sponsors (retailers or organisations that services the retail industry) are invited to join by event organisers, Retail Directions.

 - article obtained from http://www.insideretail.com.au/IR/IRNews/Retail-suppliers-fund-special-school-bus-1921.aspx 

All the contact phone numbers remain the same.

I have no doubt that practically everyone will be adversely affected to a degree, but my view is that from a long term perspective, the current crisis is a good thing to have. Let me elaborate.

The key driver that slows down the economy is the decline in demand. In difficult times, two kinds of expenditure tend to shrink: on projects with long term payback and on irrational purchases. The latter is the main reason why the current crisis will benefit us in the long term. True, some good projects will be deferred, delaying their benefits, but there will be a major gain from the elimination of waste caused by irrational business decisions.

When a business is put under pressure, executives can no longer pour money into white elephants and get away with it. The boards and senior management are forced to become much more diligent in endorsing new and existing projects. The higher the pressure, the more frugal the decisions tend to become.

This is why, if your organisation supplies real value, you have an opportunity to increase your market share as a consequence of the current upheaval. On the contrary, if your products or services sell mainly because they stroke peoples egos, your sales will drop. The economic forces will shift the demand from you to those suppliers who provide solutions to real problems.

But, you may wonder, do people really make highly irrational decisions in good times? They do, but the reason we rarely hear about it is because the abundance of cash allows them to get away with it - in spite of extravagant spending, the business can still make profit. I call such organisations lucky, but as we all know luck sometimes runs out.

Let me give you some examples from my main area of interest retail systems. Every chain retailer needs a computer system to run their business. It is possible to implement a good, retailspecific package within six months and to get the payback in less than a year. One would expect that every retailer in Australia would want such a system, but they dont. Retailers still spend exorbitant amounts of money on big-name, generic systems, paying twenty times (!) more than they need to. The worse part is that they still cannot get acceptable results. It is like buying a printing press when what you really needed was just a book. Shareholders in such companies are simply short-changed.

Consider some specific examples, reported by the media. A publicly listed retail chain which operates 150 stores is Australia employs 25 people in their IT department. In contrast, another retailer who operates over 400 stores (in four countries) employs only four IT specialists. What makes the 400 store retailer different? They have a single, fully integrated, retail-specific system. They are saving .5 million (in perpetuity) on IT staff alone.

Another example: a well known chain of department stores spent million on a head office retail management system. They could have gained similar outcomes for million, had they not decided to buy something not-made-in- Australia and very expensive. It is a classic example of the old principle that if something is not well understood, the price becomes the main gauge of quality. The annualised cost of this extravaganza is about million a year; million of profit per year gone forever.

A similar financial accident happened two years ago in another retail vertical a chain of 150 hardware stores spent over 0 million on their systems. Had they chosen a different system, the same outcome could have been achieved for about Andrzej Gorecki 2 million. Another permanently handicapped business, with concrete poured into the bottom line. The fact that such businesses had spare money at the time is no excuse. Shareholders surely would have preferred it if the cash had stayed in the business. It would have been very handy today.

The benefit of difficult economic times is that such irrational decisions are less likely to be made. The need to be prudent reduces the incidence of business decisions made without sufficient understanding.

Difficult economic times benefit both: the buyers and those providers whose products and services add real value. Those who sell hot air will suffer and, I dont hesitate to say: rightly so. We live in a small world of finite resources. It is becoming increasingly important that we treat these resources with respect to give and deliver real value for money.

If you have a good, value-adding business, take heart. You will experience some pain sailing through the stormy waters, but your market share will increase once the sun starts to shine again.

The potential risks should not deter you; there will never be a better time to make improvements in your store operations.  In the current economic climate the conservative voices are silent and good ideas have a much better chance.  The trick is to manage the risks, so when something goes wrong, you do not cause a catastrophe (remember: leverage works both ways; it amplifies penalties too). 

The best way to manage risk is to pilot your improvements in one store and then deploy it in a few more stores.  Once all the unforseen consequences of your great idea are in the open, roll it out to all stores.  Just make sure that when you test marketing ideas, you pilot them in isolated markets, as some marketing initiatives cannot be reversed. 

Some ideas to consider: eliminate couriers between the Head Office and the stores, introduce surcharges on the most expensive charge cards, eliminate double counting of cash, bank your cash takings on the day, and so on… The key objective is to eliminate what I call: ‘business rituals’ – processes that are executed every day but no one can rationally justify why we keep them.  So, question everything and when you find one of those, stop it in one store.  It may look scary at first, but if nothing happens, stop it everywhere.

CRM is often seen as a panacea for slow sales - especially in difficult economic times.  However, the experience shows that CRM only works for some retail formulas and does little for the others.

Let's assume for a moment that CRM would work well in your business; the key question immediately arises: how to do it right?

There are vendors on the market who will gladly sell you a CRM system.  What they are not telling you is that - in order to work - such a system must exchange a massive volume of data with your transactional system.  Customer information is of practically no value unless it is fully cross-referenced with sale transactions.  Each sale made to a specific customer must be linked to the customer's record in the CRM database.  So if you put in place a separate customer database, you will either need to regularly export gigabytes of sale transactions to your CRM database, or you will need to import customer information to your main transactional system -  otherwise, analysis of the sales baskets will not be possible.  Add to this the cost of the separate CRM system, and you end up with a real lemon.

Recognising the inadequacy of such fragmented solutions, Retail Directions decided to incorporate customer and loyalty functionality into our main stream retail management system.  Today, customers such as The Body Shop and GNC use our loyalty system with excellent results and at minimal cost.  By a simple scan of a customer's card at any time during a sale transaction, the system links the sale with the customer, applies any promotional deals that are valid for the customer and manages loyalty entitlements.  The data is immediately available for analysis and various promotional offers can be constructed.

For example, a customer who regularly buys shampoos but who has never bought conditioner may be mailed an offer: present this letter within the next 30 days, buy a conditioner and get 20% discount.  The retailer can then set up a promotion that is activated by scanning a bar code on the letter.  All automatic, without any staff training, data file transfers or cumbersome manual procedures.

Whilst not every retailer uses the Retail Directions system, the principle remains the same: if you are looking for a CRM solution, make sure it is an integral part of your mainstream system.

© Retail Directions 2009

There are two elements to consider here: your pricing policy and its implementation. Systems can be of some help in shaping the retailer's pricing, promotional and markdown policy (by providing data to support decision making), but they are definitely essential in implementing the policy.

Let's deal with the policy first. The key here is to avoid situations where the retailer becomes completely dependent on promotions in order to get sales. In the policy area we usually recommend the following to retailers:

• Make prices area-specific and if necessary, store-specific. Each store operates in a different environment and good retailers take advantage of this.
• Create promotional offers that make simple price comparisons difficult - for example: get 20% off every conditioner when you buy a shampoo, and spend more than in the transaction, and you are a member of the VIP Club at Gold or Platinum level.
• Use psychological pricing i.e. price points. They don't make a huge difference, but can be helpful.
• Know your GP accurately, so you can sharpen the prices when necessary.
• Avoid promotions that rely on store staff making the calculation of customer entitlements. They will invariably make mistakes, causing loss of margin and good will.
• Avoid markdowns through better initial allocations, sell-through analysis and end-of-season stock redistribution.
• Integrate your promotions with Customer Relationship Management to target your offers and follow up with targeted communications - for example: offer one-off discount on oil paints to customers who bought brushes and canvas from you but never bought any paints.

As far as policy implementation is concerned, the systems in the retail enterprise must then be able to handle your pricing policies. For example, the Retail Directions' system allows retailers to manage prices by region and by store, it supports complex promotional offers, it allows the retailer to use price points, provides accurate costing information, automatically calculates promotions at POS, provides tools for markdown minimisation and fully integrates promotions with Customer Relationship Management functionality.

For example, a chain of department stores in Australia (40 stores) reported that 3% of turnover was added to their bottom line (as profit!) simply by automating their promotions at POS (using our software).

© Retail Directions 2009

This is an important announcement, as the question as to which version of Windows to use arises frequently - every time equipment is upgraded or replaced. From time to time the operating system platform is also reviewed from a strategic / architectural perspective.

We currently recommend Windows XP (NT5.1) for our store-level applications and sometimes we are asked about our intentions regarding Vista (NT6) or Windows NT7.

We periodically re-evaluate our operating system platform, but at this stage there is no intention to recommend Vista. One of the reasons is the smaller footprint of XP. 'The Economist' recently made comments that Vista started life in early 2007 with 50m lines of code, whereas XP used around 35m when it was launched in 2001. Even with all the service packs released since the launch, XP remains a relative lightweight compared with Vista.

Our operating system strategy is reinforced by the fact that Microsoft will continue to provide upgrades and security patches for XP until 2014. By then, not only will Vista have been out of favour, so too will Windows 7.