by Dana Dabagova
Published
Start by separating sales problems from cost problems. First look at where you lose the client between the door and the till, then at what it costs to keep the store open against what it sells. Only then decide whether to act on team, assortment, opening hours or rent.
1. Read the store P&L, not just sales
A store can lose money because it sells too little, because it sells at a low margin or because it costs too much. These are three different problems with three different fixes. Line up sales, margin, staff cost and rent for the last twelve months and compare them with similar stores in the network.
2. Break sales down
Sales are the product of four numbers: footfall, conversion, units per transaction and average price. Knowing which of the four is below average already tells you where to look.
- Low footfall: location, windows, local marketing, opening hours.
- Low conversion: welcome, staffing at peak hours, size availability.
- Low units per transaction: styling and add-on suggestions, product knowledge.
- Low average price: product mix, discounts given in store.
3. Spend a day in the store
Numbers tell you where to look; the store tells you why. In one day you see whether peak hours are covered, how clients are welcomed, how many sales are lost to a missing size and what the store manager does with their time.
4. Pick a few actions, each with a number
Three well-run actions beat twenty. Each action has an owner, a deadline and the indicator it has to move. If the number has not moved after six to eight weeks, change the action.
5. Decide what cannot be fixed from the store
Some stores lose money for reasons the team cannot correct: an above-market rent, a location that has lost traffic, the wrong format for that city. In those cases the decision is to renegotiate, relocate or close, and it is better taken early.
Related questions
How long does it take to bring a store back to profit?
It depends on the cause. If it is a sales problem, first effects show in six to eight weeks and the full result in two seasons. If it is a structural cost problem, the timing is that of the renegotiation or reorganisation.
Should we replace the store manager?
It is rarely the right first move. First check whether they have clear targets, the numbers to read them and the time to be on the floor. Many struggling store managers improve quickly once they are given those three things.
Related service: Retail performance and store turnaround