Why Satellite Stores are Especially Advantageous in Today’s Economy

From the Principal’s Office

Strategic Partner Bob Berger came up with a neat little approach to combining footprint reduction with IT to keep the customer satisfied while reducing operating overhead and fighting the competition.  Give it a read.

Bob Amster – Principal, RTG

Why Satellite Stores are Especially Advantageous in Today’s Economy

By Bob Berger – Berger Management Services

Retail in the traditional sense is changing.  Some of the big-box stores have figured out they may be too big and along with opening smaller stores are leasing space to concessionaires and other non-competing entities.   ‘Showrooming’ is taking a toll.  Who of us hasn’t product shopped in a conventional store and purchased at the best available price as quoted via our phone or iPad?

So what’s a retailer to do?  Here’s an idea.  Why not take a look at smaller storefronts in economical, highly trafficked locations.  Maybe you can split a space in a regional mall, perhaps a spot in a strip mall or on Main Street in the cities or suburbs.  The key is to find an economical formula of rent, payroll and sales.  How can this be done cost-effectively?  The answer is the Small Store Merchant (SSM) and IT.

Let’s take a look at both a hard lines and soft lines small store-operating environment.  The first thing that has to happen in both situations is for the SSM to have access to the best sellers by geography regardless of department and if product is being delivered to the stores on company trucks, a free use of warehouse exchanges to keep merchandise fresh, turns high and the most desirable merchandise constantly in front of the customer.  This is especially important in a small store.  The shopper may not find exactly the hammer they were looking for but they will find a hammer.  Emergency taken care of.  The best styles may be present but what if a size or color is missing?  If the product is carried at the large store or in the warehouse, the customer should have three choices:

  1. I’ll pick it up here in two days or less
  2. I’ll pick it up at another store
  3. Ship it to my home or office

Multi-location inventories should be available at every site, as satisfying the customer and getting the sale becomes even more important in these competitive times.   Most large store locations and warehouses have shipping facilities already so IT needs to develop shipping labels and tracking mechanisms.  Most of this may also exist today.  If it doesn’t at your company, call UPS or FedEx.

The next step is to work on the lag.  The lag is the time between the customer leaving the inquiry register (which may be conventional POS, tablet or phone), and the time at which the merchandise is in their hands.  The operations group needs to implement a process that shortens the time for picking, packing and delivering to any of the above locations.  Arrival times must be given to the customer with a confirming shipment notice which, by the way, provides you, the retailer, with an email address to add to your CRM campaigns.  And then, IT must develop and maintain statistics on performance and a plan for strengthening the weak links.

Benefits are obvious.  Lost sales are prevented, convenience shopping encouraged at your location, and customer satisfaction increased, new neighborhoods visibility and better advertising cost spreads.

Try, see and report back.

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