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ALAN OAKES publisher ajoakes@aol.com

High Performance Retailing

As the war with Iraq winds down, entering a mop up and rebuild mode, perhaps we can now take this monkey off our backs. The economic news seems to be positive these past days, with housing up 8Vo in March over February, consumer spending holding up and inflation steady.

As I travel around and speak with dealers, I'm delighted to hear so many doing great business. In one past life I was in the book industry where we publishers sat and watched the demise of the independent dealer. They just could not compete against the Barnes & Nobles and Borders Books of this world. We watched as on Main Street after Main Street, independent booksellers closed down.

While the big boxes have made an impact, many LBM dealers have risen to the challenge to create solid highperforming businesses. Many consumers, as well as the builder community, have found that there are alternatives that provide better knowledgeable service, comparable pricing, and reliable after-sales help.

As in any industry, every retailer would like higher margins. While commodity prices have remained low, high-performance dealers have been able to increase margins that have provided ROI's of 9-lOVo by offering an ever increasing assortment of product. However, one recent report suggests that the top independents are further increasing their profit perfor- mance over the rest of the pack with very healthy ROI's well in excess of 20Vo. This increase would appear to come from being able to achieve higher gross margins than their counterparts, while not necessarily indicating that they have been able to grow sales at any faster rate.

Many factors impact profitability at the retail level or any business for that matter. Having a high ROI, generally suggests that a business can afford to see a drop in performance and still not have to face any difficult business issues-a great cushion in a difficult time. However, under that same premise, a healthy cash flow better positions a business to expand and capitalize on market opportunities.

Better performing stores generally achieve a 2O-30Vo greater floor sales productivity than poorer performing stores, while at the same time achieving higher inventory turns, higher sales per employee, higher gross margins, lower receivables and a lower payroll percentage of revenue. Keep these ratios steadily improving, in line or better than average industry ratios, the better the opportunity to compete.

Locally, I've been impressed how retailers are effectively competing with the big boxes. Fliers and specials in my newspaper, trained and enthusiastic inside and outside sales teams, classes, competitive prices, friendly and knowledgeable service, accessibility, an ever-widening range of services along with one-stop shopping, all drive a business as a destination store. In other words, by offering value, they can compete more than effectively.

The lifetime value of every customer won and lost can dramatically impact business results. The biggest tangible lost in statistics, is the quality and the motivation of employees. Their knowledge to save customers time and money are invaluable in differentiating a business from all the rest. Getting people to walk into the store is only part of the battle, getting them to purchase, and more importantly giving them enough "customer delight" to bring them back over and over again is the key. Yet, a recent survey of all businesses suggests 557o of all employees are intensely negative about their job and company. Now think that these same people might be the first impression a potential customer gets of your business. Hmmm...

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