Mar/Apr 16 Feature: Retail

VOL 10 ISSUE 03 march/april 2016

FRANCHISING

retail:

it’s all in the detail!

Business Franchise Australia and New Zealand 43

what’snew!

NMI target retail businesses The National Measurement Institute (NMI), a part of the Department of Industry, Innovation and Science, has recently published their summary of 2014-2015 trade measurement compliance.

As part of a targeted inspection program directed to proper use of scales, NMI inspectors made anonymous ‘trial purchases’ at more than 720 businesses. Inspectors issued non-compliance notices for incorrect use of scales and/or not properly accounting for the weight of packaging at almost a third (241) of those premises. The program identified particular issues among franchise businesses in the confectionary and dairy products (frozen yoghurt) sectors.

In most cases inspectors were able to work with the business to ensure proper procedures were put in place and no further action was taken. Demonstrating the effectiveness of NMI inspections under this program, when follow-up ‘undercover’ purchases were made 87 per cent of previously non-compliant businesses were subsequently found to be compliant. However, repeated or severe breaches resulted in around $40,000 in fines being issued to 47 businesses under this program in 2014-15.

To read the report in full go to: http://www.measurement.gov.au/TradeMeasurement/ NationalData/Pages/default.aspx

Appointment of 7-Eleven Specialist Investigator a position to act as quickly as possible in cases where breaches have clearly occurred.

7-Eleven interim CEO, Bob Baily said “the appointment of the investigator adds an additional layer to 7-Eleven’s compliance protocols, which include store audits, enhanced payroll, timesheet and rostering procedures as well as refreshed training and education for Franchisees and their employees.

7-Eleven Stores Pty Ltd says that it has strengthened its investigative and compliance capability with the appointment of a specialist investigator.

The investigator, who has a law enforcement background looking into criminal and fraudulent activity, is tasked with undertaking inquiries into any suspected serious breaches of workplace obligations, so the company is in

“7-Eleven does not condone the failure to meet workplace obligations including the underpayment of employees by Franchisees and these measures demonstrate our ongoing commitment to stamping out such practices,” Mr Baily said.

7-Eleven is not only committed to ensuring all Franchisee employees are accorded their workplace rights, but by supporting the work of the Independent Panel headed by Professor Allan Fels, is making sure those who have been underpaid receive their entitlements.

To assist the Panel in encouraging claimants

44 Business Franchise Australia and New Zealand

to come forward 7-Eleven has also established a special whistleblower hotline so complaints or claims can be made without any fear of retribution. 7-Eleven will also not tolerate any action by a Franchisee that may intimidate employees or actively attempt to minimise legitimate claims.

7-Eleven Chairman Michael Smith said “The company is making significant progress toward satisfactory remediation and prevention, but we recognise there is more work to be done.

“As Chairman I am sorry for the circumstances and the fact of Franchisee Employee underpayments and I am sorry that those workers have been subjected to it.

“What has occurred is unacceptable and abhorrent and we are building capability internally and utilising external expertise to rectify the impacts of what has occurred and prevent them from happening again,” Mr Smith said.

Bridgestone franchise awards recognise the best of the best Owner Ashley McDougall said the win was a testament to the efforts of his team, including manager Neil McAlpine who has worked at the store for 38 years.

“Neil takes a systematic approach to running the store and does his utmost to make each and every customer feel at home,” Ashley said.

“Ninety per cent of business is from repeat customers and when you see how well Neil and the team treat their customers, it’s not hard to understand why people keep coming back.”

In addition to being named National Franchise of the Year, the store was also inducted into Bridgestone’s Chairman’s Club – an accolade reserved for those stores which deliver the ultimate in customer service, operational excellence and more.

Bridgestone Australia has announced the winners of its annual MasterClass awards, recognising retail outlets across the country for their commitment to customer service and excellence in retailing procedures. The MasterClass awards recognise those Bridgestone stores which achieve the highest standards in customer service, safety, compliance, sales, showroom and workshop management and responsible tyre recycling.

For the third year in a row, Bridgestone Select Coffs Harbour won the top honour – being named Bridgestone’s National Franchise of the Year and taking home a brand new Toyota Hilux as part of the major prize.

Bridgestone Australia and New Zealand Managing Director Andrew Moffatt said the importance of the MasterClass program is twofold. “Not only do our MasterClass awards recognise the hard work and dedication of our people, but the program is also a vital part of ensuring our retail outlets across the country maintain the highest standards in all areas of operation,” he said. “Congratulations to Ashley and his team on being named Bridgestone’s National Franchise of the Year for the third year in a row – it’s an incredible achievement.”

Alongside the national winner, the following stores were announced as Bridgestone’s state franchise of the year retail outlets: QLD: Upper Coomera | SA/NT: Aberfoyle Park (SA) | WA: Malaga | VIC/TAS: Hobart (TAS) | NSW/ACT: Coffs Harbour (NSW)

Retail turnover relatively unchanged in December 2015 The latest Australian Bureau of Statistics (ABS) Retail Trade figures show that Australian retail turnover was relatively unchanged (0.0 per cent) in December 2015, following a rise of 0.4 per cent in November 2015, seasonally adjusted.

In seasonally adjusted terms there were rises in food retailing (0.8 per cent), clothing, footwear and personal accessory retailing (1.1 per cent) and department stores (0.1 per cent). Household goods retailing (-1.0 per cent), other retailing (-0.9 per cent) and cafes, restaurants and takeaway food services (-0.5 per cent) fell in December 2015.

The fall in household goods retailing was the largest of any industry in December. This fall follows large rises in recent months which have contributed significantly to stronger rises in total retail turnover. Despite the fall in December this industry maintains the strongest growth rate of any industry compared to this time last year, rising 6.3 per cent compared to December 2014.

In seasonally adjusted terms, there were rises in the Australian Capital Territory (2.4 per cent), Queensland (0.2 per cent), New South Wales (0.1 per cent), South Australia (0.2 per cent) and the Northern Territory (0.3 per cent). There were falls in Western Australia (-0.6 per cent), Victoria (-0.1 per cent) and Tasmania (-0.6 per cent).

The trend estimate for Australian retail turnover rose 0.3 per cent in December 2015, following a 0.3 per cent rise in November 2015. Compared to December 2014 the trend estimate rose 4.0 per cent.

Online retail turnover contributed 3.0 per cent to total retail turnover in original terms.

In seasonally adjusted volume terms, turnover rose 0.6 per cent in the December quarter 2015, following a rise of 0.5 per cent in the September quarter 2015. The largest contributor to the rise was Household goods retailing which rose 2.5 per cent in seasonally adjusted volume terms in December quarter 2015.

Business Franchise Australia and New Zealand 45

FEATURE : r e tai l fr anch ising

RETAIL:

It’s all in the detail!

By definition, retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser. The retail transaction is at the end of the supply chain.

Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.

Your product So, as a retailer, or potential retailer, your product is the most important component in your business, right?

True, your product is vital. It should be top quality and something you believe in. But to succeed in retail, you must be a shrewd business person who considers all facets of the business. If you don’t have a sound business plan, a strong marketing strategy and a firm grasp on your financial status – the quality of your product becomes second tier.

A growth industry According to recent Retail Trade figures by the Australian Bureau of Statistics, Australian retail turnover was

46 Business Franchise Australia and New Zealand

FE ATUR E : r e ta i l fr anch isi ng unchanged in December 2015, rose 0.4 per cent in November, which followed a rise in October of the same percentage. Whilst the percentage may seem small in comparison to previous years, it shows that retail is still a growth industry, despite a continuing squeeze on the economy.

Sectors experiencing growth included food retailing (0.8 per cent) and clothing, footwear and personal accessory retailing (1.1 per cent).

Tread carefully Tempting, isn’t it? Do you have visions of owning your own quaint little dress shop in the local village, or a big name coffee house in the flash shopping centre in the city?

Can you get your hands on some of this vast sum of money being handed over by eager consumers?

The answer is yes, but tread carefully. Over the last few years, the global financial crisis has affected nearly every industry throughout the world. Australians are still willing to spend money, but they are much more selective now. Consumers are more conservative, more willing to seek out a ‘good deal’ and more willing to wait for the items they want.

This means retailers are competing in a highly competitive arena as they fight to win the dollars that are being spent.

Add to this the fact that commercial rental rates have gone through the roof, with large shopping conglomerates pushing for leasing rates based not on what the market can

bear, but what they can scrape out of their leasees.

So, if the cost of doing business has gone up, is it worth the risk of entering the retail market now? The answer, again, is yes, but do your due diligence.

Security in franchising This is where the benefits of entering the franchise industry come into play. If you know you want to own a corner bakery, why not purchase a bakery franchise.

It is romantic to envision the sign over your bakery having your own name on it, however this is symbolic of the situation that will follow. You will be on your own.

You will have to develop your business plan, secure funding, choose a site, negotiate your lease, supervise your fitout, formulate a marketing strategy, source your products and then actually run the business. Are you tired yet?

Imagine if all of this work had been done for you already? Well, at least a great majority of the work. This is the beauty of franchising. Retail is romantic, in a sense, but it is also risky. As opposed to the service sector or the work-from-home business options, in retail you have bigger costs and bigger risks.

The strength of experience But don’t despair. Despite the drop in consumer confidence, people are still spending. Perhaps not as quickly or as easily as before – but they are still spending.

Being part of a franchise system that has weathered previous economic storms, and

knowing that you are an integral part of a larger network, can give you the strength and knowledge to not only survive retail lulls, but continue to prosper.

Along with the actual site you eventually choose, hopefully with the help of your franchisors site selection strategy, you also now have the online space to consider.

Online spending According to the NAB Online Retail Sales Index, currently, online retail spending in Australia stands at $18.1 billion to November 2015, which accounts for around 7.3 per cent of traditional retail spending (excluding cafes, restaurants and takeaway food). But this figure is surely poised to keep growing. Social Media is a powerful tool and one that can not be ignored.

The benefits of utilising the social media platform include reaching a large audience to develop and instill brand awareness, increasing the effectiveness of marketing plans and creating an interactive experience for your current and potential customers.

Make it happen In the end, the choice will be yours.

Whether you decide to go forth into the world of retail and whether you choose to do this as part of a franchise, it is ultimately up to you to define your success. You must be passionate about your product, committed to offering the best service to your customers and willing to work hard to make your business successful.

Business Franchise Australia and New Zealand 47

FEATURE : r e tai l fr anch ising

How to keep retail businesses profitable with advanced data analytics “Whether it is the ability to try on a jacket, hold a product in your hands, or get detailed advice from an assistant, physical stores retain a number of advantages over digital outlets.”

Alec Gardner | General Manager, Advanced Analytics Teradata AUS & NZ

There is no doubt that online retail is growing swiftly.

However, the perception that it is beginning to overtake bricks-and-mortar retail outlets is misleading.

There is a lot of life left in physical retail stores, and new technology, such as data analytics and mobility, is helping to establish a better business case for these shops.

In Australia, research has shown that the general public still favours physical over online stores. The latest research by the Australian Bureau of Statistics (ABS) shows that online retail turnover contributed

just 3.1 per cent of total retail turnover in Australia during July 2015.

Globally, the vast majority (93 per cent) of total retail sales worldwide still take place in-store, and customers are willing to pay 50 per cent more for items they can see and touch.

While online sales are strong, market figures by the National Australia Bank (NAB) suggest they’re not growing as fast as you might think. According to NAB, online sales in Australia actually fell by 1.4 per cent in July last year, compared to the previous month.

Given these trends, it’s no surprise that retail franchises in Australia remain particularly strong, despite weaker growth in other sectors. Research by Griffith University’s Asia-Pacific Centre for Franchising Excellence found that the franchise sector in Australia has experienced net growth in franchise units and sales turnover, particularly in the retail franchises, despite generally sluggish economic growth in the local market.

48 Business Franchise Australia and New Zealand

Whether it is the ability to try on a jacket, hold a product in your hands, or get detailed advice from an assistant, physical stores retain a number of advantages over digital outlets.

Despite these traditional benefits, it would be foolish to think that the experience, on its own, is enough to protect bricks-andmortar stores from the encroaching online alternatives forever. Online retail is growing and will continue to cut into real stores’ revenue.

So, what does commercial success require for physical stores in an age of online retail?

A good starting point is to have a close look at what physical stores can offer that online stores cannot: physicality and face-to-face advice, and service. Traditionally, one of the strengths retailers have had is the ability to know their customer on a face-to-face level, understand their habits, and preempt their desires. In today’s increasingly crowded, metropolitan society, however, this has become an almost impossible task for physical stores that might have hundreds, or

even, thousands of customers come through each day.

At the same time, it is becoming easier for online stores to understand their customers, as they can easily track a customer’s shopping and purchasing activity on a website.

Fortunately, technology is now providing retailers with new ways to re-discover the physical customer, and understand the customer’s behaviours and desires.

The power of technology Physical retailers have an unprecedented number of digital tools with which they get to know their customers. Data analytics, along with mobility, are perhaps the most powerful tools retailers now have at their disposal to truly unlock the secrets of customer behaviour.

There is an increasing amount of information that bricks-and-mortar retailers can now draw upon thanks to the data-capture capabilities opened up by online channels, loyalty programs, electronic payment methods, beacon technologies, social media interactions, and mobile device activity.

In some ways, the mix of data physical retailers can draw upon is more diverse than much of the information pure online sellers generally use. This means they can increasingly know, rather than infer, how and why customers are behaving. The challenge, however, is to analyse that data effectively and act according to the insights that data delivers.

The core capability that can be leveraged by both online and offline channels to effectively understand all this information is advanced analytics. By using data analytics, retailers can begin to understand what customers want before they ask, and how they’d like to interact before they even walk into the store.

Professional services and analyst firm, PricewaterhouseCoopers (PwC), calls this ‘consumer adaptive retailing’. It is where

“Online retail turnover contributed just 3.1 per cent of total retail turnover in Australia during July 2015.”

Business Franchise Australia and New Zealand 49

FEATURE : r e tai l fr anch ising

The strength of traditional retail

FEATURE : r e tai l fr anch ising

businesses provide a seamless customer experience across multiple touch-points by integrating all processes and business systems. However, without adequate data and the analysis tools to understand it, this approach could leave retailers fumbling over how to adapt their approach to each customer.

Many traditional retailers recognise the importance and value of the data produced by digital channels and e-commerce portals, yet few are leveraging its full potential.

Retailers no longer have an excuse for not making the most of the information at their fingertips. They now have the tools at their disposal to integrate data analytics insights into business processes and systems. This way, they can better tailor their product offering, increase relevance and adjust their customer service methods. This tends to engender better customer engagement, improve service level and, therefore, increase sales.

There are four key ways advanced data analytics can transform physical stores’ profitability:

1

Have the right stock in the right place at the right time

Advanced analytics can help retail outlets understand what stock they should have available, and when it should be made available. Advanced analytics can also help inform retailers’ scenarios planning, which provides detailed information for decisionmaking as far-reaching as stock sizes based on customer demographics, outlet locations, and range. Analytics can bring insight to variations in demand and act upon it. In the Australian market in particular, there is a significant opportunity to better optimise ratio pack provision to improve service levels and to reduce markdowns and wastage of over provisioned, irrelevant items.

2

Price it right

Despite the availability of fine, granular data around price and sales, many retail pricing decisions are still based on past experience and spreadsheet analysis of general data.

If retailers use price sensitivity analysis on their fine data, they could be far more precise about how best to adjust prices, by how much, and at what time. This approach to pricing could yield incremental revenue for a bricks-and-mortar retail outlet. In store digital technologies can enable faster turnaround in on-shelf pricing.

“Many traditional retailers recognise the importance and value of the data produced by digital channels and e-commerce portals, yet few are leveraging its full potential.”

3

Maximise the impact of promotions

One third of promotions don’t yield the results expected because of insufficient stock which continues to represent a significant area for optimisation. Promotions should first and foremost be relevant to the customers expressed or predicted need.

In bricks and mortar retail, many are set around special events, such as Christmas, to take advantage of additional foot traffic at those times.

Advanced analytics can give retailers the fine-grain information they need to determine the most appropriate stock levels to align with promotions currently in market, be it Christmas, Easter, holiday seasons, or other special dates in the calendar. Traditional retail modelling techniques can now be significantly enhanced and run at much larger scale to enable wider and deeper data sets to be brought in. This enables retailers to modify analyses to allow for specific anomalies in market conditions that could exist at the time of promotion.

4

Get value for money on marketing spend

Extra marketing spend doesn’t always translate into additional sales. Businesses must understand the factors that contribute to the success of marketing efforts. Advanced data analytics can work to understand how

50 Business Franchise Australia and New Zealand

much return on investment (ROI) there is for marketing dollars spent and attribute the value across the full lifecycle of a multichannel campaign.

There is an increased amount of data now available to real world retailers thanks to connected business equipment, such as electronic point of sales (POS) tools and inventory management platforms. It should be an easy leap to incorporate advanced analytics and use all of that valuable information to better engage with customers and drive profits.

Alec Gardner is General Manager, Advanced Analytics, at Teradata Australia & New Zealand. He is responsible for the Teradata Advanced Analytics line of business in Australia and New Zealand, incorporating Teradata Aster, Big Data Analytic solutions and the Teradata partnership with key Analytic partners such as SAS. In this capacity, Alec heads an expert team of Data Scientists and Business Analysts.

Teradata (NYSE: TDC) helps companies get more value from data than any other company. Teradata’s leading portfolio of big data analytic solutions, integrated marketing applications, and team of experts can help organisations gain a sustainable competitive advantage with data.

W: www.Teradata.com

FEATURE : r e tai l fr anch ising

Australian customer service

Why do we get it so wrong?!

“You need to forget what you think you know about your service levels and see it from your consumers’ point of view.”

52 Business Franchise Australia and New Zealand

And with much anticipation you arrive… but you find yourself instantly deflated by the complete and utter lack of ANY kind of quality of service. It’s a struggle to even get any acknowledgment from staff! So you find yourself standing alone, waiting, wondering why, oh WHY is it so hard to give you people my money!

Service levels in Australia can be mediocre and it is one of the most important challenges we face today. Getting it right is one of the most important keys to success in any consumer facing business.

Why is it so important?

Obviously, poor customer service can destroy a business very quickly, but mediocre service can be just as costly. Providing exceptional customer service can create one of the most valuable marketing tools we have at our disposal – word of mouth. Bad word of mouth can send a business to the point of failure in the blink of an eye and tarnish it forever in the eyes of the customers. Good word of mouth can propel a business into the dizzying heights of success without breaking a sweat. The problem is that as consumers we are geared to talking about our bad experiences. There is a saying in hospitality and retail – “every customer that has a bad experience tells 20 people while a customer that has a good experience might tell five”.

I believe this rings true in all industries, especially in today’s world of online review sites and forums. Now, more than ever we need to work for that good word of mouth.

Your business NEEDS those five people to hear about how great you are, so you need to work for it.

The thing that really annoys me is that the people who are running businesses are consumers themselves! They share these same experiences and same frustrations. So, why can’t we get this right?!

“Service levels in Australia can be mediocre and it is one of the most important challenges we face today. Getting it right is one of the most important keys to success in any consumer facing business.”

Mike Holtzer | Owner | The Retail COO Group

How do we get it right?

• Hire the right people – It’s that simple.

Hire the right people. Hiring people who are naturally geared towards providing exceptional service will get you half way there. You can teach anyone to serve well, but under stress people always revert back to their natural preferences. What you need are employees that revert back to providing excellent service when they are under stress. These people are invaluable to your business - get them on board!

• Mix it up – Even the most customer focussed employee will get bored performing the same monotonous tasks day in and day out. So, mix up the shifts.

Having staff that are trained in multiple areas not only makes them more valuable to you, it allows you to rotate them through different duties during their shifts, keeping them fresh, focussed and poised for excellence.

• Motivate! – This is crucial - you need to find a way to motivate your staff to consistently go above and beyond. This is part of the reason we see such high service levels in other parts of the world. For example the legendary service standards in the US are primarily driven by a tipping culture. Waitresses rely on tips to survive and if they don’t provide exceptional service, they don’t get paid very much at all. While this is an extreme example, it illustrates that with the right incentive, we are all capable of more. If you can find a way to incentivise your staff to go above and beyond, you will undoubtedly see better performance.

• Budget for it – Excellent customer service is essential to growing your business in today’s market but it doesn’t come for free. I have seen so many operators get this wrong. They try to run on a skeleton crew even during peak trading periods in the hope of controlling their labour percentages. In fact they would be much better off concentrating on driving top line sales in peak periods and growing their business. I believe labour costs need

to be seen less as a cost to your business and more as an investment in the growth of your business. It is an investment that will always pay off and needs to be budgeted for. Create that good word of mouth and the sales will follow!

But more than anything else, I think we need to re-evaluate what it is that we are trying to achieve. Essentially we are trying to find a way to have our customers leave feeling something positive. Exceptional customer service is integral to the success of your business but it’s only a small part of something bigger – your consumer experience.

An exceptional consumer experience incorporates exceptional customer service but doesn’t stop there. It starts there and goes way beyond it into the sensory experience of your customers. Getting the lighting and music right can be just as important to your consumer’s experience as your customer service levels. So, you need to revisit your consumer experience through their eyes.

You need to forget what you think you know about your service levels and see it from your consumers’ point of view. You need to see what they see, you need to hear what they hear and you need to feel what they feel when they shop with you.

Herein lies the dichotomy – how can you possibly see the business through their eyes when you work so closely with it? Answer this question and you will discover the key to tackling this issue.

Mike Holtzer is a highly talented COO, with over 25 years of experience in public and private companies spanning over four continents: Australia, North America, Asia and Europe.

The Retail COO Group resolves operational issues for Retailers – Parttime COO’s, Non-executive Directorships, Board of Advice, Forums / Seminars and Operational projects. For more information visit: W: www.theretailcoogroup.com

Business Franchise Australia and New Zealand 53

FEATURE : r e tai l fr anch ising

We have all been there.

Eagerly out on a shopping spree buying our favourite brands, or maybe finally ordering that special piece of furniture that we have been saving up for, or even heading out to try the new cafe that EVERYBODY in the office has been talking about.

FEATURE : r e tai l fr anch ising

ACHIEVE A BEST PRACTICE WORKPLACE

BY GETTING THE BASICS RIGHT

“We offer a wide range of free services and educative resources to help you develop the skills needed to confidently manage your employment relationships.”

Lynda McAlary-Smith | Executive Director – Proactive Compliance and Education | fair Work Ombudsman

The retail franchise sector is a significant contributor to the Australian economy and continues to grow – a 2014 report showed that growth in retail franchises in Australia has surpassed other franchise sectors and retail accounts for the highest proportion of new franchise business entrants.

If you are considering purchasing a retail franchise, or are already in the business of operating one, you may be looking at hiring your first employee or taking on additional employees. This is an opportune time to brush up on your knowledge of workplace laws and establish employment practices that will stand you and your business, in good stead.

The good news is there is a wide range of support available to help you. Here are the Fair Work Ombudsman’s (FWO) top four tips to creating and maintaining a best practice workplace:

1

Know where to get help Firstly, it’s important to know where

54 Business Franchise Australia and New Zealand

to get accurate and reliable advice. Your franchisor is a great starting point. Your franchisor knows your business and will have a good understanding of your employment needs. Importantly, they might already have a number of established employment policies in place, such as an induction policy, to help you and your employees navigate the employment relationship. If your franchisor hasn’t already provided you with this information, it is a good idea to ask if they have any policies or other employment relations support available.

You should also consider joining an employer association in the retail sector. Employer associations are member organisations that offer assistance and advice on a range

FEATURE : r e tai l fr anch ising

“One of the important things to consider when hiring a new employee is the type of employment status. Should the new employee be engaged on a full-time, parttime or casual basis? ”

of topics, often including employment relations. As these organisations are generally industry-specific, they are able to offer advice tailored to your industry making them a valuable source of information. Lawyers, accountants and HR advisers are other third-party advisers that can offer you expert knowledge on a range of topics relevant to your business operations.

Finally, remember that help is always at hand at the FWO. We offer a wide range of free services and educative resources to help you develop the skills needed to confidently manage your employment relationships.

For instance, our Small Business Best Practice Guide provides an overview of the workplace relations system, relevant to small business operations. It explains minimum employment conditions, record keeping, pay slips, unfair dismissal laws and other responsibilities of employers. We also have a dedicated Small Business Helpline you can call on 13 13 94 (choose option 3).

2

Get the basics right

Now that you know where to get help, it’s time to determine what your employees are entitled to. Minimum wages and conditions for most employees are set out in modern awards. Modern awards apply to employees depending on the industry they work in, or the job they do. The General Retail Industry Award 2010 covers employers and their employees in the general retail industry. This refers to the sale or hire of goods or services to final consumers for personal, household or business consumption. If you are not sure whether this award would apply to the employees in your business, you can find the award at www.fairwork.gov.au/awards and read the coverage clause and job classifications to work out if your employees are covered.

Once you’ve checked award coverage, you need to know what to pay your employees.

The FWO’s pay and conditions tool, PACT,

lets you calculate rates of pay, penalty rates and leave entitlements under the retail award. It is accessible ‘on the go’ via mobile devices making it simpler and faster for you to get wage information for your employees.

PACT can also give you a reference number and lets you save your results so that they can easily be retrieved at a later date. Find the PACT at www.fairwork.gov.au.

To find out what you need to know about minimum employment conditions and your obligations as an employer, take the FWO’s Workplace Basics quiz. Workplace Basics is our online, interactive quiz with multiplechoice questions on topics including pay and awards, leave, and record keeping and termination. At the end of each topic, a customised list of links to relevant resources and information is provided which you can email to yourself so you can easily find these later. Workplace Basics will allow you to identify any gaps in your workplace relations knowledge and provide resources and information to develop in these areas. Visit www.fairwork.gov.au/basicsquiz to assess your workplace relations knowledge.

By signing up for FWO’s My account service you will be able to store and receive personalised workplace information, such as pay guides for the retail award. Through My account you can save results from PACT and our Pay, Shift, Leave, Notice and Redundancy calculators. You can also submit queries and receive responses that can also be saved in My account. You can register for My account on the www.fairwork.gov.au homepage.

3

Establish good employment practices

Once you understand the basics, it’s a good idea to establish employment practices and systems that will help your business run smoothly. At the FWO, we have a variety of tools and resources to help you do this.

For instance, when hiring a new employee there are a number of important decisions to be made. Taking some time to think about aspects of the role, and preparing the right questions to ask potential candidates can dramatically affect the outcome of the recruitment process. One of the important things to consider when hiring a new employee is the type of employment status.

Should the new employee be engaged on a full-time, part-time or casual basis? Each employment type is different with different pay and conditions. It’s important to be aware of those differences when hiring a new employee. Our online learning centre provides a free interactive course on hiring employees, which includes a tool that can help you determine which employment type is best suited for the role you need to fill.

With some simple planning you can ensure that you are prepared for the hiring process, including being aware of what the minimum pay and conditions are for each employment type.

Online learning courses are also available on managing performance and having difficult conversations in the workplace.

These courses take you through activities and interactive scenarios to provide hands-on, skills-based training that fosters good workplace practices. By taking an

Business Franchise Australia and New Zealand 55

FEATURE : r e tai l fr anch ising online learning course, you can acquire the information and skills that will assist in the management of your employees.

Additional online courses on diversity and discrimination, workplace flexibility, managing people and record-keeping and pay slips will be released this year. Visit www.fairwork.gov.au/learning.

In addition to helping you develop the skills and know-how to manage your employment relationships, we also have a number of guides and templates to assist you. Our downloadable templates can take the stress out of the record keeping that’s involved with hiring employees, pay slips and other common workplace issues. Visit www. fairwork.gov.au/templates.

4

Stay on the front foot and resolve issues early

Finally, it is important to be proactive and stay on the front foot when it comes to the management of employment relationships in your business. You can do this in a number of ways. Firstly, take steps to ensure that you are kept up to date and informed of any changes that impact the retail industry and, as a result, your business. By subscribing to our email updates or our employer newsletter at www.fairwork.gov.au you are ensuring you will be amongst the first to know if

“It is important to be proactive and stay on the front foot when it comes to the management of employment relationships in your business.” any changes or updates have been made to the wages or conditions that apply at your workplace.

Be proactive in resolving any disputes that arise in your workplace. Where a dispute occurs, and it will at some point, it’s important to know how to approach it. The best thing to do is to address it early, and to try and resolve it at the workplace level.

Doing so will not only alleviate the need for intervention from a third party, such as the FWO, but it is also likely to save both your time and money. We know that having a difficult conversation with an employee can be a daunting task. Dealing with these issues before they escalate is not only best practice as an employer, but can also prevent further disputes arising later down the track. Our ‘Difficult conversations in the workplace’ online learning course was developed to help you feel confident in discussing and resolving issues that arise in your workplace before they escalate.

As you now know, there’s plenty of support available to help you navigate the workplace relations system. Not knowing is not an excuse for failing to comply with your obligations as an employer. Failing to comply can expose you and your business

56 Business Franchise Australia and New Zealand

to significant penalties. For example, the owner-operators of a franchise in Melbourne were fined a total of $110,500 after underpaying employees a total of $83,566 in a nearly two year period.

Be proactive in getting the help you need, get the basics right, take the time to establish good management of employment relations in your business, and stay up to date. It will save you time and money down the track, and will help you build a workforce that performs well and supports your business goals.

Lynda McAlary-Smith is the Fair Work Ombudsman’s Executive Director of Proactive Compliance and Education.

Lynda’s branch is responsible for proactively assisting Australian workplaces and educating them about their workplace rights and obligations.

The Fair Work Ombudsman is an independent statutory office responsible for ensuring compliance with Australia’s workplace laws and promoting harmonious, productive and cooperative workplace relations.

T: 13 13 94 W: www.fairwork.gov.au

FEATURE : r e tai l fr anch ising

PUTTING THE

‘SOCIAL’ INTO A SOCIAL MEDIA

STRATEGY FOR RETAILERS “Establish whether you’re aiming to increase your brand recognition, inform customers of current discounts and promotions or manage customer feedback and complaints.”

John Bresolin | Audit Partner BDO

As the digital world continues to integrate itself into our lives, it’s no surprise this integration is emerging as a prominent part of businesses’ day-to-day operations, and the retail sector is no exception.

Retailers are diving head first into social media to help create brand awareness, launch and run campaigns and, ultimately, improve sales.

In the last decade, social media has moved from an emerging trend to a central pillar of any organisation’s digital marketing strategy, thanks to an exponential increase in use among consumers.

At BDO, we’ve just released our annual Spend Trend* report, which has revealed some interesting insights into how retailers are actively investing in their marketing to increase brand awareness in a bid to attract shoppers to local bricks and mortar stores.

Spend Trend provides an annual health check for Australia’s $292 billion retail

sector by analysing key 2014-15 financial ratios and indicators for 18 ASX-listed retailers, including Wesfarmers (WES) and Woolworths (WLW), as well as 13 US and UK-based retailers.

What we found was that Australian retailers boosted their marketing spend by 35.7 per cent in relative terms between FY14 and FY15, including investment in digital marketing to coincide with an increasingly mobile marketplace.

This effort is not a mere half-asked attempt at engaging with social media, with many retailers now employing dedicated social media staff or appointing a digital marketing department to coordinate these efforts. Tools like Facebook, Instagram and YouTube are being used heavily, particularly in key sales periods like Christmas or school holidays.

This social media surge among Australian retailers has coincided with some encouraging growth in online sales, with many – analysed as part of the Spend Trend report – recording significant double digit growth in relative terms. However, they still have a long way to go if they are to match their international counterparts, whose online sales represent well over 10 per cent of their total revenue.

So while social media is becoming a

58 Business Franchise Australia and New Zealand

fast-growing part of retail businesses, it’s important those giving it a go do so with a measured head, and commit to understanding its full scope before giving the green light.

Perhaps more than any other sector, retailers will need to stay ahead of new trends and meet the changing demands of their customers. Social media can provide insight into these developments, offering platforms where people go to share, like and talk about what they want from a shopping experience.

More importantly, an effective social media strategy that can drive concrete engagement also requires buy-in from senior executives who can offer oversight from across a retail business’ operations.

With that in mind, here are a few points on what executives within your business can do to help drive this development.

1

Ensure your company has an up-to-date social media strategy Social media can be a rabbit warren if your company doesn’t have a clear understanding of what you want to achieve through its use.

Establish whether you’re aiming to increase your brand recognition, inform customers of current discounts and promotions or manage customer feedback and complaints.

Understand that all can be achieved, but only with a defined strategy. Lastly, make sure your strategy is integrated with your broader digital, marketing and sales strategies to not only ensure they don’t contradict one another, but to leverage and complement each other’s success.

Measure – data is gold

Just as you do for almost all other parts of your business, it’s imperative to know whether your social media strategy is effective, so measuring its operation is important. The key is ensuring that what you are tracking fits your objectives. There are a number of recommendations for how to measure your social media return-oninvestment, from number of impressions, tracking traffic through to your website or store and to operational analysis such as number of complaints handled or number of enquiry responses / conversations directly with potential customers. Consider which are most important for the business and best reflect your business goals.

With all of this in mind, a social media strategy is something executives will need to be aware of and involved in if they want to see it add value to their organisation.

The role of social media — both as a tool for communicating with customers and for achieving commercial objectives — is only going to grow in the coming years and businesses need to respond accordingly.

For retail executives, taking the time to understand how their own actions can support a strategy will certainly help the company realise its long-term goals. That requires going beyond the technologies involved and understanding how to drive meaningful engagement with individual users.

“For retail executives, taking the time to understand how their own actions can support a strategy will certainly help the company realise its long-term goals.”

2

Be aware of how social media is changing the way a company communicates with its customers and vice-versa Social media is now a common forum for reviews, feedback and complaints, and as such can quickly damage your brand if you’re not responsive and do not communicate appropriately. Make sure to actively listen and engage with your customers; put a plan in place for how you communicate with the public in various scenarios. Ensure your social media team understands how to respond to both positive and negative social media posts and what policies are in place for formal complaints, product returns or general feedback.

3

Understand your audience

When determining your target market, you must figure out who they are, what social media platforms they prefer and how much time they are spending there. Then you can decide which platforms are the right fit to achieve your company’s goals.

4

Understand your company’s voice and how it is being portrayed through social media If your company’s voice differs across its digital platforms, your brand will be diluted.

Consumers will be confused about what your brand stands for so it’s important your content is harmonious and consistent across all platforms.

John Bresolin is an Audit Partner in BDO’s Sydney office. He has over 20 years of experience and has worked with medium to large, private and publicly listed clients.

John is retail specialist with extensive expertise in supporting retail clients. As an active member of the BDO’s Retail Partner Group, he authors two of BDO’s retail flagship publications - the annual BDO Spend Trend and Changing Tides: BDO Retail Market Update.

BDO offers a wide range of business, accounting and corporate advisory services to large corporate organisations, Government & Public Sector entities, private businesses, entrepreneurs, and individual clients across a wide range of industry sectors.

T: 02 9240 9711 E: john.bresolin@bdo.com.au W: www.bdo.com.au *http://www.bdo.com.au/resources/publications/ retail/spend-trend-2015

Business Franchise Australia and New Zealand 59

FEATURE : r e tai l fr anch ising

5

FEATURE : r e tai l fr anch ising

Franchisees need to beware of consumer rights

under the Australian Consumer Law On 12 January 2016, the Federal Court of Australia (“Federal Court”) handed down an important judgment which should serve as a timely reminder for franchisees, and its employees, to avoid engaging in conduct that could breach the Australian Consumer Law (“ACL”).

60 Business Franchise Australia and New Zealand

The Federal Court held that the Harvey Norman franchisee had breached the ACL when dealing with two consumers who each purchased a computer at the Bunavit store.

Employees of the Harvey Norman franchisee made numerous incorrect statements in relation to the consumer’s rights prescribed

by ACL. In this instance, the consumers returned to Harvey Norman to have their defective computers repaired. They were,

The Federal Court held that such statements were false or misleading and resulted in a breach of the ACL guarantee provisions.

The Harvey Norman franchisee should have offered to repair the computers free of charge. Importantly, the Federal Court found that the conduct was so unlawful that it ordered the franchisee to pay a $52,000 penalty to the Australian Competition and Consumer Commission (”ACCC”).

In light of this important judgment, franchisees and their employees need to be aware of the extensive consumer rights under the ACL and the significant ramifications a breach of those rights may have for them.

The most common and important consumer rights and obligations under the ACL are:

Businesses may be consumers The ACL does not only apply to business to consumer transactions. Confusingly, given the name of the Australian Consumer Act, the ACL also applies to business to business transactions with a value of less than $40,000. In those circumstances, it does not matter whether the products or services were supplied to the business for business purposes only.

Guarantees on products and services There are various consumer guarantees which automatically apply to transactions relating to the sale of products or the provision of services. These guarantees must be provided regardless of any additional and/ or voluntary warranties you give to your customers.

In the sale of products to customers, there is an automatic guarantee that these products are of ‘acceptable quality’. Products are of acceptable quality if they are, for instance, fit for the purpose for which the products

You are not always required to provide the automatic guarantees. These guarantees do not apply if, for instance: (a) the products have been damaged by the customer and the products do not operate correctly any longer due to the damage caused;

Bianca Sevastos | Partner | Baybridge Lawyers

however, advised that Harvey Norman could not assist them and that they should contact the relevant computer manufacturers to have the defects repaired.

Exceptions

were purchased, free from defects, safe and durable. The nature and price of the products may be taken into account when determining whether products are of acceptable quality. This means that a customer may not expect the same durability for cheaper second hand products than brand new products which are sold at the regular retail price.

When providing services to customers, you automatically guarantee to your customer that they are supplied with due care and skill, are fit for the purpose for which the services were supplied and will be delivered within a reasonable time in the event no time period has been agreed with the customer.

Failure to provide guarantees If you fail to provide any of the mandatory product or service guarantees, your customer may: (a) request that you repair or replace the products free of charge; (b) request a refund for monies paid; (c) cancel the services which you were to supply to them; or in some instances, (d) make a claim for compensation for loss and damage incurred by the customer.

Be aware that you cannot refuse to provide your customers these options by simply referring them to the manufacturer or importer of the products or to your franchisor. The ACL clearly states that it is your obligation as a supplier to offer your customers these options. Customers may have additional options which they can exercise against the manufacturer or importer. As the decision of the Harvey Norman franchisee shows, the Federal Court may find that you have breached the customer’s rights or your obligations under the ACL and, in circumstances where incorrect statements are made about consumer guarantees, even penalise you for those incorrect statements.

(b) you made express statements prior to the sale that the products or service are unsuitable for a particular purpose and the customer later complains that the products or services are unsuitable for that purpose; (c) the customer changed his/her mind about the products or services and wants a refund of the purchase price; or (d) the products or services are worth more than $40,000 and were supplied for business use only.

In these circumstances, you are not required to provide the customer with the right to a repair, replacement, refund, cancellation or compensation.

Warranties In addition to the mandatory consumer guarantees, you may wish to provide additional warranties about the products or services. Warranties are voluntary promises to your customers about the products sold or services provided. These promises can be enforced under the ACL and you must therefore ensure the accuracy of those warranties before providing them to customers.

You may, for instance, make additional warranties about extended service or repair time frames for customers or other particular statements about the characteristics, performance or state of the products.

Misleading or Deceptive Conduct You are not permitted to make any representations or statements about your products or services which are false or incorrect. The ACL provides clear examples of areas in which you are not permitted to make such false or incorrect statements. For instance: (a) false advertisements; (b) engaging in bait advertising to lure customers into buying the products or services;

Business Franchise Australia and New Zealand 61

FEATURE : r e tai l fr anch ising

“The ACL also applies to business to business transactions with a value of less than $40,000.”

FEATURE : r e tai l fr anch ising “Failure to adhere to the consumer guarantees or making incorrect statements to your customers about their consumer rights could result in damage to your reputation, the franchise network’s reputation and unhappy customers.”

Importantly, it could even result in lengthy proceedings with those customers or the ACCC resulting in significant claims for compensation or fines.

(c) incorrect labelling or packaging of the products; or (d) false statements about the standard, quality, value, grade, composition, style or model of the products or services, the country of origin, consumer rights or remedies under the ACL or the price of the products or services.

It is important to note that if your business makes any false or misleading statements that this could result in enforcement proceedings from the ACCC where you could be ordered to pay heavy fines up to $1.1 million.

Consumer rights and your obligations must be taken seriously Consumer rights and your obligations are important aspects of doing business in Australia. They are automatic, complex and may be difficult to understand. It is, however, important that you have a basic understanding of those rights and obligations. Failure to adhere to the consumer guarantees or making incorrect statements to your customers about their consumer rights could result in damage to your reputation, the franchise network’s reputation and unhappy customers.

62 Business Franchise Australia and New Zealand

Bianca Sevastos is Partner at Baybridge Lawyers where she specialises in franchising and licensing. Bianca advises on all aspects of franchising industry compliance with the Code, day-today management of franchise systems and relationships with suppliers and franchisees.

Bianca has extensive experience and advises on a range of national and international transactions, industry master and area development rights and advises both franchisors and franchisees in dispute, obligations under the Franchising Code of Conduct and the Competition and Consumer Act. T: 02 9232 3511 E: info@baybridge.com.au W: www.baybridge.com.au

WANT TO STAY ON TOP OF THE LATEST NEWS AND WHATS HAPPENING AT THE FOREFRONT OF FRANCHISING?

Franchise BUSINESS

AU S TR A LI A A N D N E W Z E A L A N D

SUBSCRIBE TO Business Franchise Australia and New Zealand’s newsletter and receive all the latest franchising news delivered straight to your inbox, every week!

To subscribe visit: www.businessfranchiseaustralia.com.au

FEATURE : r e tai l fr anch ising

Retail is a H2H business 64 Business Franchise Australia and New Zealand

Retail is detail, retail is a brand game, retail is about the numbers. Heard it all before? Well so have I and I have actually said these very catch cries more than once in my career.

Well here’s a confession: they are all true and paradoxically are actually, in many cases, the undoing of many retail strategists work, because above all else, we are in the business of people – a human to human business (H2H). Our type, style, behaviour,

Brian Walker | Founder and CEO | Retail Doctor Group

amongst the sage advice it simply says that to win a war, we must have a great army.

of retail strategy. Better to learn in the dress rehearsal than on opening night.

Again, how many strategies have we witnessed that fill in the people piece as they go along? As we enter 2016, let us take a closer look at five business fitness™ steps to ensure we are effectively utilising the people within our strategies.

There is very strong evidence to show that up to 50 per cent of strategy is rolled out by the CEO and team, endorsed by the board with little or no customer involvement.

The first people fitness piece is to understand in great detail the capability and preparedness of the team as a vital input to the strategic implementation. Forecasting future needs in up-skilling, deployment and succession planning is critically important in the planning rather than implementation phase.

Omni channel deployment is a case in point: what are the influences to the team and their deployment with the introduction of adjunct methods of distribution.

Look to the boards and senior team that have senior HR capability with strong influence and you will see that they “get this piece”.

motivation, bias, the conditionality upon which we accept or reject, the messages we hear as distinct from what we are told... all these elements contribute to forming our uniqueness.

Put another way, more than we give it credit for, strategy is simply about understanding people. To elaborate on this point consider the old multi-channel strategies that focus purely on product, or location. With some exception, we have seen so many of these ‘product push’ strategies invariably fail and often because they are so easily replicated and copied.

The Art of War by Sun Tzu is, in my mind, mandatory reading for ‘Fit’ strategy and

Leading on from this comes fitness step number two, consider the power of your in-store team. The fit retailer understands one of the most powerful weapons in its arsenal is its staff. By investing in increased service levels and staff training, fit retailers generate more motivated and confident employees who in turn generate motivated customers. By measuring your service levels and rewarding excellence, you create a culture of customer service fitness in your retail business, allowing you to trade on the front foot strategically rather than tactically.

The third fitness step concerns the ‘good old customer’ and aren’t they lucky to have us retailing to them?

I’m not sure how many retailers test their strategic implementation with their desired or actual customers. What I can tell you is that this is a significant ‘fitness’ step to ensuring that the desired market provides much needed feedback in the gestation stage

Creating assumptive ‘product push’ methodology that presumes too understand the customer? Saved some money in R&D, and then spend an awful lot more if they have it wrong at the coal face (and some do).

The fourth fitness step is to deeply understand who our customers are with more research and definition than ever before. To be ‘fit for business™’, retailers must think strategically when it comes to connecting with consumers and the key to becoming smarter and fitter as a retailer is how you listen and connect with your shoppers. You need to inspire, lead and manage them in new ways.

Have we understood who our market is and ‘who’ our customer is? What, why and how do we have permission to consider that we actually have this understanding?

It’s also equally apparent that the definition of market and consumer is rapidly changing such that last season’s product strategy may no longer be relevant to that fast moving and elusive core customer.

Demographics are increasingly becoming superseded by ‘customer behaviour motivation sets’. Where we live is becoming increasingly secondary to who we are and our preferences.

To test this point I recently purchased product from a London based retailer online.

These products were delivered to our home in Sydney from London within seven days.

I am now on the database of that English retailer - importantly, where we live is increasingly secondary to our customer motivations. A classic demographic slice would never pick that up.

Whilst data capture is an evolving

Business Franchise Australia and New Zealand 65

FEATURE : r e tai l fr anch ising

“Our type, style, behaviour, motivation, bias, the conditionality upon which we accept or reject, the messages we hear as distinct from what we are told... all these elements contribute to forming our uniqueness.”

FEATURE : r e tai l fr anch ising conversation amongst retailers on top of this, have you considered that 95 per cent of consumer decision making happens in the subconscious limbic mind? So whilst you may capture their demographic location and understand which products they buy regularly, do you know why? Today we have access to new technology that allows you to go deeper into your consumer’s subconscious drivers. Are they influenced by others or perhaps by your marketing? Are they a thrill seeker or perhaps prefer efficient clean shopping processes?

influences them to purchase. Furthermore, you have the ability to personalise their experiences, whether it’s online or in the physical store space, thus adding value and allowing you to be strategic about how you may decide to get tactical.

We apply our proprietary Limbic® methodology – The limbic insights model used by our subsidiary company RDG Insights which is based on the latest findings from consumer neuroscience, psychology, sociology and neurobiology and has been built into a model that is applicable for the marketing practice and allows our ‘fit’ retailers to base decisions on genuine shopper and marketplace insights.

The fifth fitness step is simply about communication and the alignment of strategy, branding, messaging through to the internal language of our business on the shop floor. The more complex the messaging, the less clarity in understanding, the greater the risk of breakdown in communicating.

Simply testing understanding in communication helps the process of clarity significantly. (It’s not rocket science is it?)

If you put all the tools in place to listen and analyse what your shoppers want, need or have to say, you have enormous intelligence in understanding what motivates and

Walk into a highly ‘fit’ retailer and you will see clarity in communication, alignment of purpose, articulated expectations, staff feedback and above all else a culture of

“Demographics are increasingly becoming superseded by ‘customer behaviour motivation sets’. Where we live is becoming increasingly secondary to who we are and our preferences.”

66 Business Franchise Australia and New Zealand

performance, mutual respect and winning.

These five fitness steps all have one glaring commonality and that is the engagement of all stakeholders as vital fitness inputs to a successfully aligned strategy and operational implementation.

Happy ‘Fit’ retailing.

Brian Walker is Founder and CEO of Retail Doctor Group. Brian specialises in the implementation of insights driven strategy to build Business Fitness™.

Contact Retail Doctor Group and quote ‘Business Franchise Australia’ to receive a complementary discussion on building your business’s retail fitness in 2016.

T: 02 9460 2882 E: businessfitness@retaildoctor.com.au W: www.retaildoctor.com.au