Richard Fenton

Article Summary:

Focus on creating income rather than cutting costs in retail businesses.

Don't Cut Costs, Add Income

When a store or district or company finds itself struggling to keep payroll hours in line, they have two choices:

  • Increase sales
  • Cut hours


Which is easier? Which one happens almost every time? You can probably guess.

One of my biggest pet peeves is the tired old strategy of cutting hours when sales are low. Too often this strategy is employed when we need that extra half or full percent gain on sales. This is probably the greatest mistake retailers make and only gives us a very short term gain while simultaneously setting us up for long term failure. Because then we ask the question, what do we do next week or next month or the same time next year? Cut hours again?

And what always suffers in the end? The ability to sell and serve customers. Ultimately sales increases happen because of people. These must be well trained people, of course. I am not suggesting throwing people on the floor, because that won't increase sales either. That will just result in failure because the sales will not simply "present" themselves. And when the results do not come - the hours will get cut and cut even deeper to make up for the failed "experiment" of increasing hours.

Not too long ago, we were at one of the busiest restaurants in Portland for their happy hour. The restaurant is on the 32nd floor at the top of a bank building and it is always mobbed. The bar area is huge and can easily accommodate over 100 people. We observed several tables around us where people sat before empty glasses waiting for the waitress to come by so they could order again. They were clearly losing sales.

If we owned this restaurant there would be a "floater" - someone who would walk around the bar looking for people ready to reorder. If this person scooped up 10 extra drink orders an hour they would pay for themselves and ensure that customers were receiving prompt and attentive service. But a well trained person could probably do much better, pay for themselves, ensure high service levels, and bring in a healthy profit!

So what's the answer? Take the people you have, and develop them to build sales to justify an increase in hours. Then strategically add hours with well trained people and build from there. The answer is to operate with an "income" mindset rather than an "out-go" mindset. Your business probably does not have an out-go problem, you just have an in-come problem. So work to boost that first!

Richard Fenton is a speaker, trainer, consultant and author that specializes in the retail industry. Richard's topics includes sales, sales management, leadership and customer service. For more information visit www.fentonwaltz.com or call (800) 290-5028.

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