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Fred Clements: Avoid the Entitlement Trap and ENGAGE

Published May 2, 2014
A blog by NBDA executive director Fred Clements.

Editor's note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements' previous blog posts can be read on bikedealerblog.wordpress.com.

Entitlement can be a disastrous thing for retailers facing increasing competition and struggling to compete. The future belongs to those who are willing to change, who are tired of playing defense, and who are willing and able to aggressively engage with customers and transform their lives.

That was the message from Mike Cosentino, owner of Big Peach Running Co., a seven-store running retailer based in Atlanta, at the IBD Summit in Monterey in April.

He was speaking to an audience of bicycle retailers interested in hearing from a successful and growing retailer in a somewhat similar industry that is being challenged by online competition such as amazon.com and zappos.com.

Cosentino didn't hesitate to share his views that the first step for retailers is to dump old attitudes and take a fresh look at what it means to be a retailer today.

"The local market is not yours," Cosentino told the group. "Thinking it's yours is entitlement selling. Do not lay claim to something that is not yours. If you feel entitled you are wrong, and being local is not a marketing platform."

The solution he has employed has been to move away from entitlement and toward what brick-and-mortar stores are in a unique position to provide: engagement.

"You need to connect with customers in a meaningful way," he advised. "You do not work for yourself as an owner, you work for others, your customers. Every customer is a broadcast tower of information and opinion. If you do your job well, you can provide the content that they will pass on."

Cosentino continued, "You are not going to out-access the Internet or beat it on price and convenience. You need to create value in your store. People don't shop online because they are fully satisfied with the brick-and-mortar experience. That means you have opportunity."

Cosentino has found it useful to do this by focusing on the three traditional ways to grow a business, and developing a strategy for improving each area.

The first is to get more customer purchases. Strategies can involve work on increasing store traffic and focusing on conversion rates.

The second is more frequency of visits from current customers, having special events and features to encourage them to come to the store.

Third is larger transaction size, whether in ticket size (higher-priced merchandise) or more units per transaction that can be done with a combination of merchandising and staff training.

He said a lot of businesses make huge monetary and time investments that are not specifically aimed at improving these three elements. The result? Wasted time and money. Each of these can be measured. Strategies can be built to improve each one. Results can then be analyzed and strategies modified to suit.

"Mine your data," Cosentino suggested, citing Units Per Transaction, Sales Per Square Foot, Units Per Transaction, Inventory to Sales and Gross Margin Return on Investment as some of the key indicators he watches closely.

He also emphasized that small things can make a huge difference — "everything counts" — and recommended the book Everything Counts by Gary Ryan Blair. Many businesses focus their attention and efforts on getting the big things right, but they ignore the little things that often make a big difference. Blair writes in his foreword, "For years, we've been taught not to sweat the small stuff, but in the real world of business, Everything Counts."

Cosentino uses store merchandising to market for specific occasions from the customer's life, such as a long run (or long ride?). He advised to use associative merchandising where products related to the customer experience are placed together rather than separating by category (such as placing special detergent next to apparel).

In the bike market "it's really not about cycling, it's about retailing," he said. He urged dealers to focus on leading the growth of the lifestyle in all things, the in-store environment and the interaction.

"You cannot crawl out of the commodity trap without providing an experience," he concluded. "If you are not able to transform the lives of your customers, you will fail."

All businesses are entitled to compete for the sale, but not entitled to the sale itself. In that realm brick-and-mortar businesses can succeed by providing what the Internet cannot.

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