Retail

Customer Payment Trends are Changing. Are You?

by Bridget Weston Pollack
Originally published on July 26, 2018, at SCORE

Human beings have utilized everything from food and crafts to checks and mobile pay to purchase goods and services.

The ability of businesses to analyze and adapt to ever-changing consumer behavior and preferences is crucial to their financial success. As technology has improved and integrated itself into our economy, consumers are already changing their preferences along with it.

In this month’s infographic, “How Customers Want to Pay: Is Your Small Business Keeping Up,” we delve into the customer payment trends now facing small businesses.

Cash is no longer king

In the same way payments of the past have come and gone, cash is becoming a less desirable payment option for consumers. A whopping 46% of people surveyed say they rarely or never use cash, and 20% said they don’t even carry it with them. Since the use of cash is dwindling, people have turned to other methods of payment.

How do people want to spend?

Instead of cash, customers want options when it comes to how they pay. A study conducted by the Federal Reserve shows that B2C customers spent $105.3 billion on noncash payments while B2B customers spent $24.6 billion. Among the B2C customers, the majority preferred debit cards, to the tune of $57.4 billion. Meanwhile, in the B2B sector, ACH electronic bank transfers at $9.6 billion were the most common form of cashless payment followed closely by checks at $8.7 billion. Credit cards were used modestly by both sectors, with $26.9 billion being spent by B2C customers and $4.1 billion being spent in the B2B arena.

Payments of the future

Aside from the more traditional payment options, mobile pay is quickly catching up. From 2015 to 2017, the total number of Apple Pay users increased from 15 million to 86 million people, and Android Pay users increased from 2 million to 24 million. That’s an increase of 71 million users for Apple Pay and 22 million users for Android Pay. With an uptick like that, it’s a safe bet that mobile pay will continue to trend upward.

Fear surrounding online fraud

Although mobile pay is on the rise, people are still worried about online security. The concern over fraud has caused 37% of those surveyed to stop purchasing anything over the web. Out of those who still make online purchases, 42% use credit cards, 26% use PayPal, 12% use a debit card, 10% use prepaid cards or gift cards, and the final 10% have no preference for how they purchase goods online.

How to keep customers happy

Surprisingly, 38% of small businesses haven’t updated their payment methods in the last five years. Simply put, businesses that haven’t adapted these new payment trends are missing out on easy ways to improve their cash flow, keep customers happy and increase sales.

Upgrading the way your small business accepts payments doesn’t have to be a hassle. Talk to a SCORE mentor today about ways you can make the transition into new methods of payment.

Copy of Secrets to Managing a Store Successfully: Part II

by Yamarie Grullon
Originally published on June 20, 2018, on SCORE.org

To prosper in today’s retail environment, small retailers need to adopt a strategic plan that enables them to adapt to the ever-changing market. In Part I of “Secrets to Managing a Store Successfully,” we covered three store management practices small retailers need to adopt to remain competitive in today’s cut-throat market.

In today’s post, we define four additional best practices store managers can adopt to improve store operations.

1. Set Clear, Specific Goals

What do you want to achieve in your business? Do you want to reach a specific sales value? Do you want to be able to increase your salary? Do you want the majority share of the industry in your metro area? Decide on what you want to achieve, and determine strategies accordingly.

If, for example, you want to reach $1,000,000 in sales this year, meeting that goal should be the objective that drives the rest of your retail operations. You'll want to focus on sales-related KPIs, perform analyses into which categories of product sell the most, and see which kinds of shoppers make significant purchases. Armed with this information, you can do things like increase stock in high-yield product types, tailor marketing toward your biggest spenders, and draw conclusions based on monthly sales statistics.

This said, it's also essential to ensure your goals don't overshadow general business sense. Sinking $200,000 in marketing expenses to reach your sales goal isn't prudent or productive. It’s important to understand the lifetime value of your customers before you make any investments.

2. Handle Consequences in a Timely Manner

As the manager of a small retail operation who is likely juggling many hats, it's common to unknowingly neglect or ignore the seemingly minor issues rather than tackling them head-on. However, doing so can be a grave mistake. Without placing immediate attention to these problems, a manageable challenge can easily spiral out of control.

Say, for example, your KPIs are indicating declining sales after a store reorganization. Instead of assuming it's a fluke, it's up to you to take immediate action. If your sales per square foot were previously higher, and your sales in what used to be a significant category declined, you can assume that rearranging your store played a significant role. Instead of waiting to see if things improve over the next six months, take action now, or risk losing tens of thousands of dollars in sales each month with no plan to turn things around.

This goes for employee issues as well. If a rude employee results in a negative Yelp! review, you need to talk to your problematic team member today, not next month at the team staff meeting. Ignoring the issue could lead to continued customer service issues and a declining business reputation.

3. Seek Quality Talent

As the adage goes, you're only as good as your weakest team member. When your team isn't skilled, your overall performance won't be good either. This includes management practices. The better your talent, the more likely your employees will be to stick around and give your store their all.

When hiring, keep these points in mind:

  • Clearly and efficiently describe job postings. Employees should know what to expect before settling into a new role.
  • Be reasonable and realistic. When your job posting meets industry standards, you're likely to receive a broad range of resumes that fit your general specifications. Going too far outside the box, like demanding college degrees for retail associate roles, can compromise the success of your search.
  • Pay appropriately. A minimum wage policy may be good for your bottom line, but it may not help you attract high-quality employees. If budget is a concern, incentivize employees with unique perks and benefits.
  • Recruit with a focus on performance and cultural fit. An employee with a bad attitude will bring down the team, no matter how good they are at sales.
  • Interview thoroughly. Just because someone sounds good on paper doesn't mean they'll be a great employee. Make conversations with candidates as in-depth as you'd like, and be sure to follow your instincts, at least to a point. Someone who seems a little off may very well be a poor fit.
  • Screen as needed. Background checks and reference checks aren't just formalities; these kinds of screenings can help you be sure that your candidates are who they say they are.
  • Make sure training is thorough and comprehensive. Employees need to start out armed with tools for success, and the better your training is, the more prepared they'll be to face both day-to-day tasks and extraordinary events.

4. Adopt a Coaching Management Style

How you work with your employees can play a significant role in how they work for you. When your persona is aggressive, strict and exacting, you may find yourself with a high turnover as employees are afraid of you. On the other hand, if you fail to set rules and boundaries, your employees may begin to take a lax approach to store policies in a way that hurts your brand identity.

As a manager, it's on you to provide stable, reliable leadership that does not belittle, bully or undermine. A coaching management style is often recommended, especially for small teams.

Combining authoritative and affiliative management styles, this variation on leadership balances independent decision-making with group input. Players can make suggestions that would boost morale and performance; coaches decide whether or not these ideas have merit.

For example, it's up to you to determine when employees begin preparing for the day. If you want this time to be 5:30 a.m., that's fine – but if employees start speaking out about an inability to do quality work so early in the morning, you may want to consider moving your time back a little so that employees feel less tired and stressed. However, if you feel that this isn't a good reason and such a start time is warranted, it's on you to stand firm and stick to your guns.

By thinking of yourself as a leader who provides guidance and support rather than a ruler who lays down the law, you are much more likely to foster a supportive and industrious environment.

Being the Best Manager You Can Be

Management isn't necessarily a natural skill, but the more time you invest in getting things right, the better you will become at optimizing tasks, leading your team, employing technology, and managing conflicts quickly and appropriately. With these seven secrets, you can learn how to manage a store successfully.

 

About the Author(s)

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Yamarie Grullon is the Director of Content Strategy at ShopKeep, the #1-rated iPad Point of Sale System. Yamarie leverages her professional experience with the brick-and-mortar community to create helpful & engaging content on all things related to small business and point of sale.

Yamarie Grullon
Director of Content Strategy, ShopKeep

Secrets to Managing a Store Successfully: Part I

by Yamarie Grullon
Originally published on May 17, 2018, on SCORE.org

Retail is a complex and challenging business, posing problems ranging from inventory management to theft prevention. When coupled with falling prices inspired by major retailers, like Amazon, and the rising costs of labor, there are a variety of pitfalls facing modern retail businesses.

With so many ins and outs to consider, now more than ever, effective management plays a critical role in retail success.

In this two-part blog series, we reveal the core principles and techniques you should apply to manage a store successfully.

Streamline In-Store Operations

Whether you know it or not, many of the day-to-day tasks that dominate small retail operations are based on old-school styles and strategies, like counting inventory by hand, creating manual schedules, and entering sales transactions one by one into bookkeeping software. While these methods can be useful, they cost you time that could be invested elsewhere.

Instead of letting cumbersome techniques compromise your productivity, take steps to streamline your operations and make the best use of your time.

  • Create to-do and task lists: There are two types of people in the world: those who make lists and those who are continually struggling to keep up with tasks because they don’t. Since the capacity of our working memory is limited, as a manager, to-do lists are your lifeboat. Instead of planning out things to take care of and hoping in vain that you can remember them, make to-do lists your new best friend. The lists you utilize can be as intricate as necessary, documenting all opening, daily, and closing procedures as well as hour-by-hour tasks like organizing shelves and overseeing employees. Your team members can use lists, too; this can help ensure all necessary employee tasks are managed accordingly.
  • Utilize automated tools: Automation is a huge benefit for businesses of all kinds, and retail is no exception. Virtually all aspects of the business can be streamlined using automated technology, including inventory management, staff scheduling, sales tracking, and report generation. With the right POS system, it's possible to optimize all of these tasks, putting a full suite of management tools at your fingertips.
  • Maintain a store clock: Do you know what you're doing every moment of every day in advance? If not, you should. A store clock is an hour-by-hour schedule that dictates what's happening at your store. For example, at 9 a.m., you may be entering the store, turning on lights, cleaning up, and making sure your store is ready to go. At 10 a.m., maybe you unlock the doors, ensure your employees are in place to assist customers, and then go to the back to work on administrative tasks.

Employ Lean Techniques

In business, the term “lean” refers to the strategies and processes that minimize waste and maximize efficiencies to increase your bottom line. While this terminology is most commonly applied to manufacturing and production applications, many lean principles that can be applied to your retail business.

For example, consider store schedules. If you're like many store owners, you probably have the same number of people working at the same times, every day you're open. Maybe you have a few more people on the schedule on weekends or shopping-heavy holidays, but otherwise, scheduling is relatively routine. Utilizing lean tactics to revamp scheduling, retailers can use data trends provided by their retail management systems to determine exactly when the store is busiest – and when fewer staff members are required for successful operations. Cutting just a few team members from the floor when they're unneeded can result in thousands of dollars in savings each week.

How you employ lean retailing will ultimately depend on how your store currently functions and the pain points you're experiencing, but many retail stores can benefit from:

  • Store organization based on the popularity of products.
  • A floor plan redesign pairing like items together.
  • Updated checkout strategies to minimize time waiting in line and at the register.
  • Aisle alignment to maximize the flow of cart traffic.
  • Intuitive utilization of the storage room based on store layout.
  • Optimization of administrative processes, like accounting and payroll obligations.

Utilize Key Performance Indicators

More commonly known as KPIs, key performance indicators can provide insight into your business you didn't know you needed. These metrics can be an important part of essentially grading your business, indicating what you are doing well and what you aren't. KPIs can relate to financial metrics, like gross sales, or other areas of your business, like inventory turnover.

While KPIs can exist in many capacities, some of the most important stats in a small retail operation include:

  • Gross profit margin: Calculated by dividing gross profit by revenue, this figure can tell you more about the actual profit you are making on your sales.
  • Customer retention: How many customers come back? By tracking repeat sales, you can learn more about how much your customers like what you have to offer.
  • Inventory turnover: Knowing how often you have to turn over your inventory can be an essential part of seeing how your sales trend over time. First, pick a period like 30 days and calculate the cost of goods sold over this period. Then, divide this figure by your average inventory in that period.
  • Sales by category: Some product categories may do better than others. Evaluating which types are the most successful can help you learn to prioritize your inventory.
  • Sales by square foot: By dividing your sales by the square footage in your store, you can see how efficient your use of space is and the effectiveness of your staff members, particularly in comparison to competitors and over time.
  • Average customer spend: If your average customer is only spending $15 with you rather than $150, you may want to consider increasing your efforts to drive sales in current shoppers. This figure can be found by dividing the total sales over a period by the total transactions.
  • Year-over-year variances: Are your sales declining year-over-year, or are your profit margins rising? By monitoring statistics from one year to another, you can track growth rates and understand how your business is changing over time.

KPI evaluations aren't just for your reference. Track KPIs on a monthly or weekly basis to monitor trends and issues that otherwise wouldn’t be immediately noticeable. It also helps to share these figures with management and key employees regularly during team meetings.

Retailing today is at an interesting crossroads. As big box retailers continue to undercut small retailers on price, adopting strong management practices becomes more and more crucial for growing brick-and-mortars.

 

About the Author(s)

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Yamarie Grullon is the Director of Content Strategy at ShopKeep, the #1-rated iPad Point of Sale System. Yamarie leverages her professional experience with the brick-and-mortar community to create helpful & engaging content on all things related to small business and point of sale.

Yamarie Grullon
Director of Content Strategy, ShopKeep