The Beauty of Retail Chains

I love working with retail chains.  They have the sublime beauty of leverage.  Where else can you get your every decision amplified 100-fold?  If you have 100 stores in your chain and save $1,000 in every store (and it is not difficult), you just added $100,000 to the bottom line.  The downside is that if you make a mistake, the consequences will be amplified too. 

The potential risks should not deter you; there will never be a better time to make improvements in your store operations.  In the current economic climate the conservative voices are silent and good ideas have a much better chance.  The trick is to manage the risks, so when something goes wrong, you do not cause a catastrophe (remember: leverage works both ways; it amplifies penalties too). 

The best way to manage risk is to pilot your improvements in one store and then deploy it in a few more stores.  Once all the unforseen consequences of your great idea are in the open, roll it out to all stores.  Just make sure that when you test marketing ideas, you pilot them in isolated markets, as some marketing initiatives cannot be reversed. 

Some ideas to consider: eliminate couriers between the Head Office and the stores, introduce surcharges on the most expensive charge cards, eliminate double counting of cash, bank your cash takings on the day, and so on The key objective is to eliminate what I call: business rituals processes that are executed every day but no one can rationally justify why we keep them.  So, question everything and when you find one of those, stop it in one store.  It may look scary at first, but if nothing happens, stop it everywhere.

- Andrew Gorecki