Category Archives: Convenience Stores

The A, B, C's of Inventory Management

The A,B,C’s of Inventory Management

One might think the books have not been written, the software not developed and the knowledge base empty when reading some of the recent headlines. When the largest retailer in the world announces they are reducing the amount of inventory in their stores because they have too much, it crowds the isles, confuses the customer and delivers the wrong message, one might wonder why they have this problem. After all the best and brightest work there and they has not held back on investments in technology. So how does the largest retailer in the world get themselves in a position where inventory levels are excessive?

Inventory management is an art not a science. The levels of inventory are a judgment call based on the available information. Let’s review how it is supposed to work. Before we start, this brief lesson applies to every company that has inventory no matter what industry and no matter what size the company. If you think this does not apply to you then I submit you are exactly the person I was thinking of when I wrote this article.

The primary reason for any inventory is to use it or sell it to make money. If you have an inventory of spare parts for a machine that is 20 years old, you are carrying that inventory to make sure you can repair the machine if it fails. If you dispose of the machine you no longer need the spare parts inventory. If you are a restaurant that specializes in prime cut steaks, you need the inventory to match the projected customers for today and maybe tomorrow. If your projections are wrong, then you either run out of steaks or have an excess. In the restaurant business, there rarely is any need to carry more than a couple days supply of inventory. Restaurant suppliers generally deliver more than once a week. In the fashion apparel industry, inventory is seasonal. In the early Spring merchandise is already in the pipeline for Fall and Winter. If apparel merchants misjudge the style, color, or fashion trend of their customer, they will be left with merchandise taking up valuable retail space. Blowout sales are then used to get rid of it.

Good systems will tell you the quantities on hand, on order, days of supply, gross profit in inventory, inventory turnover in total, by category, by vendor, by item and a lot more. Good systems will automatically process replenishment orders for item that are considered basic or staples. However, people makes policy decisions. Policy decisions are ones like inventory turnover will be at least 4 or we will now carry a higher mix of higher priced items to attract a more upscale customer. Inventory policy decisions drive the organization to action to achieve the goals of those policies.

In my experience, effective inventory policies are a result of business strategy linked to business financial performance and liquidity goals. When there is no clear definition of the goals then how do you evaluate actual results? Actual performance is always relative to the targeted goal.

The following is a brief summary of the impact of less than optimal inventory management:

Sales goals can not be met if you have nothing to sell. Forecasted demand along with replenishment modeling are key.

Gross margin goals cannot be achieved if your actual inventory mix does not match your gross margin goal or your customer demand patterns do not match what you have to offer.

Liquidity goals cannot be achieved if inventory turnover is less than target.

A,B,C Inventory Management Plan

1.Establish clear sales and gross margin goals.
2.Develop the same goals by line of business, product category
3.Identify the A items in each category. A items are the ones that make up 80% of the sales volume for that category.
4.Calculate the gross margin for the A items by category. Calculate the variance of actual gross margin for the A items vs. goal. If the result is the same, your goals are likely too low.
5. Repeat steps 1-4 for inventory turnover. Be sure the turnover goals tie into you liquidity forecast.
6. Develop detailed action plans to improve the performance of the A items. Assign a time line to those action plans along with specific accountability for implementation.
7. Extend steps 1-7 to the B items. Include in your action plan a goal of identifying which B items should move into the A category. This is normally done based on buying trends and gross margin opportunity.
8. Calculate the total investment for each level of inventory (A, B, and C’s) Evaluate the actual return on investment vs. target. You do have a targeted ROI, correct?

Project Manager: Make inventory a priority. Many people can be involved but one person should be accountable. If you have concerns about status or progress, hire an outside professional.

Complexities usually flow into the picture when people begin to spend a lot of their time on what they view are needed support tools. Those can include staff, systems and procedures. While tools are necessary to achieve your goals, a consistent focus on actual vs. targeted performance of A items should yield enormous benefits.

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource information.

Consumers Vote With Their Wallet

Your business will not learn you have lost the election until you realize the money is no longer being spent. Most of this attrition is preventable by following a few basics.

Consumer Marketing 101.2: Listen to your customer and ask them how you are doing meeting their needs and fix what is broken.

It is likely I am not a typical customer since I tell companies when I am happy or not with their products or services. It has been my experience that most companies DO NOT CARE or at least the people serving the customer do not care.

Not too long ago I had a problem with my laptop. Over the years I have purchased at least 10 laptops from one company. The last one is the last one. They accused me of a liquid spill and did not honor the platinum warranty for which I had been charged a premium. I will not bore you with all the details. Their customer service department didn’t care. End result – business lost. Lifetime value of this customer (me) is about $3,000 a year.

There is a service station close to my home with a car wash. I was working with a client near but not that close so I was driving a lot. I would spend about $100 per week at that particular station. 2 out of 4 times that I used the car wash – it didn’t wash. I have asked them repeatedly to fix the car wash. Each time they have given me free car washes or my car wash money back. I DON’T WANT A FREE CAR WASH …I NEED A CAR WASH THAT WORKS. Today was the end – I will not return. End result they lose $100.00 of revenue per week. I estimate their average customer spends $80.00 a month. If I owned that station I would consider me a valuable customer. They don’t care. When you see stores closing or changing ownership, just give the departing owner a sticker that says “I don’t care.”

Consumer Marketing…It is not about the headline, the copy, the web site, the direct mail piece or media ad. First and foremost,It is about how you treat the customers you have.

Author: Steve Pohlit, a business consultant who has helped companies in many industries including: retail, manufacturing, wholesale distribution, restaurant, real estate and trucking achieve increased profits. All information published by Steve, unless otherwise noted, may be republished without restriction with this resource box intact. For more information please visit

Dunkin Donuts vs. Starbucks

Dunkin Donuts wanted to know. To find out they offered to send their customers to Starbucks and paid them to go there and drink and eat. But they also paid Starbuck customers to come to Dunkin Donuts to eat and drink. In exchange, the people involved agreed to answer Dunkin Donut’s questions.

This test was reported by the WSJ and what Dunkin Donuts discovered was that there are very loyal people to both businesses and they are not interested in the competitor. The Starbucks Tribe will continue to go to Starbucks and the Dunkin Donuts tribe will continue to go to Dunkin Donuts. That was the conclusion.

Why did Dunkin Donuts conduct this test? The business of Dunkin Donuts has a strategy of growing and attracting more customers. So they want to know more about what appeals to people. Of course they could have their customers in a data base and communicate with them regularly and offer them incentives for answering surveys but that is all the subject of my rant in other articles at

Duncan Donuts used a traditional focus group approach. Duncan Donuts is to be commended on testing. They are to be commended on wanting to know what changes, upgrades, new product offerings will appeal to their customer. When you review their history, you may conclude they should have done this more often. The facts are most companies fall into the trap of not reinventing themselves. Why is this important to do? Well, look at Kmart. Do you recall when they were in Chapter 11? How about Delta airlines and General Motors? Do you think Microsoft can be in trouble? Interesting to look at history and then ask the hard questions?

There are lessons to be learned from the work done by Duncan Donuts. I remember working with the leaders of The Limited when they were the premier retailer in America. The culture was amazing. New fashion ideas, new store formats, new promotions were always being tested. Merchandise managers were expected to bring their insights of what the competition was doing to the famous weekly Monday meetings where performance was scrutinized.

The point is every company has a development history and at a point in time if you become a champion, a challenger emerges. This is the like playing the game king of the hill kid as a kid. Whenever you are winning someone will be out to take your place.

How do you sustain revenue and profit growth long term? How do you do that when as soon as you are on top there is a challenger? In The Profit System I teach how to track information that tells you how you are doing. Initially, the information is developed for you to track actual vs. plan and the plan is your own performance improvement plan. This evolves to where you are confident in your ability to achieve internal targets, then you set your site on local, regional, national or international champions. At that point your goal is to be the champion. The Profit System is free.

Why is that? Why do I offer something that I promote as being so valuable for FREE when I should be selling it for a million dollars or 10 million dollars or more? Simple, I know this works, and as Joel Bauer says ( my life does not change at all if you use what I teach. But yours is likely to change a lot. If I can be a catalyst of positive change for you and your company, I am delighted to offer these principles and The Profit System to you at no charge.

Wait there is one more thing. There is a major price to pay for using this system. This price is your time, attention and action to implement. My material is FREE. Even if I were to charge $50,000 for the this material and I am considering that, it is a small sum in comparison to the time you and your company will invest to apply the principles of The Profit System. Return on investment is off the charts. So if you want to make a lot more money go to The Profit System and register for the FREE course.

Will Ducan Donuts™ latest testing mean new store formats will be hugely successful? I don’t know. I do know this if they keep monitoring and keep testing they will figure it out. You can also solve the issues facing your business with a rational management system. I have given you one source for a management system roadmap.

Sending you energy of health, happiness, prosperity

Steve Pohlit

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About: Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies.  Steve is a business owner and an expert business consultant focused on building profits and net asset value. He is very experienced with Internet marketing and social media marketing.  All articles published by Steve unless specifically restricted may be freely published with this resource information.

How To Diffuse A Competing Ad Campaign

Calculating return on investment of brand advertising is an art. When a commercial is run on electronic media, whether it is TV or radio, the methods used to calculate return on investment include ratings that measure viewers or listeners vs. sales in the relevant period following the promotion. Since I work with companies on more objective ROI calculations based on direct response marketing techniques, you might imagine I question the effectiveness of brand marketing.

An ad agency executive would probably give me a dissertation on what I am missing and it is doubtful we would ever reconcile. I remember the discussion with the Vice Chairman of a major international retailer on the topic of decentralized organized structure vs. a centralized one for administrative services common to multiple companies operating under the same corporate umbrella. It is an issue that is never reconciled. You either have one point of view or the other. There is no middle ground on some issues. I think brand advertising vs. direct response marketing falls into the category of irreconcilable differences between marketers. Back to Coke.

I must admit the most recent ad campaign is awesome. The scenes make me want to go out and buy the product. Correction, they make me want to go out and live the scenes. This is particularly amazing, since I watch very little TV and rarely react to an ad in terms of thinking of making a purchase. One of the current ads being run by Coke is where a senior citizen is shown experiencing Coke for what is supposed to be the first time. The experience of drinking Coke for the first time motivated him to call a childhood idol for the first time and tell her he has always loved her. It also motivated him to run with the bulls for the first time. All first time acts for him. Very well done.

Congratulations to Coke. This is a campaign that links the emotional response to the product. If others have similar reaction to this as me, then the sales numbers should being increasing for Coke during the running of the ad campaign. On the other hand, if I am a competitor I would quickly mass out an end cap displays in my A category stores in A category markets, with pricing at about $1.00 less per 12 pack of Coke and diffuse their entire campaign. Of course I would also attach a bounce back coupon on that same display and link it to a customer contact page on line. When the contact information is filled out, the customer receives additional promotions and gifts on line. Once I have that contact information, I then know I have a person who bought my product and that is a customer whose loyalty I can now nurture and strengthen. This is a strategy that capitalizes on the media ad campaign of a competitor and turns it to your advantage.

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource information.

Retailers Can Win Customers Without Struggle

Mark Albright, staff writer for the St. Petersburg Times published an article in the Sunday paper on retailers struggling to win back customers. He does an excellent job at identifying the key issues customers face when shopping in many stores. In summary, customers know what they want from their shopping experience and they don’t get what they want most of the time.

Two charts were provided in the article. One showed that 68.4% of those responding to a recent poll said knowledgeable, helpful, friendly staff was the most important criteria for a positive shopping experience. The other chart reported that 50% of the people surveyed reported retail service has gotten worse.

Shoppers have always wanted a friendly environment with knowledgeable staff. What is most alarming is how poorly retailers continue to meet the expectations of their customers. With almost 70% of the customers ranking knowledgeable, friendly staff as most important, why is it that so many retailers continue to be obsessed with having compelling price? Studies have consistently shown and Mark points this out in his article as well, that less than 10% of the shoppers name price as the most important reason they shop a store.

Let’s examine pricing and promotion a bit deeper. The paper that Mark Albright writes for has a daily circulation of 1.2 million. On Sunday, like all large metropolitan areas, the paper is thick. Most of it is advertising circulars. Most have between 4 – 20 or more color glossy pages and this format is used by most of the major retail chains. Stores attempt to show items attractive to the largest number of people and offer special buys or sale pricing. The goal is to drive traffic to the stores.

Normally on a store by store basis, retailers are able to tell how effective a particular circular was by measuring customer count (customers that actually buy), average sale and items sold. Most retailers have these statistics, but there is one critical piece of information they do not have. They do not know who it was that purchased something. They do not know their physical address, they do not know their email address and do not know their customer’s phone number. There are exceptions and I will address those shortly. However, in general, large and small retailers spend huge amounts of money on print advertising to drive customers into their stores and they don’t even know who their customer is. Consequently, they are unable to thank the buyers, hear their comments and suggestions and they are not able to personally invite them back.

Here is a brief summary of the issues so far: consumers want knowledgeable and friendly sales staff and over 90% of them place importance on knowledge and friendliness over price. On the other hand, retailers spend a lot of resources developing promotions based on price to drive traffic to their stores. When the customer gets there, not just the price shopper but the loyal customers as well, the retailer is not properly staffed and the staff that is working is not properly trained and managed. I call this a mismatch in expectations and delivery. The result of that formula is a high rate of retail business failure with stores that fail being replaced by new ones that operate the same way. You know what you get when you keep doing things the same way. What is the solution? Keep reading.

When the subject of price in retailing is mentioned, Wal-Mart’s name always comes up. Here are just a couple of things I noticed about Wal-Mart recently. First they are increasing the number of more upscale items offered. Why are they doing this? It is because they understand that appealing just to the low price crowd long term is a risky business model. No retail chain founded on the low price model has ever survived long term. None. What else have I noticed? The other day I noticed a Wal-Mart banner on the front page of This particular ad was what is known in the Internet Marketing circles and Direct Response Marketing circles as a lead generation ad. I followed it through and noticed interesting “bribes” to get you to register for on line information. You could even categorize the information you were interested in receiving. Wal-Mart promised to give you advance notice of their best deals for the store closest to you. Notice I said store closest to you. When you entered your information they asked for your zip code so they could match you with relevant regional promotion.

Wal-Mart is taking the lead again in building their customer data base. I don’t think they have taken this to the store level, which where it really needs to be implemented. But they are headed in the right direction.

Do you need to have Wal-Mart’s system to implement a similar program? Last September I was testing the implementation of program with a small retailer in a small market. You can review more of the detail of this program at We used incentives as a motivator to provide their contact information. This program was hugely successful in a short period of time and confirmed the value of capturing the contact information of your customers and communicating with them. That is the first step in bridging the gap between what customers want and what retailers deliver. Note: if you are a grocery store, restaurant, nightclub, shoe repair store, dry cleaner or any business that has customers, this applies to you.

If you are a local or regional chain of stores, outsourcing this customer contact program is the most cost effective approach. If you are not sure that is a true statement Email Me and I will prove it to you. National Chains should outsource this program in the test phase and then it is likely that in-house technology will be needed long term. Regardless, it is easy to build your customer list, easy to communicate with them and this communication builds loyalty and value. This communication process is the critical link that breaks down when this process is managed internally. In summary, outsource this entire program initially; bring the technology piece in house if and when that makes sense but keep the communication program outsourced.

Does all of this solve the problem of bridging the gap of what the customer wants and what the retailer delivers? Absolutely not! All of the fundamentals retailers are paying attention to today must continue. Having the right product in the right place at the right time is a good goal. Having staff properly trained and managed is a great goal. But this is the planet earth folks. When all the best logistical systems and human resource development processes fail .. and they will from time to time, a strong binding relationship with your customer will overcome any isolated execution failures.

Are there any examples of anyone doing this more right than wrong? I remember in 1996 when I was in my second year of operating an Internet Service Provider company that I founded. I was focusing on industries likely to benefit a lot quickly from using the tools of the Internet. One of them was mail order. I knew there would be huge benefits to catalogue retailers from using the internet. Of course when I contacted many of them and they had no idea in 1996 what I was talking about. So I let it slide instead of pursuing that idea along with a number of other billion dollar ideas I had in the early days of the commercial Internet.

Today there are numerous examples of catalogue retailers doing a great job of communicating with their customer base. Now the big gains are coming from the “brick and mortar” companies who are communicating like catalog retailers. Who are they? Well Circuit City gets my number one vote. Circuit City sends me wonderful emails in addition to their weekly print advertising circulars. Wal-Mart is doing a good job now that I am on their list. In the catalog retail business, the best is Fredericks of Hollywood. Don’t even ask me why I am on their list but they do a great job. There are other catalogue retailers that have an effective communication program in place. In fact if you order on line from any catalogue company and give them your email address, I would bet you start getting information from them. Even if you don’t order, sign up for some of these lists to see what they send you.

The biggest mistake made by companies that have you in their data base, is dropping your contact information when you have not purchased for awhile. I know of one very popular retailer with a huge mail order division that sends me tons of catalogues but not one email. When asked about this I was told I no longer receive emails because I am not a current buyer. But they continue sending me expensive to print and mail catalogues. Go figure! Recently I was talking about this issue with an author and speaker on retail industry issues and discovered the huge successes several companies are having by aggressively pursuing customers who have become inactive. However, you need to know your customer and have their contact information in your data base to execute any program including this one.

In summary, study the companies that are doing this well. Look at your own business. If you are not sure what I am advising you to do will work, call or email me and let’s “kick it around”. Click to email or go to Retail Profit System for phone contact information. I am so convinced that there is a great need for help in this area I have recently partnered with several business development experts and we have formed a new company that will provide the Internet marketing services retailers and others need. Look for a major announcement soon on this advanced service for helping your business dramatically improve revenue and profits.

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource information.

But Bill … My Business Is Different!

“If You Hang Out With Coconuts, You’re Going To Be A Coconut.” Rocky

You may not have been in Chicago but if you add this blog to your RSS feed reader you will not miss another article when it is issued. Why is that important to you? Here is one reason.

Recently I invested four days of my time and more than a few bucks with Dan Kennedy, Bill Glazier and over 600 of my closest friends all focused on further developing profit building skills. If you don’t know who Dan Kennedy is then go to this link. If you are in business you need to be reading Dan’s No B.S. marketing newsletter Click on this link for a three month FREE trial

It’s too late to join me in Chicago, but add this blog to your RSS feeder by click on one of the links on the right hand side of this page because you will not miss another article. Since I will be giving you a number of valuable business building principles that came from the Chicago conference your are not going to want to miss any of it. Unless of course you are not interested in growing your revenue and profits.

There are conferences around the world every week. I attend on average 4-6 carefully picked ones every year. Conferences, resources I purchase from other experts and a growing network of very successful business owners form part of the foundation of my continuing professional development.

Now here are a couple very important points. You will benefit by making notes of these points. First: if you do not have a professional and personal development plan then you will have increasing difficulty, growing your business. The obvious answer is to have a professional and personal development plan based on you own strengths, weaknesses and interests. Second: while technology and global markets are advancing at lightning speed, the business and wealth building foundation principles are not changing, they are only being enhanced by different views.

The Profit System that I developed has business and profit building principles at its root. By the way, you can get most of this training absolutely FREE simply by subscribing to my six week course at The conference in Chicago reinforced this point as most of it centered on revenue building business principles that have been around for quite some time. So if they have been around for a long time, why is it that they still need to be taught? Well the facts are that these
principles are almost universally ignored.

What is the #1 foundation business building principle that we spent most of the 4 days in Chicago learning more about?

The Cow

Dan Kennedy told us that he has purchased a cow. Not just any cow but one that had long term value a measured by its ability to produce more cows and it has. So now one cow has produced more cows which are valuable and also produces embryos which are also valuable as they are implanted in other cows and the herd grows faster. The point is it starts with one and with the right action grows into a herd.

The Herd

This is the term used by Dan a lot in reference to the most valuable asset of just about every business. That asset of course is the customers of a business. Without exception, every successful business owner I have met or read about has achieved
success because they have developed a list of customers who trust them.

There are a number of ways to develop customers and in the next article I will cover the ones we spent of our time in Chicago discussing, why they work and what you can start doing now to make sure you are getting the highest return on you investment
in your marketing dollar.

P.S. If you are curious as to the reason behind the title to this article, I’ll tell you. Among the more than 12,000 members of Dan Kennedy and Bill Glazier’s Inner Circle, there is a small percentage of people who say to Bill “but my business is different.” The longer you read my articles and say to yourself “my business is different” the longer it will take for your business to realize its profit potential.

You know it the instant you see the person. It is apparent they have achieved an extraordinary measure of success and have the time to enjoy it. Steve Pohlit is an expert business consultant who developed The Profit System shows business owners how to achieve an extraordinary level of profit and the time to enjoy it. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource box.

The Hidden Costs of Employee Turnover

Mike Ullman, the CEO of J.C. Penny since late 2004, estimates the company has saved over $400 million annually by implementing programs to reduce the turnover of valuable talent. Mike has further quantified this cost per employee leaving. Each one costs J.C. Penny about one third of that employee’s annual salary to replace.

If J.C. Penny only loses one third of the cost of an employee’s annual salary when they leave and need to be replaced, they are fortunate. I have seen huge costs associated with employee turnover including the cost of recruiting, training and relocation. There are also the less obvious costs of lost productivity, lost sales and a loss of control of assets.

J.C. Penny operates fairly large format stores supported by district and regional managers. In theory, if a person leaves there is a backup to cover the business while a replacement is found. The reality is that even in that situation productivity is compromised and customer service standards are at risk.

Consider a smaller format store with local or regional retail chain. Often the only backup is none or maybe the owner. I have seen many instances where a store cannot open because of inadequate staffing. When this happens too often, the customer base loses confidence and the profits decline to a point where a store may have to close. Look at the transportation industry where there continues to be an acute shortage of drivers. How many freight companies are losing revenue because they simply do not have enough drivers for their equipment?

In each of these examples, the cost of replacing an employee is far greater than 30% of the departing employee’s annual salary.

In one of the modules of my FREE course How To Increase Profits by 30% or More in 90 Days or Less, I cover key ways to minimize the turnover of valuable people. One is to make sure you do not retain and nurture mediocre performers. That is a major negative influence on talented staff. Another is to clearly define and communicate company performance goals in terms of how they relate to a person’s job and then answer the question “WIIFM” or What Is In It For Me?

Mike Ullman is right on point focusing on the company’s number 2 asset. Employees in retail and many other industries are key to developing a company’s number 1 asset which, of course, is it’s customers. If you know Mike, please compliment him on J.C. Penny’s vastly improved performance and please ask him to visit which is a program that will definitely help him grow profits by customer.

A reminder: the FREE course including the module on human resource development is offered at I wrote the course and the human resource section based on my experience helping numerous clients across a number of key industries including retail, recruit and retain key people.

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Discover Three Programs Convenience Stores Can Implement Right Now and Win The Market Wars With Specialty Product Stores Like Starbucks and New Format Stores.

The key to success is winning customer loyalty before your competition has a chance to change buying behavior. How do you do that? Every retailer reading this article already has the answers. This short report will review those answers and provide a roadmap for implementation.

Roadmap To Successfully Compete With Specialty Stores and New Competitors:


Nearly every retailer I have worked with has a basic set of store operating procedures. Rarely is there a consistent management system in place to confirm the standards are being followed. So step number one, make sure your operating standards reflect how you must operate to compete with your neighboring Starbucks, Home Depot Convenience Store or whoever is your biggest threat. (For more detail on having the right management system in place, register for the complimentary Roadmap Course)


First discard the traditional financial measurements of labor costs as a percentage of revenue. Those numbers are completely distorted by the real costs of not having trained and motivated staff. They are further distorted by the costs of high turnover and the impact of turnover on the costs training and costs of failing to follow the operating standards. The operating standards having the biggest impact on profits are those dealing with inventory control, sale transactions and customer service.

Interim Summary:Have the right operating standards first then hire, train and reward staff for following your plan on how to operate your businesss.

Have the right operating standards first then hire, train and reward staff for following your plan on how to operate your businesss. Your Hidden Asset

The balance sheet for every business includes items like cash, inventory, property, accounts payable and equity. Nowhere on any balance sheet that I have ever prepared or read is there a number for the most valuable asset of the business…your customer.
If you have followed my articles, you already know I am fanatical about developing a customer data base and implementing an effective communication strategy with customers and visitors to your business. I have developed this view after working with possibly the most notable and successful consultant in the world – Jay Abraham. I have further imbedded this concept into my business soul by working with a number of the most successful Internet marketers and direct response marketers who universally state their only asset is their list.

There is an entire website devoted to this issue which is So I will avoid the temptation to lecture here. However, before moving off this point, the following are important:

  • Have as one of your primary missions to develop your customer and visitor list beginning now. This next sentence will seem self serving because in some respects it is, but let me assure you that you will never regret outsourcing this program. Of course you should hire me to get it done for you because I know how and I can do it much more economically than you can. And one more thing: if you say you are going to get it done, you won’t and you will be leaving tons of money on the table.
  • Do not attempt to implement a communication strategy using email with your own servers.
  • Integrate membership programs, email autoresponders, email broadcast and eCommerce at the same time.
  • Have a website and blog as a foundation for your customer and visitor list development program.
  • Have multiple secure backup points for your list – your most valuable asset.

Practical Examples:

My business is based on the theme “no reports…just results”. So let’s look at a couple topical items based on what seems to be a hot topic in the trade journals.

First Example: Can a C-Store successfully compete With Starbucks?

Answer: yes

Second Example: Can an older C-Store successfully compete with a new format store like those being opened by Rally’s or Home Depot?

Answer: yes

In each case the answer is in your people, your offer and your management of your customer list. Attempting to win on price won’t work. In the Starbucks’ example, their target audiance is not that price sensitive. So you have to offer a competing or even better product (not hard to do) with a higher perceived value. How do you know what to do? You test your ideas. In the case of Home Depot or some of the other major players coming out with new and exciting formats, you cannot compete on price because they have deeper pockets. You have to be prepared to take a bit of a hit when a new store opens and then win back your traffic plus add new customers with your service level, your product offer and your customer communication strategy. The big players will have a tough time competing with your local retail marketing strategy. They won’t be as nimble as you can be.

Now if you are a national chain leader reading this then you need to be implementing local retail marketing because the facts are most of the local merchants will not take action on this and when you do you will take major market share.

Let the games begin and remember the game is always won in the details.

Steve Pohlit, Business Consultant

PS. This article and a growing list of all articles developed by Steve Pohlit can be found at

Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue and profits by at least 30% in the next 90 days, please visit All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.