Archive for Mystery Shopping

Dirty Bathrooms and Messy Stores Still Hurting Retail

Retail Store

Can cleanliness and organization affect how a retail store performs? You better believe it. 2018 was a rough year for several retailers…proving that fact.

Toys R Us closed for good in the United States and was forced to liquidate because it was unable to sustain its debt load after a leveraged buyout in 2005. According to a filing with the bankruptcy court, Toys R Us had still been making $400 million payments on its debt every year.

Department stores, in particular, have been struggling because of declining foot traffic to malls, which has affected Sears, JCPenney, Lord & Taylor, and Macy’s. They all have closed stores in the past year, and Sears filed for Chapter 11 bankruptcy protection after years of declining sales.

The rise of e-commerce has played a huge role in the downfall of some retailers who can’t keep up with Amazon, eBay, Wayfair, etc. Although stores have been working on improving their marketing strategies, it hasn’t always been enough. Even on Black Friday, traditionally one of the biggest shopping days of the year, stores were relatively empty.

Maybe it’s because department stores are focusing on the big picture and not the details. During secret shopper visits to various stores, it was alarming what was discovered. Empty shelves, dirty carpet, displays so crowded you couldn’t sort through the inventory, and empty cash registers with no employees in sight.

Tom Buiocchi, the CEO of facilities management platform ServiceChannel, sees it over and over. Retailers cut back on store maintenance and improvements and end up on the fast track to bankruptcy, while those who invest in store improvements and upkeep are succeeding and expanding.

A study commissioned by ServiceChannel surveyed 1,521 consumers and 70% said they recently had a negative experience with a messy store, ranging from dirty bathrooms and broken toilets, to disorganized shelves and burned-out light bulbs. Over two-thirds said they have walked out of stores because they were messy or disorganized. Four out of five shoppers said they would rather have a clean store than ones with the newest tech, and two-thirds said retailers are forgetting the basics—like clean floors and well-stocked shelves—in the rush to add tech. “The vast majority of purchases are still being done by people walking into a location. And their experience of that location has never been more important,” Buiocchi said in an interview.

With so many other shopping options, retailers must be on top of their game. Consumers want to be rewarded when they make the effort to walk into a store and a dirty, disorganized store says the retailer doesn’t care—about the store or the shopper. Store maintenance used to be considered “a non-sexy part of the business,” Buiocchi said, “but now it directly affects the high expectation for an in-store experience. And facilities managers all have a role at the table now.”

Many of the new online brands that are opening stores are quick to recognize the value of rigorous maintenance and are signing up as customers. “There are the people that get it, and there are the people that don’t get it,” Buiocchi said. “Good progressive retail is investing in their brick-and-mortar experiences and enjoying the benefits of that,” he said. “Bad retail is not and they’re unfortunately being penalized for that.”

Although JCPenney has been struggling the past few years, new CEO Jill Soltau, is up for the task of bringing the stores back to life. Soltau, who took over the position in October, said in a recent earnings call that the department-store chain is failing to adequately deliver on some fundamentals of “good retail.”

On Tuesday, JCPenney reported first-quarter earnings for 2019; same-store sales during the quarter dropped by 5.5%, following a 6% drop in the previous quarter. “I am pleased with the strides we’ve made in setting key objectives, building our senior leadership team, executing significant changes in our assortment, such as eliminating major appliances, and mobilizing the entire organization around our priorities,” Soltau said in a press release on Tuesday. She continued: “JCPenney is an American retail icon that is very important to all of our stakeholders, and I am encouraged by the early signs I am seeing in our business as we work to realize the potential that lies ahead.”JCPenney, and other struggling retailers, are definitely capable of delivering on the fundamentals of great retail. The fate of the company now depends on its ability to execute this shopping experience across its entire fleet.

The problem is consistency. Visits to numerous JCPenney stores across the Southeast proved just that. Stores in Richmond, Virginia featured empty shelves, messy displays, and abandoned cash registers. The stores, which both anchored enclosed shopping malls, felt outdated and far too large. However, a third JCPenney store in a strip mall, revealed flawless design, layout, and presentation. This store obviously cared about presentation, reputation, and customer experience.

How Loss Prevention Audits Help Retail

Loss Prevention

The loss prevention audit is a means of providing an objective and consistent evaluation of company standards, operating procedures and internal controls. Audits enable companies to address a variety of performance efficiencies that shape and influence service, sales, organization, security, productivity and numerous other factors that impact overall management and profitability of your store or facility.

Analyzing the results of a loss prevention audit can provide you with a multitude of insights in to the overall operations of a store. Compliance—and non-compliance—does more than provide you with specific information regarding how a specific strategy is being executed. The audit process will also provide insights about the bigger picture:

  • The leadership in the store and the way they supervise their teams.
  • Organizational skills and the overall way store operations are managed.
  • Management’s ability to plan, prioritize and multi-task.
  • The character of store management and how they perceive the importance of certain aspects of their job.
  • The sense of ownership that store management carries in making and keeping their store successful.

Auditing is a process, and should not be viewed as a single event that occurs in the store on any given day. Results should be reviewed and analyzed over time. Anyone and any store can show great results or great lapses in efficiency at any given time…but it’s how those results are received, how they are addressed moving forward, and how they are managed over time that will provide you with true insights.

It is vital that you approach audit functions with the appropriate understanding of your role in order to most effectively serve the company, the store, your associates and your customers. The spirit of the entire audit process should be one of growth and progress.

There will be challenges and opportunities, including:

  • This is what we found…
  • This is why it’s an issue…
  • Here is how it should be corrected…
  • Establish an action plan that facilitates correction and improvement…
  • Establish a timeline to follow up on the areas of opportunity…

The purpose is to reinforce principles that should already be familiar to those being audited and evaluate compliance with established performance standards. Too often, audits tend to focus on the negative. This unfortunate tendency can and will influence the entire process, and must be addressed in order to make the impression and realize the results that we hope to accomplish. Our methods and mentality should acknowledge achievements while recognizing the importance of training, education, and awareness as a means to send a message and improve our stores.

Driving Performance with Loss Prevention Audits

loss prevention audit should do more than evaluate performance. A well-managed program should also serve as a training tool that enhances performance through training and development. Compliance is a result of information effectively learned so that it can be applied, and behavior effectively inspired so that it will be modified and maintained. Ensuring that policies are correctly followed must be an emphasis of the audit process.

Tracking Results

There are many ways to input and track audits results. Some companies use paper audits and manually track the results. Some companies use software programs and handheld devices that enable them to instantly view, sort, and track results. However you do it, make sure that the results you track include the total audit scores, as well as the responses to each individual question.

The ability to quickly view the results of the inventory shrink audits should be a major consideration. Audit scores are important, but so are the common findings. For example, knowing that 95% of your stores failed questions 25 and 26 on the audit will enable you to determine why they are failing those questions and identify what needs to be done to get them back into compliance. Common findings should be reported on a regular basis so you can course correct throughout the time period leading up to your inventory analysis.

Communicating Results

Timely reporting of audits is important. As soon as an audit is completed, the results should be communicated to the store and the district manager. This enables them to take immediate action to correct identified issues. The sooner they can be addressed, the sooner they can be corrected.

Audits can serve as an important vehicle for ensuring operational compliance, enhancing awareness, measuring key performance functions, and providing valuable teaching and training opportunities. But our impact on the business is only as successful as our methods, our approaches and our attitudes when conducting the audit, when sharing the results, and when supporting the store teams. Information must be used in a positive and productive way. Our objective must be to improve the performance and productivity of our stores, and add value to the organization as a whole.

Loss prevention audits can be a tremendous tool in helping to validate performance and bring attention to store strengths and deficiencies, but it is how that information is used that will add value to the organization. We have to maintain a positive, objective approach when evaluating compliance. We should recognize exceptional performance when it exists.

We should not only identify opportunities for improvement, but educate the store on the reasons why it’s an issue, how it can potentially impact the store, and how we can make improvements.

Mystery Shopping the Franchise Process

B2B mystery shopping

Would you believe that 80% of franchise companies do not hit their recruitment goals? Why is that?

How many studies, reports, and surveys must franchise executives read to realize there is a problem? Year after year we see similar outcomes from the data. Franchise companies need to know that for any real change you must identify, properly diagnose, and address the root cause.

So what are the issues that companies complain about?

  • “We need more leads.”
  • “We need a better CRM.”
  • “Our franchisees aren’t validating.”
  • “We need better marketing materials.”
  • “We need a better team.”
  • “We need a bigger budget.”

Take a look at what the successful companies are doing.

Consistency is key to establishing success in a retail franchise business structure, meaning your brand needs to be diligently aware of how each individual location is performing compared to organizational and industry benchmarks. Each franchisor brand relies on the individuals within each branch to perform up to expectations, but too often there is a disconnect between these two partners. While every individual location under your brand umbrella should have a degree of self-control, there also needs to be strict brand identity guidelines that are being adhered to. Localization in marketing and product sourcing is important for individual branches, but ultimately there needs to be an assessment program that ensures each brand is contributing to the franchisor’s overall brand identity.

Follow these tips for franchise success:

1) Know that the business model and franchisor training/support works. Best practices are crystal clear, documented, and validated. They can effectively demonstrate turnkey systems for HR, marketing, sales, operations, finance, and technology. And there is a well-documented and comprehensive onboarding and start-up program.

2) Designate a true leadership team. This means executives who are growth-oriented, transparent, and “unit economics” focused. Your company should have a single vision with target dates that the leadership group is aligned to win. Resources match the targets and initiatives.

3) Develop a defined and documented recruitment system. No jumping from one format, model, or recruitment program to the next. Year after year, recruitment delivers results. Utilize this system for lead generation, turning suspects into candidates, and winning the top candidates as new franchisees so successful new units are opened to make the future vision a reality.

By making programs like mystery shopping compulsory for all individual branches, franchisors will possess a consistent stream of data that can improve the performance of every employee in the over-arching brand and offer insights to improve the corporate brand’s growth potential.