Multiple locations offer opportunities and challenges
Laurie Rudd -- Casual Living, 9/9/2010 3:23:06 AM
NAVIGATING TODAY'S retail landscape is a difficult task even for the hearty.
Yet, for those with multiple locations, the opportunities and challenges can throw in curves unknown to the single-store set.
From day-to-day workings to structure, personnel, communication and the creation of a healthy growth plan, operating more than one location can only be truly understood from within.
"The challenges may not be exactly multiplied, but there are many challenges that are just different for us," said Mary Mann, vice president of purchasing for Laacke & Joys, a three-store casual retailer in the Milwaukee area.
"In a single store, the ownership is in the store and the owner directly controls the customer's experience. They are physically there to make sure the ship is sailing the way they believe it should," said Tim Newton, managing director for Leader's Casual Furniture, which has 19 locations in Florida. "In this aspect, our challenges are different in that we have to build systems to convey our ideal culture and brand. Trying to convey a message rather than telling it yourself is never as effective. We work hard to build systems and empower our excellent staff to get the message out."
From maintaining a consistent business culture to logistics issues, challenges abound for multi-location retailers.
"Each of our locations is not only in a different region, they are sometimes even different states and with different family member owners," said Ken Reilly, manager, patio furniture for Pelican Sport Center, headquartered in Morris Plains, N.J. with five area locations. "This style of ownership creates challenges and opportunities that are unique to us."
Multi-location retailers often enjoy strength and a financial stability that enables them to take advantage of opportunities that may elude single store operations. "We have been pleased with the last couple years," Reilly said. "Sales were up, and a lot is due to the loss of competition in our area as well as the fact that our competition now has become the big boxes that run out of inventory halfway through the season." With its greater inventory across the company, Pelican enjoys being able to assist customers when other retailers cannot.
At Leader's Casual Furniture, the changing retail climate has not deterred the company from growing, including the addition of locations. "We have opened three locations since the beginning of 2007 - one each in February and March of '07 and one in May of '08," Newton said.
Today's available workforce and inexpensive real estate also provide opportunities for healthy multi-store retailers. "We have been able to upgrade several of our locations to A sites for the same costs we were paying for C sites," said Erik Mueller, president/CEO of Watson's of Cincinnati, a family owned recreational products specialist with six locations. "We added a new franchise location in the Louisville market that was previously Walnut Ridge in Clarksville, Indiana."
When retailers multiply locations, a critical piece of the operational puzzle is placing quality people in management positions where they can develop.
"A single location retailer can be much more hands on," Mann said. "We, however, need to rely on the skills of our managers more."
With multiple locations, attaining management members that also can cultivate the business culture is vital. Newton finds that hiring good people is the key to success, combined with the ability to be able to keep them. "We are fortunate that the majority of our team has been with us for over five years," Newton said. "Our people are our most important asset."
Many Florida cities were hit hard during the recession, but Newton sees it as an opportunity for personnel to shine. "We have excellent teams in some of these cities and they are selling close to all-time record volume."
Ultimately, with quality personnel comes added expense. Staying on top of operating costs is a constant challenge with all retailers, but exponentially with multiple location retailers. To rein in expenses, Laacke and Joys' managers are asked to wear extra hats, Mann noted. "We realign personnel to use people most efficiently for the company and for their own growth," Mann said. "Also, we take full advantage of all technology within our means to improve our team's productivity and manage work flow."
Technology is universally described as an important component in creating optimum efficiency for multiple location retailers. It is vital to share product information, company procedures and philosophy.
"We are always looking to technology to spread a consistent culture, increase productivity, speed communication and make it easier to find information," Newton said.
How the managers of individual locations are empowered to act varies between retailers. For most retailers, the multi-store concept works best when there are shared responsibilities between the ownership and the individual store management.
"Hiring and purchasing for some items are done individually at the locations," Reilly said. "The ownership, however, is totally involved in the marketing and advertising."
For Leader's, store managers also are involved in hiring and firing decisions within their team as well as merchandising.
"All purchasing and marketing are done on a companywide level to create the unified branding and greater buying power," Newton said.
All managers at Watson's of Cincinnati are involved in hiring and some product selection, but the majority of purchasing and all marketing and accounting are handled on the corporate level.
"Each of our managers has ownership of individual inventory," said Mann of Laacke & Joys. "They initiate trades of merchandise to create the right mix for their location's customers. We feel a team atmosphere is encouraged within that regard."
Different but alike
With multiple locations comes the challenge of the physical differences individual properties can create. "There is a broad variety in size of our stores," Newton said.
Although they may have the same product mix, the ability to display in the same manner may be altered due to space. Some may be able to display a seven-piece set where another (can show) only a bistro set. Yet, size aside, the overall feel of the stores is similar."
For most multi-store concerns, the product variation is controlled as a result of volume purchasing, but the ability to make alterations based on location remains a factor. "Location influences the (product) mix to a degree," Mueller said. "But, we generally try to keep the mix as close as possible in order to properly manage the inventory."
With the greater inventory needed to feed multiple locations, the inventory management must be a priority. "Operational planning with a multi-store is crucial," Newton said. "If a retailer grows to multiple locations without the culture in place for operating, managing inventory, warehousing and understanding of what they have, they will run into trouble."
Multi-store retailing may not be for the faint of heart, but for many it is thriving even in what may be seen as challenging times. For some, the framework has been well established. In the case of Leader's, Tim Newton is quick to credit his parents, Jerry and Linda, for creating Leader's Casual Furniture and the financial stability it enjoys today. "This has allowed us to build and continue building a stable multi-store distribution and retail model," Newton said. "Having multiple stores obviously gives us buying power, but it also gives us stability."
With all the challenges involved in today's multi-store retailing, growth in retail locations continues to be a possibility for many. Watson's of Cincinnati and Laacke and Joys join Leader's in remaining open to expansion through the addition of retail stores.
"We are continually exploring options, given opportunities presented to us," Mann said.
Optimism is another factor for multi-store casual retailers, and for all in the industry, that is multiplying.
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