And Just One More Thing….

Now is not the time to moan and whine. You want to make more profit this year? You’ve got to do something to make it happen!

As Albert Einstein was once quoted as saying, “Doing the same thing time after time, year after year, expecting a different result each time is a definition of insanity”. So what are you doing right now to achieve incremental profit over and above last year?

There is one very simple, low cost action that will make a meaningful difference to your bottom line immediately. While essentially frequency of purchase and value of purchase are the two critical ingredients to profit growth, the easiest of these to alter quickly and cheaply is basket size or purchase value.

And it is very simple to affect.

The McDonalds “Would you like fries with that?” analogy works on two simple principles.

First and most importantly close the first sale first. Then and only then do you have the opportunity to add additional items to the basket. If you don’t close the first sale, you risk getting no sale.

Find some simple additional items that are priced at a point where the decision to add them to the basket is easy to make because they represent good value from the shoppers perspective and are not priced above a level where they need to be considered.

Look through your range and find both complementary products – which can be double ranged in the stand-alone department and with the complementary item – and look for impulse items that can be visually merchandised at the right point within the store to affect a reflexive purchase.

With shoppers continuing to become more and more impulsive in their shopping behaviour the greatest sales lift can often come from simply presenting the product to them to buy. As they say in retail 101 – “don’t die with your secret.” Stick it under the customer’s nose and present it in a seductive, easy to pop in the basket way and more likely than not it will sell in volume.

When you break sales growth down into individual transactions, generally the goal is surprisingly attainable. For example, take a food retailer who achieves a 22% average finished margin and a 4% EBIT with an average basket of $30.00. For as little as an average add-on sale of $0.82 cents to every transaction, profit can be lifted by 15% because there are no additional costs beyond the landed cost of goods. Obviously you need to work out the formula for your business, the items that could work and the places in the store that could best help you to achieve your goal.

But don’t ever forget the most basic step of scripting your staff to prompt that other thing that could go in the basket. If you don’t ask, you don’t get.