Seven “sins” of the shoe business. How do owners harm the company with their own hands?

Why is Company X able to create a strong, profitable brand, but Company Y is struggling to make ends meet? Many people prefer to attribute success to luck, luck, or the support of strong patrons. And few people ask themselves the question: “What am I doing wrong?” Moreover, many entrepreneurs begin to harm their business from the first day of its opening. In this article, together with SR expert in the field of fashion business management and development, Maria Gerasimenko, we will look at the 7 main “sins” that business owners commit using specific examples.

Maria Gerasimenko -

CEO of Fashion Advisers and the first online school for fashion business Fashion Advisers School, expert in business management and development, business coach. Fashion business management experience - more than 12 years. Successfully defended 2 MBA dissertations (Mirbi International Higher School of Economics, Russia, Moscow, 2013) and London Metropolitan University (Great Britain, London, 2017)

Main areas of activity: strategic and anti-crisis management of the shoe business, assortment matrix management, development of motivation programs, conducting trainings in the field of management, service and sales. Clients include: Unichel, Tamaris, s'Oliver, Kotofey, Rieker, Sinta Gamma, Helly Hansen, Rusocks and others.

The names of the characters and the city have been changed by the author, any similarities are accidental. #1 The main thing is to start, and then we’ll figure it out

“I have always had an interest in shoes. He opened the first Italian shoe store in the city back in 1998. Now we have 8 stores, we have been operating for more than 25 years, but sales are becoming less and less. What is the reason?"

Stepan. Krasnoyarsk

Given:

• A small chain of stores from the regional center.
• Stores lack traffic counters and performance indicators.
• Economic indicators of a business do not include the real cost of goods.
• Purchases are determined by the taste of the owner and two sellers.
• Pricing is built intuitively. The owner multiplies the purchase price by 2. He estimates by eye whether the buyer is willing to pay that price for a particular pair of shoes, and passes the list with ready prices to the sellers.
• There is not enough money, and the exact profit is not known to the owner.

One of the main traits of an entrepreneurial character is determination. This is an excellent quality until it goes to the extreme called “The main thing is to start, and then we’ll figure it out!” This extreme simplifies the essence of business in the eyes of entrepreneurs, so they simply discard boring and unnecessary analytics at first glance and save on software that allows them to accumulate and analyze data over time. This results in a lack of understanding of profits, a lack of data on traffic and conversion, intuitive purchasing and pricing, and talmuds of invoices from suppliers are sent straight to the shredder.

Surely, when you read this, you had a question: “What, Ivan Petrovich has an excellent business! 10 shoe stores and plenty of money! And he never counted any of your indicators. He succeeded - and I can do it!”

This situation can be compared to the emergency landing of a plane in 2010 in the taiga at an abandoned airfield. Then all the plane's electronic systems failed, including navigation, autopilot and communications. The commander was able to land the plane only thanks to his experience, a glass of water and, of course, luck - a unique coincidence: the pilot discovered a runway in the middle of the taiga, which, despite everything, continued to be looked after by the caretaker of an abandoned airport. Does this mean pilots don't need instruments? No. Does the pilot have confidence that he can successfully repeat such a landing again? No. So it’s the same with the success of entrepreneur Ivan Petrovich. He got lucky. It is not a fact that he will continue to have luck in the future. And it is completely doubtful that you will be able to repeat his success. Safe flight requires instruments and experienced pilots. And for a successful business - experienced managers and clear performance indicators.

Decision:

It is important when you are just starting your business to take the time to plan, build a business model, enter performance indicators and monitor their data on an ongoing basis.

In addition to traffic counters and performance indicators, it is necessary to implement software from the very beginning of the business that will automate the collection of data such as: traffic, conversion, average check complexity, NPS (net promoter score - assessment of the quality of customer service) and mystery shopper assessment. This data will help you quickly and accurately determine the reason for the increase/decrease in sales and take the necessary measures in a timely manner.

Misunderstanding your target audience “How can we identify a specific audience if all our customers are so different? Both women and men buy shoes from us, and even grandparents come sometimes. Our store is suitable for everyone!”

Margarita, Novosibirsk

Given:

Two offline stores in the regional center.
Selling accounts on social networks with delivery throughout Russia.
A deliberately formal business style of communication with the audience.
Assortment purchases are organized intuitively: according to the owner’s taste and customer requests.
The assortment includes items in three price segments: economy, medium and premium

Sales are down.

In this situation, it is immediately obvious: the company does not know its target audience (TA) and is trying to chase all the rabbits at once. There's just no point in this chase. To attract a client, you first need to get to know him.

Without knowing your target audience, you will not be able to answer questions such as:

· Where to find clients? · Which place to choose to open an offline store? · What is important for a buyer when choosing a product? · What “pains” of the client should be used in advertising? · How to set up advertising correctly? · Why do they buy, and how to sell more?

How to meet your target audience:

1. Conduct a short interview or survey. Buyers appreciate it when their opinion is asked, this increases loyalty. And at this time you will also learn useful information about “who your client is.” 2.Analyze which posts on social networks have collected the most saves and comments. What is important is not only those publications that had the greatest coverage, but also those that brought a client to you. 3. Study those who have already purchased. Look at their accounts, who they follow, what they write about, how they live, what they ask. 4.Ask direct and leading questions in the store and on social networks - stories, in posts, during live broadcasts. Thanks to answers to questions, you will increase engagement. 5. Each brand has a core target audience, additional segments, and occasional buyers. Once you have the information, segment your target audience.

Segmentation is the process of dividing the entire target audience into separate subgroups based on certain characteristics in order to increase the effectiveness of the chosen promotion strategy.

The method allows us to find an individual approach to each subgroup, so that each buyer has confidence that the company is making a unique offer specifically for him. Segmentation can be carried out according to such criteria as: location, socio-demographic characteristics, economic situation, psychographic profile, but the most interesting, in my opinion, are behavioral factors.

Segmentation can be carried out according to such criteria as: location, socio-demographic characteristics, economic situation, psychographic profile, but the most interesting, in my opinion, are behavioral factors.

Behavioral factors

In this case, the criterion for separation is the attitude towards the brand (positive, negative), emotional reaction to it. Depending on this indicator, the following subtypes of segmentation are distinguished:

The reason that influenced the purchase decision; • The benefit from receiving the goods is a forced necessity or an element of image; • Degree of use – people unfamiliar with the product and those who have made or may make a purchase. In the latter case, consumers are divided into the following categories: former, potential, new and regular customers; • Users' loyalty to a particular brand divides them into four segments: loyal, casual, disloyal (may switch to competitors) and non-customers (positive or negative); • Level of awareness: familiar or unfamiliar with the brand, interested in purchasing or unwilling to purchase.

Having carried out segmentation, you can identify for yourself one main and 3-4 additional segments of the target audience. This will allow you to stop spreading yourself thin, choose the right location and the right concept for the retail space, choose the appropriate language to communicate with your audience, make more accurate purchases and increase the efficiency of marketing and advertising.

3 Incorrect selection and motivation of personnel

“So, I tell sellers how to sell, how to communicate with the buyer - nothing works! Sellers burn out, do not comply with service standards, and violate regulations. Firing and hiring new employees is scary. What if the new ones will be even worse than the old ones?

Artyom, St. Petersburg

  Given:

• Large federal chain of stores.
• The vacancy was copied from competitors and is a dry listing of the functionality of the position.
• Most employees are dissatisfied with their work and constantly blackmail their managers with their dismissal.
• The salary level is 10% below the average regional income of salespeople.
• Salespeople work under a busy schedule: in many stores there is 1 salesperson per shift, the shift lasts 10 hours.
• Salary is calculated based on salary and percentage of sales.

Personnel is one of the key and most difficult issues in the shoe business. And yes, personnel decides everything: your wonderful concept, ideal assortment, loyalty program, advertising and promotion can be crossed out at the last stage - communication with the seller. Before you start selecting, compare your conditions with your competitors. If your conditions are less attractive to candidates than those of your competitors, reconsider the working conditions, and only then start searching for future sellers. Next, create a vacancy. The right vacancy necessarily includes the following blocks: 1. Briefly, catchily and vividly about yourself. In one sentence, tell us who you are and what you do. 2. Position and reason. Indicate the position and reason for searching for the employee. 3. Benefits. Provide compelling reasons why your vacancy is better than others. 4. Opportunities. Increase interest in the position by presenting future opportunities. 5 Responsibilities. Describe what the person will need to do while working. 6. Anti-obligations. What are the unpleasant responsibilities that usually need to be done by others and should not be done by you. 7. Requirements. Voice your wishes for your future employee. 8. Conditions. Be as specific as possible about what the candidate will receive. 9. Time limit. Create excitement by setting a deadline for submitting responses. 10. Call to action + contacts. Indicate what needs to be done to send the response.

Advertising

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What salary should I indicate if it depends on the salesperson’s performance?

It is optimal to indicate the average salary; this will not create high expectations and at the same time will not frighten you off with a low base rate. Don’t hide this figure; the absence of a specified salary has never motivated anyone to send their resume as soon as possible!

IMPORTANT!

When writing a vacancy, avoid dry and formal language. A good seller is a bright, modern and creative person. In addition, it is now mostly generations Y and Z who are looking for work, and these are generations that grew up on social networks and smartphones, and not on the queue at the thrift store.

Once your dream team has been recruited, you need to motivate it. We have already discussed the motivation program in detail in the previous article. Open the previous issue of the magazine - and feel free to apply the recommendations!

#4 Ignoring online sales channels

“We tried to launch sales on Instagram*, but it turned out to be blocked. Such horrors happen on WB that it’s scary to start, and your own online store requires quite a large investment. We have abandoned online sales and continue to work only in the offline store.” Anna, Irkutsk

The pandemic era has left a noticeable mark on changing consumer behavior. Even those buyers who had put off switching to online shopping for a long time were forced to use this tool. Many people liked buying online: they don’t need to go anywhere, the required product is easy to find through a search, you can compare it with competitors’ products and easily find the lowest price. In large cities you won’t have to wait long for delivery. In most cases, couriers will deliver everything for free in 1-2 days and give you the opportunity to try it on.

  Your business can't help but be where your customers are. Otherwise, perhaps not immediately, but gradually you will find yourself out of the game.
  Decision:

• Don’t forget that in addition to Wildberries, there are other marketplaces: Ozon, Lamoda, Yandex.Market. Choose the one most suitable for your business, study the terms of cooperation in detail, get training on working with marketplaces and, finally, take the first step.
• Continue to work on prohibited social networks and cover domestic VK and Telegram.
• Buy traffic on Yandex.
• Collaborate with micro-influencer bloggers and regional public pages that your target audience follows.
• Use such a shareware promotion option as geoservices (Yandex.Maps, Google Maps and 2GIS). Research shows that users are increasingly looking for stores “nearby”.
• If you do not have a sufficient budget to develop a full-fledged online store, start with at least a lightweight version using the Tilda builder and others. Website builders are already offering package solutions that include analytics collection, a payment system and cooperation with delivery services.

Today, the shoe business needs to keep its finger on the pulse: develop online sales channels, strive for omnichannel and seamless service. Sellers must be able to see in real time the availability of goods in all stores of the network and in the warehouse, provide the buyer with the opportunity to receive the goods in the desired way (delivery to the store, to the address, to the post office), and most importantly - to remember that the most important factors for the buyer are convenience and speed of receiving your purchase.

5 Intuitive assortment management

“I was mired in the leftovers. Based on the recommendation, I installed 1C, I try to buy what customers like. But there are still a lot of leftovers. What should I do? Svetlana, Saratov

Given:

• 3 shoe and accessories stores in the regional center.
• The 1C program was introduced: trade and warehouse.
• The article criteria are entered in the “Name” field, which makes it impossible to conduct a sales analysis.
• The database does not contain information about the cost of goods; there is no way to calculate the marginality of each item.
• Procurement is formed by the owner intuitively.
• The owner introduces promotions and discounts situationally: when sales decline and when competitors offer discounts.
• Discounts are introduced immediately on the entire range, without any purchase conditions.

Today, the vast majority of shoemakers use inventory accounting programs, but many have the classifier configured incorrectly. This eliminates the possibility of analyzing the data. This means it eliminates the opportunity to manage the assortment during the season, plan marketing activities and form the right purchases.

Among the common mistakes:

• Savings on professional implementation and customization of software for business specifics;
• Incorrect classifier settings: combining all characteristics in the name, duplicating colors (black, black, black; light green, soft green, pastel green), insufficient or excessive number of criteria;
• Lack of information about purchasing prices in the assortment matrix (the absence of this information does not make it possible to analyze the marginality of positions, and yes, this information can be hidden from employees);
• Savings on training to use software for buyers and managers.

Decision:

Implement correct inventory accounting as soon as possible. Do this at the very start of your business, and you will not have to re-enter all product items in the future. If you have an existing business and you find errors in commodity accounting, correct them as soon as possible, and then introduce analysis and planning.

#6 Opting out of advertising

“We don't have advertising. Everyone in the city already knows about us, we have many regular customers, we don’t need any additional expenses!”

Igor, Voronezh

Given:

•  The company has been operating on the market for 3 years.
• In three years, a client base of 650 people was formed.
• Of these, about 10% are regular customers who regularly make purchases in the store.
• Customers who came to the store once make up about 40% of the base.
• The company does not use advertising and does not attract new customers.
• New clients come only thanks to rare recommendations from regular customers or thanks to a brightly decorated showcase.

Reaching new audiences and attracting new customers is just as important as maintaining relationships with existing customers.
To provide your company with a constant influx of traffic from new customers, you must first determine which advertising channels will allow you to reach your target audience as much as possible. Next, calculate the forecast for the effectiveness of advertising investments and select a contractor.
Remember: advertising is the same investment that should bring profit. To calculate the effectiveness of your advertising investment, use the ROMI formula:

ROMI = Net Advertising Revenue / Advertising Expenditure x 100%

If this figure is >10%, then investments in advertising have brought good results. If <10%, then you need to look for errors. Errors may include: incorrect choice of advertising channel, errors in setting up advertising, ineffective advertising creative, or insufficient competence of the contractor.

#7 Lack of service standards

“I don’t understand why service standards are needed? The seller is already maximally motivated to sell, his salary depends on it! Also, all these scripts of yours are killing normal communication and turning sellers into living robots!” Alexander, Kazan

Given:

• The company consists of 3 stores located in shopping centers of the city.
• The average complexity of a store receipt is 1,2 units/receipt, despite the fact that the store has a sufficient assortment of related products.
• The average store conversion is 7%, which is low for a shopping center.
• The owners attempted to introduce service standards in the company, but it caused sabotage from employees.
• The mystery shopper audit showed that salespeople do not greet customers, do not show initiative, do not identify needs, and do not deal with customer doubts and objections.

The health and emotional state of patients depends on experience, skills and adherence to medical ethics. The lives of hundreds of passengers depend on the professionalism of the pilot and compliance with regulations. In the case of the shoe trade, your sellers are in the hands of both the mood and loyalty of the buyer, and the overall success of your business. So why do so many people let this happen? You can’t even imagine how much money a business loses due to salespeople’s inability to properly start a conversation, identify a need, handle objections, and increase the complexity of a purchase.

Decision:

Develop service standards, train staff in them and monitor their application. It is important to understand that the shoe business will never completely move online. Buyers come to traditional offline stores for emotions. Therefore, one of the important tasks of retail is to provide exceptional service and emotions at all points of contact with the consumer. Fashion Advisers provides both offline and online training opportunities to the shoe business. According to our observations, the demand for online learning is growing. At the same time, offline trainings do not lose their popularity. A medium and large shoe business trains employees 1-2 times a year in an offline format, and has been using online training for a year to refresh the team’s knowledge. For small businesses throughout Russia and the countries of the former CIS, online training has become a real godsend and an opportunity to increase the competence of staff while saving budget.

The one who does nothing makes no mistakes. Finding an error means taking the first step towards correcting it. I am sure that entrepreneurs who recognized themselves in this article will be able to quickly make the necessary decisions and reach a new level of sales. And we, the editors of Shoes Report magazine and the Fashion Advisers team are always there and ready to help at any time.

Photo: Ekonika SS'23