Wait for it

If you read this story to the end I will give you a maxim that will improve your business performance, especially if you are in sales.

First the preamble. I was a having coffee with a fashion agent friend recently and he told me how he'd been going through his retail customer list to find out which ones had stopped buying. They hadn't gone broke and as far as he knew and hadn't sold out. They simply weren't buying any of his labels.

"It was just like they'd forgotten about us," he said. "We'd phone them when we had a new range to show and they said they'd come and look at it but somehow they just didn't arrive. I looked at their figures during the times when they'd been active and they certainly did sell through well with our labels. So why were we missing out?"

Faced with such a dilemma, many agents would make a phone call, or send a friendly letter asking why the cold shoulder or, if taken with technology, they might send an email or a text message.

My friend did none of these. Instead he got in his car and went to see the retailers, many of them a long way out of town. The result was magical. His smiling face and his suggestion that he'd love to see them in his showroom brought them back into his active list. He said it didn't matter if they didn't see anything they liked, he just wanted them to have a look.

How many of us think that we can do it all on the phone or other IT methods? Although some industries, where commodity items are now ordered soullessly on the internet, can get away without making personal contact, schmuttas isn't one of them. Fashion is run on emotions, belief, visual excitement, and plenty of creative bullshit. It cannot be delivered by remote control.

Here's the maxim. Print it out and put it on the wall.
"When in doubt, go out"

What shall we do with the ugly sister?

Presuming Wesfarmers finishes up with all the Coles Group divisions, the most troublesome one will undoubtedly be Kmart.

"Sell the bloody thing" one major ex-supplier told me. That's fine, but selling it only sets up a game of pass the parcel. Eventually, somebody is going to have to fix it.

Because Kmart only publishes its total figures for public gaze, one must surmise what lies behind them.
For the half year to 31 December 2006, it appears that the performance slide continued from the previous full year, which had slid from the year before. Kmart is not running at a loss, but with a margin of only 3.38 per cent it wouldn't take much to push it into the red. When you consider that Kmart takes between 10 and 12 per cent from its suppliers in discounts and rebates, then another few per cent for advertising and general expenses it appears as though it would be trading at a loss if it didn't squeeze those suppliers.

Kmart has been around since 1969, dating from virtually the same time that The Myer Emporium purchased the 14 Lindsay & MacKenzie stores which eventually morphed into Target. 

Today, Target's profit is more than two and a half times that of Kmart even though Kmart has a 20 per cent higher turnover.

Kmart has 182 stores throughout Australia. Its range of goods includes men's, women's and childrenswear; garden; home; health and beauty; outdoor living; entertainment; toys and sporting; camping and fishing; automotive; DIY and everyday needs.

Since Myer joined up with Coles there has been a sibling rivalry between Kmart and Target, but over the past five years Target has pitched itself just under Myer and has left the bottom of the retail strata for Kmart. Unfortunately, Kmart has been unable to capitalise on it.

There is more to consider than the obvious problem: Kmart's management. The question is whether enough Australians want irreducibly cheap goods in sufficient amounts to make 182 stores profitable. Is it possible to turn the popular, but individually small two dollar shop model into a department store size - multiplied by 182?

In Australia's current state of affluence I don't think so. You can scour the world for the lowest prices and squeeze the life out of your suppliers by knocking off their best styles at half the price in China, but if all you present is a shop-full of low priced goods, the masses won't love you for it. Who wants a $20 bicycle or a $99 computer or a $39 suit? Sure, a few people who are doing it tough, but most will see what Target's got in the category pay a bit more for a bit more.