Recently a number of polls were conducted regarding business hours during this critical holiday shopping season. The results show some interesting results, and may have unearthed part of the problem retailers are having!
Polls across the country reflected very mixed results regarding the "early early" opening hours in stores and deep discounting. Some retailers were opening as early as 4 a.m., and most major retailers opening at least by 6 a.m. on "Black Friday." The results in sales were not major and were for some an hour-by-hour disappointment.
The "early early" 4 a.m. retailers are finding that the increased overhead for staffing and security may not be worth the effort. Tracking hour-by-hour sales and then spreading the same volume over the normal selling hours actually resulted in a negative figure. Coupled with deep discounts, it appears that the customer is the big winner getting super cheap prices at the expense of the retailer. In short, retailers are cutting their own throats.
These results are evidence of what some economists have been saying in the last couple of years -- the extra opening hours are not worth it and just spread out the volume over more hours at higher expense. They have also been saying that a "saturation point" has been reached for annual sales, and for retailers to expect sales "gains" year after year is no longer feasible. We are now in an environment of efficiency in retailing rather than pure volume. The retailer who manages the opening hours carefully and frugally very well may be the survivor.
The same economists are already predicting the demise of Wal-Mart, judging that they have already reached and exceeded their saturation point. The measure of survival will now be in creative marketing and efficient management. Opening store after store and extending hours is no longer the formula for success.
One small liquor retailer recently provided some important data on his operation, and showed how effective management is the key to business success. For years, he was open on Sunday, 12 to 12, and the same hours Monday through Friday. He wondered if the amount of sales he did on Sunday were actually worth the overhead of staffing and electricity consumption, so he started closing on Sunday and keeping his same weekday hours. His sales actually went up each week, and with the decreased overhead, profits went up also. The trick, he said, was that people came in on Saturday and stocked up on liquor and beer and were actually buying more than they did in "convenience sales" on Sunday. Plus, he said, it was nice to have a day of rest!
After working in retail management for almost two decades, this has been a belief I have subscribed to for a long time. I have always believed that if you were open 24/7, someone would wander in a 3:30 a.m. and buy a single item -- but that hardly justifies the expense. Of course, we live in an age where people are working around the clock, but that was done for many years in times past when there were more factory workers working a variety of shifts, but they always were able to arrange getting what they wanted when they needed it.
And everyone gets a "day off."
In this day of "multi-tasking" and "on-call" employees, perhaps retailers need to really scrutinize what they are doing. The fact is that labor cannot be discounted in sales. Two boxes of nails sold on Saturday are much more profitable that one on Saturday and one on Sunday. Saturation is a reality now, particularly in the current economy. Anywhere expenses can be reduced for business is important, and this may be one of the most important realities of this decade. Who knows? With more concentration on effieciency in less hours, the price we pay for things might actually go down!
