How knowledge can lead to success in Rug and Home Furnishings Retail— and how data gets us there.
They say success is a journey, not a destination. With that being said, it’s going to be really difficult to get where you want to go if you’re always heading in the wrong direction.
Unfortunately, this is exactly what’s happening in rug and home furnishings retail right at this moment. Retailers have the experience, they have the product, they have the skill. What they don’t have is the new-age knowledge of what it takes for success in today’s retail world. The modern customer is a completely different animal from the customer shopping even five years ago. Because of this, retailers need a new type of industry knowledge to compete successfully.
Luckily, there is a simple framework for how to be successful in retail that can be applied to any business model. This framework latches on to the power of data, and how by adding vital information you’ll have the knowledge needed to make successful business decisions.
Why Data is the Place to Start
First, what exactly is data and why does it matter to you as a retailer? According to Oxford, Data in definition is merely facts and statistics collected together for reference or analysis. On its own, data has no meaning. If you were given the data points “24, 32, 78, 14” this would mean nothing to you because these numbers have not yet been processed with any context.
So what gives data context? This is where information comes in. You have these data points (24, 32, 78, 14) and right now, these numbers are irrelevant. But what if you were told these numbers are your rug sales for the past four weeks? Now, you have valuable context and thus information.
By making smart inferences about this information, you will become knowledgeable on the action steps you need to take for your business. You see sales were up in week three when you ran a Facebook ad, so now you know to run another Facebook ad. You see sales were down in month four when your part-time sales person wasn’t working. Maybe now you need to consider hiring a salesperson full time. As you continue to recognize vital data points paired with relevant information, you will become knowledgeable about what your business needs to succeed.
The Simple Framework for Success
So there you have it: Data, Information, Knowledge. This is a framework RM Innovation’s David Khazai knows well, and he has spent years showing retailers just how effective this can be in real-life business settings.
The first part of Khazai’s process is easy, just ask yourself a simple question: what do you focus on daily, weekly, and monthly to grow your business? If nothing immediately comes to mind, you’re not alone. The majority of retailers do not quantify their business performance or growth. Giving your business powerful measurement tools is key when it comes to learning how to be successful in retail. It’s also the only way to acquire valuable data, which as we know, is the prerequisite to acquiring knowledge. So step one—empower your business with a top-notch tracking and analytics solution.
Flash forward and after tracking your business performance over a series of months, you should now have a plethora of data points you can put to use.
Let’s Look at a Real-Life Example
A few months ago, a rug retailer reached out to Mr. Khazai for help with his business. This retailer used to manage multiple locations and between 8-10 million dollars of revenue every year. Now he averages about $360,000 in revenue each year. Why? Because he lacks the information needed to make the right decisions for his business in today’s retail environment.
Mr. Khazai started out by asking the retailer what he believed was his greatest competitive advantage. When the retailer responded that it was his store location, Mr. Khazai surprised him by saying this wasn’t true. Having a great location may have been his competitive advantage ten years ago. Today, however, every business owner’s competitive advantage is their very own data.
Next, Mr. Khazai asked the retailer for the effective buying income (EBI) of his market, which it turns out is 37 billion dollars. Then he asked for some data points; average rug ticket, average cleaning invoice, and gross monthly sales. After looking at this data, the retailer was closing less than 12 invoices per month. With this information in tow, there were only two questions remaining: is the problem that you are not bringing customers in to the store or that you are not selling to them when they do come in?
An Answer & An Action
It turns out the answer was the latter, as the business was only closing 3 out of 10 customers who walked through the door. Now there is vital information on the table. Traffic to the store wasn’t the problem and the purchasing power of the market wasn’t the problem. The real problem was the business’s subpar selling process. If the retailer could double his closing rate, he would instantly double his revenue.
So, this led to a very clear action step; a better-trained sales force. And past just that, a sales force that knows how to sell in today’s market, not the market of ten years ago. Today’s customer doesn’t want a selling machine, they want a collaborator to guide them through the process of making a big purchasing decision.
To conclude, this is just one example of how looking at data points and pairing them with information can lead to valuable (and actionable) insights. By continuing the practice of making informed, smart decisions you eventually attain knowledge. And with the power of knowledge comes the achievement of success.