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W. Frank Dell II, CMC September, 2004

EXPANDING RETAIL. W. Frank Dell II, CMC September, 2004. AGENDA. INTRODUCTION READY CHANGE GO. Questions. How to recognize the store is ready to replicate? What should be replicated? When to stop changing the store? What is the best approach to expansion?

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W. Frank Dell II, CMC September, 2004

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  1. EXPANDING RETAIL W. Frank Dell II, CMC September, 2004

  2. AGENDA INTRODUCTION READY CHANGE GO DELLMART & COMPANY

  3. Questions • How to recognize the store is ready to replicate? • What should be replicated? • When to stop changing the store? • What is the best approach to expansion? • What is different with multi-formats? DELLMART & COMPANY

  4. Growth Is Good • Shows progress • Measured • Per Square Meter • Comp. Stores • Percentage increase • Benchmarks • Inflation • Market growth DELLMART & COMPANY

  5. Profits Are Better Sales • Cost of Goods = Gross Margin • Store (Labor, Occupancy & Inventory) • Transportation (Labor & Equipment) - Warehouse (Labor, Occupancy & Inventory) = Direct Profit DELLMART & COMPANY

  6. Caution • Uncontrolled growth • Over-leveraged growth • Management ability • Growth for growth • Forgetting the customer DELLMART & COMPANY

  7. AGENDA INTRODUCTION READY CHANGE GO DELLMART & COMPANY

  8. Honest Evaluation • Use an independent approach • Set pride aside • Focus on reality not • Wishes • Hopes • Dreams DELLMART & COMPANY

  9. Reasons For Success • Lucky location • Lack of competition • Unique merchandise • Exceptional service DELLMART & COMPANY

  10. Are Customers Ready ? • Increasing customer count • Repeat customers • New customers • Increasing transaction size • Excluding inflation • Increasing category participation • Shop the store not the aisle DELLMART & COMPANY

  11. Is Financing Ready ? • Increasing profits • Sufficient ROI • Greater than interest rate • Sufficient cash flow • How financed • Internal cash • Borrow DELLMART & COMPANY

  12. New Store Models DELLMART & COMPANY

  13. Are Associates Ready ? • Adequate operational controls • Discipline in process execution • Training ability • Available management time and talent DELLMART & COMPANY

  14. Are Suppliers Ready ? • Sufficient merchandise range • Sufficient merchandise supply • Consistent supply • Delivery capability • Ability to supply • Fixtures • Displays DELLMART & COMPANY

  15. Is Your Plan Ready ? • Defined target customer • Site selection criteria • Location strategy • Pro-type store format • Rational financial estimates • Sales • Profits • Capital DELLMART & COMPANY

  16. AGENDA INTRODUCTION READY CHANGE GO DELLMART & COMPANY

  17. Important Question Question When do you stop making changes to the store? DELLMART & COMPANY

  18. Important Question Answer NEVER DELLMART & COMPANY

  19. Resistance To Change • Change is difficult to effect • Associates resist change • To varying degrees • Unless conditioned • Customers only accept some change DELLMART & COMPANY

  20. Change Is Good • Keeps the store fresh • Entices consumers • Creates merchandise excitement • Creates reason for store visit DELLMART & COMPANY

  21. Change Can Be Bad • Increased costs • Confuses the customer • Difficult to • Manage • Execute DELLMART & COMPANY

  22. Degree Of Change • Seasonal • Items • Categories • Pricing & Promotions • Departments • Layout • Store Name DELLMART & COMPANY

  23. TEST Set Goals Implement in select stores Evaluate ROLLOUT Develop plan Communicate Stores Logistics Supplier Execute Implementing Change DELLMART & COMPANY

  24. Prototypes • Don’t exist • Everyone has one or more • Cannot expand without one DELLMART & COMPANY

  25. AGENDA INTRODUCTION READY CHANGE GO DELLMART & COMPANY

  26. Overall Process DELLMART & COMPANY

  27. How Many Stores ? • Too aggressive • Likely failure • Poor execution DELLMART & COMPANY

  28. BUILD Advantage Maximum control Builds asset base Disadvantage Longer time LEASE Advantage Smaller capital Faster time Disadvantage Landlord control Build Vs Lease DELLMART & COMPANY

  29. Store Plan • Site requirements • Size • Layout • Merchandise & services • Labor requirements • Forecast • Capital • Profit & Loss DELLMART & COMPANY

  30. Headquarters Resources DELLMART & COMPANY

  31. Organization Structure A DELLMART & COMPANY

  32. Organization Structure B Expansion Task Force DELLMART & COMPANY

  33. Information Technology • Transaction projections • Processing capacity • Hardware • Software • Communication • Capacity • Backup • Dependability DELLMART & COMPANY

  34. Merchandising • Workload • Suppliers • Items • Transactions • Inventory Pipeline • Opening coordination DELLMART & COMPANY

  35. Logistics • Processing • Storage space • Warehouse Equipment • Transportation • New store • Fixtures • Equipment • Merchandise DELLMART & COMPANY

  36. Finance & Accounting • Expansion financing • Banking relationship • Monetary Control • Construction • Operations DELLMART & COMPANY

  37. Human Resources • Personnel policy • Hiring new associates • Training associates • Phase-in staffing DELLMART & COMPANY

  38. Store Operations • Standard Operating Procedures • Succession planning • Promote from within • Improves morale • Provides consistent service • Builds company cultural DELLMART & COMPANY

  39. Construction DELLMART & COMPANY

  40. Hard Advantages Greatest impact Focus spending Disadvantages Exposes weakness Risk of failure Soft Advantages Easiest to execute Controlled recovery Disadvantages Limited impact Hard Vs Soft Opening DELLMART & COMPANY

  41. Multi-Format • Annual plan determines number stores • Adjust for opportunities • Site evaluation • Size • Target customer DELLMART & COMPANY

  42. Summary • How to recognize the store is ready to replicate? • What should be replicated? • When to stop changing the store? • What is the best approach to expansion? DELLMART & COMPANY

  43. Thank You DELLMART & COMPANY

  44. W. Frank Dell II, CMC President DELLMART & Company 125 Hardesty Road Stamford, CT 06903 USA Tel: 203-968-8609 Fax: 203-968-8613 e-mail: Frank@Dellmart.com Web Site: www.Dellmart.com DELLMART & COMPANY

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