Maximise Profitability Of Floor Space – Lets Chat with Kevin Hennah

I recently had the pleasure to attend a presentation by Kevin Hennah at the Collins St. Precinct breakfast. Hennah spoke about one of my other favourite subjects—how to increase sales and customer returns through an overall merchandising strategy—and I knew I wanted to interview him about how to make a difference to retailers. Hennah travels the world to gather information about the latest themes and directions being taken by retailers across the board, and I was dying to pick his brain. One facet of Hennah’s expertise is his ability to relay hot-off-the-press information and ideas from his overseas trips to countries like Dubai and London. Hennah is the man you want in your retail corner when it comes to thinking about clever space management and maximising profitability of floor space.

Can you tell us a little about your past experience?

I was with The Body Shop for 9 years in the 1990’s, and this was when the company was seeing key growth. One of my major roles was implementing Operational Planning for Christmas and Mother’s Day, two massive retail sales opportunities. We spent the entire year planning for Christmas, and then I went on to become a national consultant to store managers looking after merchandise presentation and store image. I left The Body shop in 1999 to do some consulting, and my services were quickly called upon by retail giants such as Osh Kosh, Virgin Mobile, Kathmandu, and Interflora. I also do a lot of work with pharmacies and optometrists, not to mention several other small businesses.

What was the defining moment that led you to create your own business out of helping companies increase sales through merchandising strategy?

I loved working at The Body Shop, but after 9 years I knew it was the right time to move on. One of my first big clients after The Body Shop was Osh Kosh and they approached me to design their new shops, insisting that the only thing they wanted to keep was the logo. I worked closely with the designer and she brought to life my ideas, giving me the opportunity to come up with layouts, locations and fit outs. It was an experience I truly enjoyed. Another big opportunity in those early days was Villa and Hut. I joined them at the conception stage, assisting with the set-up and opening of their stores. I didn’t realise just how much I learned at The Body Shop until I got out there and moved on to something else. I guess it’s true what they say, you don’t really know what you know. The Body shop was big at developing their staff and it really made a difference in my later projects.

At what point would clients come to you?

Clients approach me once they are opening stores or renovating, or simply need an injection of sales-driven visual merchandising ideas. My job is to shine a light on the commercial side their business and do what I can to make it as appealing as possible. The architect has a vision of building a beautiful store, but I come in and look at the reality. A shop can be designed to look absolutely stunning, but if the store design and layout is not a platform to make money, it’s going to go bust. I get involved in the early stages and help ensure my clients are creating a platform for success and profitability.

Then, on the other side, I meet with clients and it has nothing to do with store design. This would be when the store is already done and I assist with making sure that they have the right products in the right location and that the volume is merchandised well with the right ticketing. After an initial consultation, I walk around the shop with the client to assess that everything is placed strategically.

In the end, despite the client’s reasons for working with me, it all comes back to selling. I look at a business’s marketing and promotional efforts with realistic eyes. I make sure each company is offering something unique to the customer so they’re not blinded by their own business.

What are some of the biggest mistakes you see retailers commit?

• No real identifiable point of difference. Sometimes they think they are offering something different when really, they’re not or they don’t even know their point of difference. These clients will look at me in confusion when I ask them, “Why would someone shop here when they could go anywhere else in the street?”
• Not using sales data to drive their store layout.
• Bad buying decisions, which pushes them into discounting (which they can’t afford).
• Blaming the Internet, suppliers, centre management and the head office because their sales are down, but never accepting responsibility that they are the ones driving it.
• Not accepting that retail has never been nor will it ever be static. The foundation of retail is being responsive, changing constantly, and reinventing yourself inline with the changing market. For example, many have been impacted by online shopping and I am sure most saw it coming. Unfortunately many have not been proactive in tailoring their strategy to remain relevant. Retail is about being agile and reinventing around the changing tides, so to speak. I find a lot of retailers who are swimming like hell against the tide, but if they just caught the wave then they could enjoy the ride. That is the consequence to a reluctance to change. You just have to find your point of difference and keep moving.

 Three tips you would give retailers when it comes to merchandising and use of space?

• The 80/20 rule: 80 % of your sales come from 20% of your product. Best sellers should drive your merchandising strategy.
• Products have to pay the rent on the space they occupy. You are not an art gallery; you are a commercial venture. Retail rent is high and everything has to contribute.
• Do not put your bad buying decisions at the door as markdowns and think you have succeeded when after weeks, they finally sell at little or no margin.

 I’ve heard you talk about hot spots in stores could you tell me a little more about this?

When standing at the entrance of a store, high profit margin and drawcard products should always be prominent. On a big-picture level, I should be able read your sales figures simply based on the way the store is set out.

 Why do you think it is important for retailers to employ your services?

I go overseas numerous times each year to gather ideas, inspiration and any information I can to bring back to my clients. This year I will be in Dubai, London, Los Angeles, Japan, Bangkok and Hong Kong. I look for themes and smart initiatives and bring back the flavour of what’s happening. Retailers are very busy and they tend to focus only on their sector of retail; I look across the board. It’s obviously important to know what is happening your sector, but to be a leader, you need to draw parallels from others. Sometimes I can find some brilliant technology or social media-driven initiative in pharmacy and with a bit of massaging, I can inspire fashion retailers to adopt these ideas. The goal is to become the leader, rather than simply aspiring to keep pace with your competitors – or worse still, going into a price war!

 What is a good store layout designed to do?

A good store layout is designed to drive sales!

 In your travels, which retailers stand out for you?

• Zara and H&M They are responsive, dynamic and quick to respond to changes in the market place. Even if a small retailer could take 5% of their attitude, it would be a winner.
• Wholefoods USA This chain of health food supermarkets makes shopping an experience, and brings a sense of theatre to grocery.
  http://www.wholefoodsmarket.com/whole-foods-market
• Pret a Manger ( French for “ready to eat”) Pret a Manger is an amazing success story of girls fresh out of university that took a humble sandwich made and it incredible (and made themselves wealthy in the process). This retailer creates brilliant sandwiches and presents a menu that goes against the grain. While others are offering potato chips, Pret a Manger offers carrot chips. Cheese and cucumber sandwich are now lobster and aioli. Pret a Manger’s philosophy is that the food never sits on the shelf long enough to go stale. Their business model is simple, yet done to the highest possible standards. Not convinced? Just visit one of their hundreds of shops all over London and New York!
  http://www.pret.com/our_food/
• Anthropologie An absolutely fantastic merchandising of home wares and clothing.
  http://www.anthropologie.com/anthro/index.jsp
• Hollister California A fashion retailer that understands the importance of in-store experience. Their downtown NYC concept store is cleverly designed to look and feel like an old Californian warehouse, they’ve even have screens built into windows which create live, faux ocean views! Staff dressed in swimwear also creates quite a lot of attention from passing traffic! http://www.hollisterco.com/webapp/wcs/stores/servlet/StoreView?catalogId=10201&langId=-1&storeId=11205

Online shopping is here to stay. What can businesses do to ensure they have a consistent branding strategy?

Retailers need an online presence, and there needs to be brand consistency from the website to business cards to the employee uniforms to the shop signage. There are many small independent retailers who solicit customers by tweeting, uploading pictures to Instagram and utilising Facebook to get their message out.

Online shopping is definitely here to stay. There are certain products that people may be happy to buy online to save a few dollars. If you are a retailer stocking that particular product, then maybe you need to reconsider your product range. In short, many retailers are resisting change. This isn’t new, although direction from which the bullets are fired is. As one example, this was happening 10 years ago in the gardening industry when it was cheaper for independents to purchase some of their best selling products from large warehouse retailers than it was to buy stock from the supplier! Some of the nurseries didn’t react and were ultimately defeated, but then you had the others that morphed themselves into a model that worked in the changing market and survived. They went with the tide and not against it.

What can businesses do to ensure they remain relevant?

Retailers must create a tactile experience to capitalise on the leisure element of shopping. This is one of the few things that cannot be replicated online . One of my favourite examples of this is Converse in the USA, where people can design and embellishing their own personalised trainers and gym boots in store. Last time I visited, I was very impressed to find they had installed a huge America flag in their window – created by cleverly stacking hundreds of red, white and blue gym boots. The precision was amazing!

Closer to home, simple examples of in store experience can be seen at stores like T2, who offer complementary sampling. Also, some supermarkets now make Ipads available pre-loaded with recipes and cooking hints.

For more information and to engage Kevin’s services, please visit www.kevinhennah.com.au