Another Installment of Strange Retails: Running The Numbers

Generally these Strange Retails columns have focused on how demented customers can be. To be fair, retail employees and managers can be equally demented, in their own way.

Unless they’ve worked in retail few people appreciate how driven by metrics retailers are. And it’s not just obvious things like revenue or expenses either: retailers dance like marionettes to the tug of many strings. Some chosen metrics are obvious and straightforward, like Sales Per Square Foot, while others are more tangential, like Engagement or new credit account signups (the retail equivalent of wearing a minimum 13 pieces of “Flair”).

What’s with the obsession on metrics? In the words of one former boss (whom I frequently find myself quoting), “What gets measured gets managed.” The assumption being that by obsessively managing all of these individual metrics sales and revenue will happen.

Well, sometimes it does, and sometimes it doesn’t.

The thing about some arbitrary metrics is that they’re derivative of the basics: one or more steps removed from sales, profit, expenses, store
traffic, etc. Monkeying with the secondary metrics may or may not spur a change in the underlying realities of business.

Take Sales per Square Foot for example: it’s a standard metric that everyone uses to gauge store performance. We all admire Costco’s $999 S/SqFt and stare in awestruck wonder at the Apple Store’s $4000 S/SqFt.

But in stores with areas devoted to different categories put too much emphasis on S/SqFt and the temptation to monkey with the numbers is almost irresistible.

After all, the easiest way to double your S/SqFt is to cut the square footage in half and keep the sales the same!

Shaky reasoning, and very Dilbert-eque but I’ve seen that decision made more than once.

On a different note, another trap retailers fall into is celebrating an apparent success, without looking deeper at what really happened.

Years and years ago I was a multi-store manager responsible for several locations of a chain of sunglasses kiosks. Believe me, it wasn’t nearly as
high powered or glamorous as it sounds.

Long story short, at the start of one holiday long weekend our Point Of Sale (POS, which also stands for something else) terminal died. The helpdesk was unable to reboot it, and because it was a long weekend, we couldn’t get a replacement FedEx’ed to us until the next week.

So we toughed it out and wrote manual receipts and did phone authorizations for credit cards. The following Tuesday, when we got a new POS terminal, I sat there and keyed in all the manual receipts from the previous three days.

I thought nothing further about it until two weeks later when I got a very nice card, hand written and signed by the CEO thanking me and my team for our performance: On that Tuesday, our location had the highest gross sales out of the thousand-plus locations in the entire company!

Oddly, he didn’t ask why we’d posted zero sales for the prior three days.