february 2011 michigan retailer

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3 5 7 Communicate Retailers must always communicate with consumers, but communication is broader than advertising alone. Page 7 New Designs Credit cards are sporting new looks, and the changes are more than cosmetic for some retailers. Page 5 Holiday Sales December numbers confirm holiday shopping was the best in more than a decade for Michigan retailers. Page 3 Item pricing reform moves forward Michigan Retailers Association. The proposed Shopping Reform and Modernization Act has gathered strong support from Governor Rick Snyder, legislators and newspaper Scholarship program accepts applications now through April 1 Continued on page 4 ‘How-to’ webinar series slated for March – June Michigan retailers would gain price- marking flexibility and consumers would enjoy an improved shopping experience under legislation being pushed by a coalition formed by editors across the state, signaling that this could be the year retailers achieve the long-sought goal of item pricing reform. “Michigan’s 35-year-old item pric- ing law is the worst in the nation,” said MRA President and CEO James P. Hallan. “If Michigan is going to move forward and reinvent its economy, it can no longer stick out like a sore thumb by discouraging business in- vestment, jobs and innovation.” Modern technology House Bill 4158, sponsored by Rep. Lisa Posthumus Lyons (R-Alto) and backed by the broad-based Coalition for Retail Pricing Modernization, would bring the state’s antiquated and costly item pricing law into the 21st Century by allowing retailers to use modern technology to communi- cate prices of general merchandise and groceries to shoppers. Current law requires that a price sticker or tag be affixed to virtually every item in a store, a costly man- date that discourages investment in modern pricing technologies. “Michigan’s current item pricing law was enacted in 1976. It is older than I am, and it forces Michigan re- tailers to use pricing technology that became obsolete when the briefcase phone was considered the wave of the future,” said Rep. Lyons, a first-year lawmaker, shopper and mother of four. $2.2 billion cost “Worse,” she continued, “accord- ing to a recent study by the Anderson Economic Group, the item pricing law results conservatively in a $2.2-billion hidden tax on Michigan’s economy each year…By cutting red tape and reforming Michigan’s pricing laws, we will finally provide retailers with the flexibility they need to deliver the most competitive prices, most convenient shopping experience, and the best technology to Michigan consumers.” MRA began to put together the co- alition last fall, Hallan said, in advance of the huge change in leadership tak- ing place January 1 throughout state government. Former Governor Jenni- fer Granholm, who was prevented by Continued on page 2 Continued on page 4 ® February 2011 Vol. 36 No. 1 The official publication of the Michigan Retailers Association www.retailers.com Michigan Retailers Association’s annual competition will award at least 34 college scholarships this spring for the 2011-12 academic year. The scholarship program benefits the employees and families of MRA member businesses. It is funded by the Michigan Retailers Foundation, which pays for the awards out of the earnings on foundation assets. Scholarships are $1,000 for students attending public or private four-year universities and colleges, $500 for those attending community college. Recipients are selected for their average to above-aver- age academic performance and extra- curricular activities, which can include part-time employment. Financial need is not a con- sideration. Those eli- gible to apply are high school seniors and col- lege freshmen, sophomores and juniors who are dependent sons and daugh- ters of owners or full-time employees of MRA’s nearly 5,000 member busi- nesses. Part-time employees who are full-time students may also apply. Applications must be submitted by April 1, 2011, to International Schol- arship and Tuition Services, Inc., of Nashville, Tennessee, which coordi- nates the application and selection How to deal with employee theft, how to get the most sales from your marketing dollars, how to get control of your inventory, and how to run your business us- ing key financial numbers are the topics for a free series of monthly webinars starting March 24 and sponsored by Michigan Retailers Association. MRA is teaming up with state re- tail associations in New York and South Dakota to be able to offer the four-webinar series. The online seminars are a member benefit and there is no cost to participate. Registration information will be mailed and emailed to MRA mem- bers. Or you can enroll online at www.retailers.com. You can sign up for all four or only one, two or three. All the webinars will be held at 9:30 a.m. Eastern time. THE SCHEDULE: March 24 Dealing with Stealing Employment law expert Chris Hoyme will explain what you can do to deal with the serious threat to your bottom line from employee theft. You will learn employer rights and restrictions when dealing with employee theft, including legally compli- ant investigation steps when an employee is suspected of inter- nal theft; appropriate discipline; avoiding liability; and other do’s and don’ts.

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The February 2011 issue of Michigan Retailer, the official publication of Michigan Retailers Association.

TRANSCRIPT

Page 1: February 2011 Michigan Retailer

3 5 7CommunicateRetailers must always communicate with consumers, but communication is broader than advertising alone.Page 7

New DesignsCredit cards are sporting new looks, and the changes are more than cosmetic for some retailers.Page 5

Holiday SalesDecember numbers confirm holiday shopping was the best in more than a decade for Michigan retailers.Page 3

Item pricing reform moves forwardMichigan Retailers Association.

The proposed Shopping Reform and Modernization Act has gathered strong support from Governor Rick Snyder, legislators and newspaper

Scholarship programaccepts applicationsnow through April 1

Continued on page 4

‘How-to’ webinar seriesslated for March – June

Michigan retailers would gain price-marking flexibility and consumers would enjoy an improved shopping experience under legislation being pushed by a coalition formed by

editors across the state, signaling that this could be the year retailers achieve the long-sought goal of item pricing reform.

“Michigan’s 35-year-old item pric-ing law is the worst in the nation,” said MRA President and CEO James P. Hallan. “If Michigan is going to move forward and reinvent its economy, it can no longer stick out like a sore thumb by discouraging business in-vestment, jobs and innovation.”

Modern technologyHouse Bill 4158, sponsored by Rep.

Lisa Posthumus Lyons (R-Alto) and backed by the broad-based Coalition for Retail Pricing Modernization, would bring the state’s antiquated and costly item pricing law into the 21st Century by allowing retailers to use modern technology to communi-cate prices of general merchandise and groceries to shoppers.

Current law requires that a price sticker or tag be affixed to virtually every item in a store, a costly man-date that discourages investment in modern pricing technologies.

“Michigan’s current item pricing law was enacted in 1976. It is older than I am, and it forces Michigan re-tailers to use pricing technology that became obsolete when the briefcase phone was considered the wave of the future,” said Rep. Lyons, a first-year lawmaker, shopper and mother of four.

$2.2 billion cost“Worse,” she continued, “accord-

ing to a recent study by the Anderson Economic Group, the item pricing law results conservatively in a $2.2-billion hidden tax on Michigan’s economy each year…By cutting red tape and reforming Michigan’s pricing laws, we will finally provide retailers with the flexibility they need to deliver the most competitive prices, most convenient shopping experience, and the best technology to Michigan consumers.”

MRA began to put together the co-alition last fall, Hallan said, in advance of the huge change in leadership tak-ing place January 1 throughout state government. Former Governor Jenni-fer Granholm, who was prevented by

Continued on page 2

Continued on page 4

®

February 2011 Vol. 36 No. 1 The official publication of the Michigan Retailers Association www.retailers.com

Michigan Retailers Association’s annual competition will award at least 34 college scholarships this spring for the 2011-12 academic year.

The scholarship program benefits the employees and families of MRA member businesses. It is funded by the Michigan Retailers Foundation, which pays for the awards out of the earnings on foundation assets.

Scholarships are $1,000 for students attending public or private four-year universities and colleges, $500 for those attending community college.

Recipients are selected for their average to above-aver-age academic performance a n d e x t r a -c u r r i c u l a r a c t i v i t i e s , w h i c h c a n i n c l u d e p a r t - t i m e employment. Financial need is not a con-sideration.

Those e l i -gible to apply are high school seniors and col-lege freshmen, s o p h o m o re s a n d j u n i o r s

who are dependent sons and daugh-ters of owners or full-time employees of MRA’s nearly 5,000 member busi-nesses. Part-time employees who are full-time students may also apply.

Applications must be submitted by April 1, 2011, to International Schol-arship and Tuition Services, Inc., of Nashville, Tennessee, which coordi-nates the application and selection

How to deal with employee theft, how to get the most sales from your marketing dollars, how to get control of your inventory, and how to run your business us-ing key financial numbers are the topics for a free series of monthly webinars starting March 24 and sponsored by Michigan Retailers Association.

MRA is teaming up with state re-tail associations in New York and South Dakota to be able to offer the four-webinar series. The online seminars are a member benefit and there is no cost to participate.

Registration information will be mailed and emailed to MRA mem-bers. Or you can enroll online at www.retailers.com. You can sign up for all four or only one, two or three. All the webinars will be held at 9:30 a.m. Eastern time.

THE SCHEDULE:March 24Dealing with Stealing

Employment law expert Chris Hoyme will explain what you can do to deal with the serious threat to your bottom line from employee theft. You will learn employer rights and restrictions when dealing with employee theft, including legally compli-ant investigation steps when an employee is suspected of inter-nal theft; appropriate discipline; avoiding liability; and other do’s and don’ts.

Page 2: February 2011 Michigan Retailer

2

To mark MRA’s 70th anniversary, we rounded up photos of all of the As-sociation’s past board chairmen and chairwomen. Then we put them on permanent display on the walls of our headquarters’ front lobby and up the stairs leading to our conference room.

It’s an impressive group dating back to 1940. The photos serve as an excellent reminder every single day that good leadership matters — not just to MRA, but to every business, organization and government on this planet. Good leadership is the difference between an excellent orga-nization and a mediocre or failed one.

MRA has been blessed with wise and dedicated boards of directors. Their oversight and guidance to the professional management team have helped MRA become the successful organization we are today. It is why we have grown to become the na-tion’s largest state trade association of general merchandise retailers. It is why we have been able to serve as a trusted business resource for thou-sands upon thousands of companies.

I mention that because Michigan has an entirely new group of state government leaders after the elec-tions of last November. The new chief executive, of course, is Gover-nor Rick Snyder. We also have new legislative leaders — Senate Majority Leader Randy Richardville and House Speaker Jase Bolger — dozens of new legislators and new Attorney General Bill Schuette, among the many doz-ens of new officials.

Gov. Snyder has been in office for little more than a month now, but he’s already demonstrating that he under-stands leadership. He knows it’s more important to rally people to focus on the future and solve the toughest prob-lems rather than debate whose fault it is that we’re in the mess we’re in.

Michigan Retailer www.retailers.com

Retail By Norm Feuti

Perhaps Exhibit A that he “gets it” is that he singled out, in his State of the State Address, Michigan’s anti-quated item pricing law as “Exhibit A” on the list of burdensome and unnecessary regulations our state must modernize or repeal in order to be competitive again. For the sad fact is that Michigan has the most re-strictive law in the nation, a law that costs retailers and consumers more than $2 billion a year (according to an independent study MRA commis-sioned). That’s an economic load no other state has to carry.

Which is why we heartily support Gov. Snyder’s call for reform — and his desire to do it right now, no more delay — of the 1976 law that was enacted back when scanning tech-nology was new and unfamiliar. The

governor understands we live in a dif-ferent world today, a world in which scanners are proven and familiar and electronic technology is part of ev-eryone’s daily life in ways we couldn’t imagine 35 years ago.

MRA has been working to fix the item pricing law for many years. This year, because of new leadership in state government — from the gover-nor right down to freshman lawmaker Lisa Posthumus Lyons, the sponsor of the Shopping Reform and Modern-ization Act (House Bill 4158) — we believe reform finally has a strong chance of being accomplished.

This new willingness to take on Michigan’s problems head-on is not only vital, it’s energizing for our state. It also proves, once again, that leader-ship matters.

MichiganRetailersAssociation

Board of Directors:

Barb SteinChairGreat Northern Trading Co., Rockford

James P. HallanPresident and CEOMichigan Retailers Association

Thomas UngrodtVice Chair Ideation, Ann Arbor

Peter R. SobeltonTreasurerSundries Plus, Birmingham

Jean SarasinSecretaryMichigan Retailers Association

Joe SwansonPast ChairTarget Corp.

Dan MarshallMarshall Music Company, Lansing

Orin Mazzoni, Jr.Orin Jewelers, Garden City

Joseph McCurryDovetail Alliance

Larry MullinsBrandon Tire & Battery, Ortonville

R.D. (Dan) Musser IIIGrand Hotel, Mackinac Island

D. Larry ShermanSherman Investments, Birmingham

John SmytheLansing

James WalshMeijer, Inc., Grand Rapids

Michigan Retailers Services, Inc.Board of Directors:

Becky BeauchineBecky Beauchine Kulka Diamonds and Fine Jewelry, Okemos

Brian DucharmeAT&T

James P. Hallan Thomas B. ScottPublisher Editor

Pat KerwinDesign Manager

Publication Office:603 South Washington AvenueLansing, MI 48933517.372.5656 or 800.366.3699Fax: 517.372.1303www.retailers.comwww.mallofmichigan.com

Subscriptions:Michigan Retailer (USPS 345-780, ISSN 0889-0439)is published in February, April, June, August, October and December for $20 per year by Michigan Retailers Association, 603 South Washington Ave., Lansing, MI 48933. Subscription fees are automatically included in the Michigan Retailers Asociation membership dues. Periodical postage paid at Lansing, Michigan. POSTMASTER: Send address changes to 603 South Washington Ave., Lansing, MI 48933. The Michigan Retailer may be recycled with other white office paper.

by James P. Hallan, MRA President and Chief Executive Officer

Leadership matters

Continued from page 1

term limits from running for re-election, opposed item pricing reform and blocked earlier attempts at modernization.

Gov. Snyder, however, gave reform a big boost in his State of the State Ad-dress in January when he mentioned item pricing as “Exhibit A” on the list

Item pricing reform moves forwardof unnecessary regulations that need to be scrapped or modernized for Michigan to improve its economy.

“We have welcomed the governor’s support with open arms and pledged to do all we can to help achieve this critical reform,” said Hallan.

The Shopping Reform and Mod-ernization Act (H.B. 4158) will:• Create a climate that attracts new jobs, investment and innovation• Improve the shopping experi-ence for consumers• End a $2.2 billion hidden load on Michigan’s economy• Include popular consumer pro-tections such as “bounty” and “rain check” provisions • Reinforce Attorney General oversight and tough penalties.

In addition:• It will not mean consumers won’t know the price of an item. The legislation requires retailers to clearly communicate prices • It will not prevent retailers from continuing to item price if they think that’s a good market-ing strategy• It will not result in lost retail jobs in Michigan’s economy, according to the Anderson Eco-nomic Group study.

Page 3: February 2011 Michigan Retailer

February 2011 3

The latest Michigan Retail Index survey confirms what many believed: the 2010 holiday shopping season was the best in more than a decade for Michigan retailers.

More than three out of four retail-ers (76 percent) reported sales gains over the previous year, with more than half reporting increases greater than 5 percent.

The average gain for survey re-spondents was 11 percent, highest since 1994, the first year of the sur-vey conducted by Michigan Retailers Association and the Federal Reserve Bank of Chicago.

Retailers remain upbeat coming off the holiday season. Their short-term sales projections rose for the fourth consecutive month.

“The season started strong, posting excellent numbers in November and good numbers in December,” said James P. Hallan, MRA president and chief executive officer. “This was the year shoppers’ spending exceeded even retailers’ optimistic projections.”

Retailers had gone into the season projecting sales increases averaging 6 percent, a figure some thought was overly optimistic. It was retailers’ highest forecast since 2004.

The Michigan Retail Index for De-cember-only found that 48 percent of retailers increased sales over the same month last year, while 34 percent recorded declines and 18 percent saw no change. The results create a seasonally adjusted perfor-mance index of 61.9, down from 68.1 in November. It was the best Decem-ber since 1998. A year ago December, the sales performance index was 47.8.

Seasonally adjusted diffusion index, calculated by adding the percent of respondents indicating increased sales and half the percent indicating no change, and then seasonally adjusting the result using the U.S. Census Bureau’s X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

3-Month Outlook Index

70

80

60

50

40

30

09-10

08-09

MAY

JUL

AUG

SEP

JUN

DE

C

JAN

FEB

MAR

OCT

NOV

APR

09-10

08-09

Current Performance Index

70

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MAY

JUL

AUG

SEP

OCT

JUN

DE

C

JAN

FEB

MAR

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APR

Holiday season was best in more than decadeHOW’S BUSINESS

700

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500

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300

200 (millions)

2009 2010

523570

564 591

453485

Oct Nov Dec

Be sure to complete youronline survey each month!

Index values above 50 generally indi-cate an increase in overall retail activity.

Looking forward, 48 percent of re-tailers expect sales during the First Quarter to increase over the same period last year, while 14 percent project a decrease and 38 percent no change. That puts the seasonally ad-justed outlook index at 77.2, up from 73.2 in November and 67.4 in October. A year ago December, the sales out-

look index stood at 57.1.Sales tax receipts totaled $590.5

million in December, up 4.7 percent from the year-ago level.

Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www.retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.

Page 4: February 2011 Michigan Retailer

64 Michigan Retailer www.retailers.com

Continued from page 1

Continued from page 1

April 20Explode Your Sales! How to Get the Maximum Bang from Your Market-ing Bucks

Retail trainer Bob Negen will dem-onstrate exactly how to dramatically increase customer loyalty and foot traffic to turbocharge sales. You’ll learn the se-crets of an organized, consistent system to generate significant sales increases.

May 17Run Your Business by the Numbers

Entrepreneur and author Lisbeth Caladrino will provide the solution to the situation when your financial state-ment looks strong but you can’t seem to get ahead. You’ll learn how to take control of your business’ finances from pointers to improve your bottom line by decreasing operating costs while increasing sales and profit margins.

June 22Control Your Inventory (Don’t Let it Control You!)

Retail management expert Susan Negen will show you how to reduce your markdowns to raise margins and increase profits. She’ll also help you make that POS system you bought really pay for itself. You’ll learn what it takes to finally get control of your inventory and open up many new and profitable opportunities.

THE PRESENTERS:Chris Hoyme is a partner in the Oma-ha, Nebraska, office of Jackson Lewis LLP, where he serves as the litigation manager. He represents management nationwide in all facets of employment law. He has successfully defended employers in state and federal courts and various local, state and federal administrative agencies, including Department of Labor investigations and audits, including wage, hour and FMLA compliance. He also routinely advises management on issues sur-rounding FMLA, ADA, WARN Act, Title VII, FLSA, workers’ compensation, NLRA, the Fair Credit Reporting Act, privacy issues, and state law, as well as counsels employers on proactive strategies to avoid litigation.

Bob Negen, of Grand Haven, is the founder of the Mackinaw Kite Co., a

chain of specialty toy and kite shops. When Bob opened his store he was only 23 years old. Over the next 20 years Bob developed the critical business skills he needed to turn the Mackinaw Kite Co.’s first pitiful an-nual sales of $17,000 into a successful multi-million-dollar business. In 1999, Bob formed WhizBang! Training with his wife, Susan Negen, an accom-plished retailer in her own right. Bob now shares his hard-won knowledge so that other retail storeowners can more quickly and easily turn their passion into profit.

Lisbeth Calandrino started her first business at nine years old af-ter learning the basics working with her grandfather and dad. In 1972 she joined up with two partners and par-layed $5,000 into a chain of furniture and carpet stores in New York and Massachusetts. She was the manag-ing partner in two of these stores and was responsible for hiring, training, merchandising and pricing. She sold her interest in 1990 and went off to consult with small businesses and create an international flooring pub-lication where she is now associate publisher. She recently published her book Red Hot Customer Service as a tribute to her dad.

Susan Negen began her retail career at large department stores. She held a number of positions at Lord and Taylor, Bloomingdale’s and Macy’s California, including department manager, buyer and group sales manager. Her experience at these large firms has given her an extensive background in all aspects of retail management. After joining the Macki-naw Kite Co. as a store manager and later as director of merchandising, she was able to transfer her acquired skills to the specialty retail environ-ment. Susan and her husband, Bob, co-authored the bestselling book Mar-keting Your Retail Store in the Internet Age and also recently completed the Retail Mastery System. This system is the most comprehensive training re-source ever created for independent retailers and teaches all 11 critical business skills that store owners need to be successful.

Webinar series to begin in March

process for MRA and many other as-sociations and companies.

Students are encouraged to com-plete the application process online at MRA’s website, www.retailers.com. Students may also contact MRA’s Laura Schilling at 800.366.3699 or [email protected] by March 15

to request an application by mail or to check eligibility.

Recipients are selected by an inde-pendent panel of educators chosen by International Scholarship and Tu-ition Services.

The MRA program has provided 286 scholarships to students since 1999.

Scholarship program accepts applications

Page 5: February 2011 Michigan Retailer

RETAIL TECHNOLOGY NEWS

What is hap-pening to credit and debit cards?

A f t e r m a n y years of forc -i n g b a n k s t o adhere to stan-dard formats for designing cards, the card brands

(Visa, MasterCard) have loosened up on their requirements. This has allowed issuing banks to get a little more creative in the way they design the “look” of a card.

If you accept cards though, the chang-es can be more than just cosmetic.

First, Visa now allows a card to be printed vertically (portrait) instead of the more traditional horizontal (landscape) orientation. While this by itself is cause for lit-tle more than a minor discussion about design, another change has a significant impact on merchants who accept cards.

That’s because Visa also allows an issuing bank to laser print the cardholder name and information on the front of the card. If you, as a merchant, use an old style imprinter (aka, “knuckle buster” or “zip zap” machine), you will not be able to ac-cept these cards without handwriting the card information.

Similarly, if the magnetic stripe is damaged and you have to hand key the card information into your elec-tronic terminal, you will not be able to complete the manual imprinter slip properly. While you will still be able to get an authorization code in either of these two scenarios, the failure to collect an “imprint” of the card information opens you up to a possible chargeback, which you will lose every time.

Since these non-embossed cards do not allow for manual imprint-ing, businesses without terminals, or with cards that can’t be swiped, should ask the consumer for anoth-er form of payment. In these cases the cardholder will probably not understand why the card is being refused. The cardholder should be directed to the issuing bank to get a replacement card. The bank’s phone number is located on the back of the card.

The other change that has been happening slowly over the last few years is the migration of the holo-gram to the back of the card. The

John Mayleben, MRA’s senior vice president, technology and product development, writes a regular column on retail technology. Contact [email protected].

New look for credit cardsmore than a fancy facelift

hologram is an important fraud pro-tection device on each card.

In the past, the card brand holo-gram was located along the line of the account number so that the num-ber was embossed right through the hologram as a way to deter counter-feiting of the cards. With the changes

noted above, this is no lon-ger needed, but the card hologram still ser ves as a way to make counterfeiting harder.

As always, b u s i n e s s e s that process through MRA s h o u l d c a l l

our customer service department with any questions brought on by the new-look cards.

5February 2011

Offer Gift Cards,Increase Sales. 800.366.3699

Page 6: February 2011 Michigan Retailer

LOTTERY

by M. Scott Bowen, Commissioner

A n a l l - n e w L u c k y L i n e s game is sched-uled to go on sale February 27. This improved version of the game will create more winners and redistribute

prize money to low-tier prizes that are awarded most frequently.

Some notable changes include:• New Prize Level – Players can win

double their money back when none of the Player’s Numbers is touching on the Player’s Game Board. For ex-ample, a player with a $2 wager and zero numbers together on the game board wins $4. The additional prize level also improves a player’s overall odds of winning to 1:4.37

• Fewer Wager Amounts – The num-ber of available wager amounts has been reduced to four. The most popu-lar wager options of $1, $2, $3 and $5 will remain, while the $4, $10 and $20 options are eliminated.

• Higher Match-Three Prizes – When a player places a $1 wager and match-

es three numbers, he or she will win $1; a $2 match-three wager will win $3; a $3 match-three wager wins $5; and a $5 match-three wager wins $9.

You should have received point-of-sale materials announcing the change and new bet slips. If you haven’t re-ceived them, make sure to contact your Lottery district sales representative.

Second ChanceSeveral new instant games are fea-

turing great second chance contests. Cash Tournament™ is a $5 game that

launched on February 14 and features a second chance contest to award one winner a $250,000 cash prize!

Also a $5 game, Single Double Triple Play Bingo™, launches on February 28 and features a second chance contest to award five winners with $500 worth of Single Double Triple Play Bingo™ tickets.

Over 94 cents of every dollar spent on Lottery tickets is returned to the state in the form of contributions to the state School Aid Fund, prizes to players and commissions to retailers. In fiscal year 2010, the contribution to schools was $701.3 million.

Lucky Lines gets new look

6 Michigan Retailer www.retailers.com

Page 7: February 2011 Michigan Retailer

7

Retailers must ‘communicate, communicate’Seventh in a series on “Managed Common Sense” by Steve Flaster

In the retail-ing text for my course at MSU, Sam Walton of Wal-Mart fame makes the follow-ing memorable comment con-cerning how a g o o d re t a i l e r

must operate: “Communicate, Com-municate, Communicate. What good is figuring out a better way to sell beach towels if you aren’t going to tell everybody about it.”

What impresses me most about the comment is that Walton uses the word “communicate” instead of “advertise.” And he is right, because retailers must always communicate, but they don’t necessarily have to advertise. Communication is a much bigger issue than advertising and involves how retailers send their message to all the parties that affect store success. Advertising is one im-portant form of communication, but it is not the only one.

In our consulting organization, we can show clients more than 50 differ-ent ways to communicate. Smaller stores without an advertising budget

can effectively communicate in other ways, provided they understand their target market and its needs. In the end, the most effective form of com-munication is not necessarily the most expensive, but instead the one that does the best job of getting the needed message to target customers and builds business.

Understanding your taskMany retailers responded to the re-

cent recession by thinking they had to advertise more. In actuality, what they had to do was communicate more — and more effectively.

I was struck by a parochial school system in Michigan that was obviously experiencing declining en-rollments. The school officials began advertising on prime-time television, and I believe this was probably an expensive error. If they had thought about communicating instead of ad-vertising, they would have realized that the most effective route was to send teachers and school officials to Sunday church services, where they would find their target market.

That way they would not be paying for wasted circulation and, instead, could form an effective communi-

cation network with the churches, which would surely support the school’s objectives. The cost would be very little and could be the most effective form of communication.

Recognizing opportunitiesVery often, stores do not recog-

nize the many ways in which they can communicate their message. If done properly, effective communica-tion can be a residual benefit of other store activities.

It all starts with a store name. Ev-ery store must pick a name, but not every store wisely chooses a name that communicates its story and competitive edge.

Two of my favorite store names right now are Bras That Fit and Signs By Tomorrow. These names are short, understandable, memorable and communicate something that is im-portant to the customer. Every time the customer passes the store and every time the store uses its name, the customer gets the message.

PackagingEvery store must provide a package

for its products, but the package is also a great communication opportunity.

February 2011

Just a few weeks ago in New York, I was attracted to an upscale pet store called The Canine Country Club. The name certainly suggested a great place to board or groom your pets (as well as indulge them). I selected a very handsome new coat for Renoir (my standard poodle) but was thoroughly disgusted when the store put the coat in the cheapest generic plastic bag with not even the store name on it. I wondered if the store didn’t want me to remember where I bought the coat and why it wasted the opportunity to have me promote the name whenever I carried the package.

Every retailer should make a list of all the ways in which his or her store can and does communicate to cus-tomers, and to make sure that each way is properly utilized and works in concert with the others. Of course, you must also recognize the message you want to communicate and what your claim to fame is, which will be the subject of my next blog.

Steve Flaster is a retailer, instructor of retailing and marketing at Michigan State University, speaker and consul-tant. To reach him at Yes For Success Retail Consulting, call 517.655.6979 or e-mail [email protected].

Page 8: February 2011 Michigan Retailer

Lottery Ad

You deserve a little credit, too.Because of your hard work selling Lottery tickets, last year $701 million was contributed to the state School Aid Fund — a good thing for our kids. You also helped players take home $1.38 billion in prizes, making good things happen for local communities. And because 10,000 local businesses earned $170 million in commissions last year, you’re making good things happen for yourself. So thanks for all the work you do and all the good things you help make happen for Michigan.If you bet more than you can afford to lose, you’ve got a problem. Call 1-800-270-7117 for confidential help.