How Retailers Grow

Jan 31, 2019

Ever wonder why some big retail or restaurant chains grow and prosper and others stumble and fail? Or why once venerable brands hit a peak and then begin to slide? What are the characteristics of a great retailer? And what mistakes do poor retailers make that often end in ignominy?

In my opinion, the strongest characteristic of a successful chain isn’t their CEO or the quality of the board; it isn’t the size of their bank account or their access to capital. It usually isn’t because they sell something truly unique or have spectacular merchandising (although this helps a lot).

I think the single biggest attribute of great retailers is their willingness to listen.

Consider Starbucks. By so many measures, their coffee shops are one of the most successful retailers of all time. Why they are so successful isn’t because their stores are unique, or they sell products you can’t get anywhere else. And it certainly isn’t because they sell coffee cheaper! And it isn’t advertising. They are great marketers, sure, but they never even ran an advertising campaign until just a few years ago.

Here's what I think it is. In the early days of the chain, the leadership spent a lot of time in their stores. They did informal “chats” with customer and associates—sometimes together, sometimes separately. And they took advice, shifted the menu, expanded offerings and built a culture of “responsive marketing.” That term means you are constantly adapting your message based on the needs of your shopper and your own employees.

The Starbucks you see today is not one person’s strategy, but an amalgamation of great ideas from across their chain. Today their formulas and new flavors may come from a test kitchen—but they just as easily could come from one of their hourly associates who took a risk and tried something that works.

That’s exactly how Home Depot grew from a five-store chain in Atlanta, Georgia to the world’s largest home improvement retailer in less than 20 years. If you read Home Depot cofounder Bernie Marcus’ book, he talks on and on about being in the stores, listening to the associates, and inverting the leadership pyramid so the people closest to the customer had a voice.

And as it turns out, if you want to move a new program through a big complex chain, the best way to get other stores to implement is to make sure they believe the new program will actually work. And the best way to do that is to have the initiative come from one of their peers.

The IGA Best Practices Library

IGA is collecting the great ideas inside our own chain now. And the really exciting thing is that they are almost infinite. Across our 1100 stores domestically and 6,000+ worldwide, our owners are constantly adapting and innovating. And the things we do are often creative, impactful, and drive incremental sales.

Some of the things our stores do are simple—like new recipes or expanded assortments. Some are just better merchandising with innovation in signage or layout. Some are efficiency plays that reduce costs or make the store run smoother. And some are more complex, involving new machinery, or new skills.

But whether small or large, these emerging best practices were all introduced by folks just like you, fighting similar competitors and all the same challenges most IGAs face. And these best practices have already been tried, adjusted, and honed so they are proven to drive incremental cost savings, market share, or top line sales.

One of our stores figured out a way to convert the bakery’s leftover wedding cake tops to a ‘crave-able’ product called “cake toppers,” turning a waste item into a profit center. Another brought a sushi program into their store to create fresh, healthier meal solutions that drive incremental lunch and dinner sales. One IGA carved out a dedicated section for mix-and-match craft beers so they could capitalize on the latest beer consumption trend. And finally, another created a text-to-order program that expanded the reach and selling capacity of their deli beyond the walls of the store.

The ideas go on and on. Already the best practices section of The IGA Minute have become our most popular segment. And we are getting more and more examples of smart, creative applications of innovation from not just U.S. retailers, but international ones, too.

Today we are asking you to vote on a selection of best practices for awards at the upcoming IGA Rally. Next year we will be giving out awards for retailers who took a best practice, implemented it, and made it better. If we learn to scale and adapt the best ideas across our entire chain, IGA will grow—in fact, we will transform—our company. Big chains are terrible at implementing non-standard practices. They rely on homogenous, “cookie-cutter” systems to control their stores. Which means they are so beatable!

In most chains, real innovation doesn’t come from the corporate office; instead it comes from the retailers themselves who listen and interact with shoppers every day. I truly believe the answer to improved comps and margins is inside our own chain—but we as an organization must be willing to listen.

Cast your vote now for your favorite best practice!

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