Successful retailers make a profit by selling things for more than they paid for them, keeping costs below that margin. However, policing costs isn’t as much fun as selling stuff. Costs always climb if we don’t consistently focus on them. Let’s look at some strategies your fellow retailers have employed to streamline their costs.
Tony Miresse of Art’s Cameras Plus (Pewaukee, Wisconsin) reorganized his photo lab to solve some problems. He adopted the “every order is prepaid” policy, ending the pain of unclaimed orders and streamlining the pickup process. Customers tend to spend money while in the store because they didn’t pay at pickup.
Miresse uses Fujicolor paper in his lab. Art’s has always offered glossy and matte (luster) options. When a customer made a scene because she got glossy instead of the luster she thought she ordered, he assessed the amount of glossy processed and decided to offer only luster. That decision has cut his paper inventory substantially as well as increased his operational efficiencies. And he hasn’t lost any customers.
Moreover, Miresse makes tough choices. He grew up selling ready-made frames. Stores like Aaron Brothers/Michaels offer a better selection at better prices than Art’s can. After judging his space, time and inventory capital, Miresse dropped frames and redeployed those assets into higher return areas. Similarly, he’s out-labbing any product category with high makeover rates. Large metal prints are beautiful and fun to make and show. However, without more volume, he can’t train the team to produce salable prints every time. The metal print remakes are unprofitable. Solution? Out-lab them and make a guaranteed margin regardless of the job complexity. Hard decisions are necessary for surviving and thriving going forward.
Policing Costs: AORs and Payroll Services
Dan’s Camera City (Allentown, Pennsylvania) is well known for their Areas of Responsibility (AOR) program. Each employee has specific “ownership areas” they’re required to manage as if they were the owner, ensuring experts in every store department. It also drives decision making to the customer contact level. The “owner” of a specific department is involved in costing, pricing, display, etc. As Dan’s broadened their offerings in profit-rich areas, like school photography and FastSigns, the AOR program was modified. However, it is still integral to the store culture. The retailer also works to digitize processes and record keeping to become even more efficient.
Additionally, one anonymous retailer finally switched to a payroll service, having hesitated due to cost. Payroll for this 35-employee company was painful and troublesome. The switch cost more cash, but his attitude improved greatly. As a result, it lifted his entire team who’d dealt with his bad moods. Sometimes it’s not about the money; it’s about the hassle.
25 Ways to Save Money
At the recent PRO convention, John Tworsky and Abby Passman of Bergen County Camera (Westwood, New Jersey) did a standing-room-only, overflow-crowd seminar on 25 ways to save money.*
One that will payback immediately and for the long term is Get Paid for Your Time. Moving or organizing image files for customers is more time consuming as files accumulate and their sizes increase. Your time and your staff’s time are what you have to sell. Charge for it! Call Best Buy and ask what the Geek Squad charges for an hour. Most imaging companies charge one-fourth to one-third what any computer tech does for the same services.
If you offer Photoshop services, use a stopwatch to time each job length. Most Photoshop artists underestimate a job’s time by 25% to 300%, only considering actual time working on the image. However, the artist is on your payroll the entire time they’re setting up the job, searching for the file, etc. You’re losing significant money if you only charge for actual editing time rather than the time to read/understand the order, complete the paperwork and deliver the image (electronically or hard copy). If the employee wants to get paid for that time, you must include it in the customer price. Otherwise your store eats significant costs you can’t recover.
B&C Camera (Las Vegas, Nevada) opened their new HÜB, another successful spatial expansion for the store. This adjacent store contains their classroom, studio and gallery. B&C is known for generally flawless execution of everything they do. And they do it with a relatively small staff. How? Owner Joe Dumic has a secret. He knows how to say “no.” “We cannot do everything we want to do. So, we pick what we do very carefully to be sure it is the best return for our time and energy.”
Great advice to carry your company through the new year.
*E-mail me for the full list of 25 ideas.
Note: Opinions expressed in this column are those of the author and do not necessarily reflect the opinions or policies of Digital Imaging Reporter or its management. Bill would love to hear from you with questions, comments or ideas for future columns. Please contact him at email@example.com or (609) 688-1169.