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Lessons from the big M

What’s the world’s most famous fast food chain got to do with running a jewellery store? A lot more than one might think, according to David Brown.

When it comes to measuring, managing and using data in setting its plans, McDonald’s is one of the best businesses
in the world.

Jewellers might not have a data collection system anywhere near as finely honed as the “golden arches”, but there is plenty of valuable information that jewellery retailers can extract from their own store reports, and plenty of things they can learn from the world’s largest burger joint. Remember: there is no point in reinventing the wheel when it’s already been done.

Relax the reins
McDonald’s is not a means of self-employment; it is an investment. The expectation of McDonald’s franchisees is that they must spend one day a year in their store – one day a year!

The rest of the time, they can leave the operation to the running of pimple-faced teenagers whose responsibilities outside of the store rarely extend further than tidying their rooms. Yet in the working environment, these teenagers seem to blossom like butterflies. Store managers should keep this lesson in mind the next time they find themselves thinking that their staff
aren’t capable.

It’s all about the system
There’s a reason why otherwise inexperienced teenagers can run a McDonald’s store with no trouble at all. It’s because systems are in place to ensure it. Every McDonald’s employee knows precisely what to do in every circumstance because every possible process has been documented for them. How else could a 16-year-old with limited life skills, no previous experience and sparse business acumen run a store?

Nobody is suggesting that retailers should leave the control of their stores in the hands of teenagers. Jewellery retail is about diamonds, not French fries, so there’s more at stake; however, owners looking to get away from the 60-hour working week should take a serious look at the structures that are in place, and consider whether these provide enough support for their staff.

Owners can only free themselves to the extent that they are willing to give control and responsibility to others. Start with the structures that are creating more work and causing frustration for your staff – the bad ones.

Setting the menu
How does McDonald’s manage to make meals so quickly? It’s as if the staff already know what customers will order before they order it. Well, they do. Every day, McDonald’s uses the information from each store to calculate and track demand for product lines. Each store can then estimate, with a fair degree of accuracy, what customers will want during the day and can stock their product and have it cooked accordingly.

Again, jewellery retailers are not in the field of selling perishable goods, and therefore are not required to anticipate sales on a daily basis, but stores can use information to determine customer preferences and, by definition, what those customers are likely to purchase from the store next.

By comparing between stores, McDonald’s is also able to create benchmarks that serve to heighten operating efficiency. For example, if one store can keep its waste below 2 per cent, then McDonald’s knows it is possible, and therefore also achievable by the other stores in the chain.

Add-on sales
Any customer who orders at a McDonald’s store is likely to encounter the question, “Would you like fries with that?” It has been asked so many times that it’s become a catch-phrase. Perhaps it’s tired and a little clichéd, but add-on sales are worth an estimated $4 billion a year to McDonald’s international sales.

With the deep fryers already turned on, the staff already working, the electricity already running and the fries already ordered, the profit on those extra sales is as tasty to McDonald’s as the food is to the customers. It’s no wonder they ask that question so often, those darned kids – the same ones who won’t do what they’re told at home, who won’t do their homework, who won’t do the dishes, but who are happy ask, “Would you like fries with that?”

Is it that hard for the older, wiser, better-paid staff of jewellery retail stores to do the same?


First published: September 2010

David Brown

Contributor • Retail Edge Consultants

David Brown is co-founder and business mentor with Retail Edge Consultants. Learn more: retailedgeconsultants.com

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