Chances are you won't find bananas and snow boots for sale at the same store, but Antony Karabus can tell you they share one thing in common: They're both perishable.
Just as bananas have a shelf life, so, too, there's a clearly defined window of opportunity to get the best price for winter wear -- or spring, summer and fall clothing, for that matter -- before it's relegated to the bargain bin or, worse, shipped back to inventory.
"Every single item in a store has a life cycle," Mr. Karabus, a retailing consultant, said in an interview at his Toronto office.
To illustrate the point, he drew a graph shaped like an inverted letter U -- demand for an item rises to a peak and then falls. "The trick is to figure out the right methodology to have stuff in the store at the right price at that place in the demand curve," he said, circling the area where demand is rising.
Antony Karabus, chief executive officer of Karabus Management Inc.
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The typical customer is "not going to go out and buy Sorel boots in May," Mr. Karabus added. As such, knocking 70 per cent off the price in May to get rid of them is "akin to shutting the stable door after the horse has bolted."
Through his firm, Karabus Retail Management Consultants, he has developed a successful business helping retailers across Canada and the United States apply the nitty-gritty of the science of selling to their operations.
But just as important, on a macro level, the Wal-Marting of Canada's shopping experience has posed new challenges for retailers -- indeed, chances are, in the not too distant future it might not be unusual to find bananas and snow boots under the same retailer's roof. In turn, this has created new opportunities for Mr. Karabus's 17-year-old consultancy in helping retailers differentiate themselves.
The essence of successful retailing is straightforward -- have what customers want at a price they're willing to pay and for the highest margin possible.
But achieving that touches on a range of issues, such as: buying merchandise in a more organized fashion; getting labour properly scheduled; managing store costs to provide service while not wasting money; having a lean back-office infrastructure; having an efficient supply chain.
"I would call all these things very practical items that require down-to-earth, practical changes to make them work," Mr. Karabus said.
It all sounds very logical -- so why bother hiring a consultant to make it work better?
"I get asked that all the time," he said. "We are not tied emotionally to the product and the company. We can be very objective, very pragmatic and make the right recommendation, irrespective of whether it may hurt someone's feelings."
Retailers are too embroiled in the day-to-day chores of running their businesses to do a thorough job of analyzing how to make them run more efficiently, he said. Take keeping the shelves well-stocked. "There are 30 or 40 best practices, and we find very few retailers have any more than 10 of those 30 or 40 relating to replenishment."
As well, consultants can draw upon a broad experience, he said. "Over the course of the past five or six years, we must have worked with 50 or 60 different retailers."
For specific projects, he will dispatch teams of two or three consultants to work with the client for two to four months.
"It's like starting a new job every couple of months," said Andrea Elliott, a managing director at Karabus Management, who previously served as a director for Gap Inc. in San Francisco and whose work as a Karabus consultant has taken her to Montvale, N.J., Pittsburgh and Kansas City.
However, for complex cases, the consultants might be with the client for two or three years. "They were literally there, Monday to Thursday, for three years," Mr. Karabus said, referring to a recent project his firm did in Puerto Rico.
A recurring issue seems to be how information technology is applied, he said. Many retailers aren't getting a proper return on investment from the "jigsaw puzzle" of systems they've adopted over the years.
Software vendors can make grand promises, and purchases can become IT-driven projects with the criteria of success being on-time and on-budget, he said. "The real criteria in my mind is did we sell more stuff at higher margins to more people? Or did we cut costs . . . or provide better service?
"What we're finding is, if there's an IT strategy, it doesn't correspond to the business strategy."
Mr. Karabus, 45, didn't set out to be a retailing consultant. His is a classic early nineties' tale of someone who gave up a secure, well-paying job with a big firm to pursue his entrepreneurial muse.
In the 1980s, he was a chartered accountant specializing in consulting at Arthur Andersen in his native Capetown, South Africa, and later at the firm's Toronto office after he moved to Canada in 1987.
While at Arthur Andersen, he realized there was a niche market for helping retailers drive their financial performance down to the basics of their operations.
He started out on his own in 1989 and soon he and three consultants had keys to the basement of his Toronto home -- his wife-to-be was not amused. It wasn't until he hit about $2.5-million a year in revenue about 10 years ago that he realized he had to create an infrastructure for his practice -- an office.
Today, Karabus Retail Management Consultants has a staff of about 45, half of them based in its north Toronto headquarters. Mr. Karabus will admit only that revenue is now between $10-million and $20-million.
For his consultants' ranks, he prefers to hire seasoned retailers from upper management levels -- those who have learned the business through the school of hard knocks -- over college grads flush with textbook knowledge. For their "attitude, aptitude and experience," and for their willingness to put up with the rigours of travel and being away from home for long stretches, he pays his consultants well -- the average salary is more than $125,000.
In the mid-nineties, Mr. Karabus said, Canadian retailing began to be taken over by American interests. Today, he estimates that between one-third and a half of Canadian retailing is owned by non-Canadians.
This prompted him to expand his reach south of the border, and not just to follow the money. "We have to go where the decisions are made."
Five years ago, Karabus Management had 35 Canadian consultants and one American; today 19 are American and about 25 Canadian.
The arrival of big American outfits has put traditional Canadian retailers in a vise of sorts: mass merchandisers, such as Wal-Mart and Costco, on one side, and specialty shops on the other.
Those caught in the middle will have to adapt to survive -- right down Mr. Karabus's alley. "It's forced tremendous pressure on price, on reducing costs, on better systems, on better supply chain."
Retail rules
The top 10 best practices for
retail businesses:
1. A retailer's strategy is first and foremost its merchandise plan.
2. The best merchandise plans are based on customer, not
commodity.
3. Retailers are not only
merchandise companies, they are also real estate companies.
4. Precision retailing is the name of the game; technology can be powerful.
5. Putting technology before business change leads to write-offs, not improvements.
6. Marketing is an investment, not an expense. It's a plan, not a reaction.
7. Store manager should be the most important job in the
company.
8. There is always too much cost; Wal-Mart has taught us the hard way.
9. A retailer's only assets are brand and location; everything else should have a near-term
return on investment.
10. There are no secrets. It's all on the shelves of the store.
SOURCE: KARABUS RETAIL
MANAGEMENT CONSULTANTS
