It’s Prime Time for Strategic Planning
Looking at the results over the past two years, our industry’s financial performance looks strong, with a bright future. We are seeing many organizations expand their offerings and services, work with additional customer analytics, and focus on improving the overall experience in the convenience channel.
They are facing ever-changing customer behaviors, demographics and generational movement, including significant changes in the workforce of the future.
Manufacturers, distributors, equipment suppliers and service organizations continue to respond to the changing needs of the industry, including the redefining of the fresh category.
All this change means it may be an excellent time to develop or refresh your strategic plan. This is the time for organizations to demonstrate their agility and flexibility. Here are some thoughts on how to develop or update your strategic plan.
You start by answering two questions: What are the major disruptive market forces you will face in the coming years and how is your team prepared to address the challenges? Where does your current strategic plan take your company or store in the coming years vs. where the changing customer and workforce will be?
The consumer is changing with demographic and generational shifts, wants and needs. Product and service offerings and new technology will provide the consumer more convenience options, even to the point of redefining the meaning of “convenience.”
Effective organizations and individuals, regardless of their size (be it a single-store operator or a chain of 10,000 stores; a supplier with one product or a national presence), need a set of goals and a footprint to reach those goals. This should be the groundwork for annual performance and improvement, as well as a long look and plan into the future.
The strategic plan can be your vehicle to develop new pieces of your business model; to sustain and create new competitive advantages for the future. You should engage your associates and management team in the plan. Create the environment that it is everyone’s plan, and everyone’s responsibility to meet or exceed the goals. Then, communicate the goals for the company and how each associate’s role supports the plan.
The most effective organizations work as one, regardless of their size, number of divisions or people. The strategic plan will set the vision, strategy, focus and priorities. In fact, companies with multiple divisions can prepare a building-block-type strategic plan that all works up to and supports the overall goals of the entire company.
TIMING & QUESTIONS TO CONSIDER
This could be the ideal time of year to establish a schedule to create a refresh of your existing strategic plan. It is an opportunity to reevaluate your previous process and select the various planning team members to ensure you have key team members and departments represented in this new process.
You must create an environment in and on the planning committee that it is OK/safe to disagree with other members and leaders on various points, but you must also instill a spirit of “If I don’t agree, here’s what I would do,” with a very professional approach. It is the leadership’s role to develop and nurture the team; it is their opportunity to work on the business, not in the business. Do not allow the thinking, “We’re all too busy.”
A very healthy engagement tool for the entire company and all associates would be to title the plan: “Strategic Plan 2016-2020: It’s Not My Responsibility. It’s Not Your Responsibility. It’s Everybody’s Responsibility.”
The higher level of engagement you have with the team across all positions, regardless of the size of the organization, will improve the potential for success in meeting your goals and objectives. You cannot over-communicate plans for the future, opportunities for associates to be a part of a winning team, and saying thank you for their input, help, effort and support.
As you establish dates, meetings and begin your process, it is important to be clear with the Planning Team what the goal is; what you want to accomplish. Clearly, with the ever-changing retail environment, accelerating successful speed of change will be critical to be an effective competitor in future years.
Here are some questions to consider that may guide you through the strategy development/refresh process:
1. What are your strategic directives?
- Financial goals and metrics — Establish EBITDA, identical units, free cash flow and ROIC goals with benchmarks during the planning years.
- Sales and marketing plan — How will you grow your customer base and build existing customer loyalty, merchandise sales and gross profit dollars faster with an effective sales and marketing plan?
- Operating model — Does the best customer experience win? What are specifics of your experience plan? How valuable is curb appeal? How are you measuring customer satisfaction? How do you operate more efficiently and take cost out of your business model? What’s your organizational structure? Cost of goods? Technology improvements and changes? And who is reviewing this process?
- People plan — Execution of any plan is dependent on excellent people, well trained and engaged in the plan. I think this is a great quote about the impact of our associates: “The customer experience will never exceed the associate experience,” said Greg Creed, CEO of Yum Brands. The key areas of the people plan are: shopping experience; training and education; associate engagement, including a development plan for everyone/every year; succession plans; personal growth opportunities; diversity; and communication. You also set people priorities and ask yourself, “What does success look like?” Identify the role each person plays, while ensuring that success or failure is everyone’s responsibility. Leadership sets the tone and environment; it all starts with the leader.
2. What are the key trends in the industry and how do you make them an advantage for growing your company?
- Digital marketing — Mobile payments, social media and customer marketing.
- Fuel — Is the last 24 months the new norm? Where’s the tipping point on volume and when will it take place?
- Consolidation — Will the M&A activity of late continue?
- Channel blurring — New convenience services
- Health and healthy eating — Are artificial ingredients going away? What about the importance of regional/local sourcing?
- Consumer trends — Analytics
- Operating expenses — Labor market, wages and health care costs
- Generational and demographic changes
- Government regulations
3. How does the team sustain existing competitive advantages and build new ones that will grow the company and the value of the company?
- What should the model be?
- How do you chase the customer, meet their new and changing expectations? Invest in the things that matter to customers, change their behaviors and avoid emotional decisions on investments.
- How can we take advantage of emerging convenience service opportunities? Examples: home delivery, multicultural demographic changes, click-and-collect, customized offerings, small basket, alcohol in fast food/change existing restrictive laws, food trucks, mobile online shopping, and logistics models.
4. What changes do you have to make to meet your financial goals? How committed are you and your management team to making these changes?
- Serve the communities where you operate.
- Live your values.
- Be a responsible retailer of age-restricted products.
- Share your value story.
- Be a leader in sustainable practices. If it’s good for the environment, then it’s good for your bottom line.
ACTION PLAN DEVELOPMENT
Once the team has decided on goals, then the various departments should develop action plans to bridge gaps with current trends. The responsible associates should develop timelines/benchmarks and drive the business to meeting and attaining the objectives.
Develop a go-and-see environment within the organization at all levels; it is the best way to understand the current status and opportunities to improve your business. Ask associates at all levels what your organization can do to improve your business, products, value, customer experience, and experience for the associate. You cannot over-ask questions of associates, nor share your appreciation for attainment of results.
I think each organization will need to determine the most effective approach to developing the planning process to build or refresh their strategic plan. I have found a third-party coordinator is a very effective tool to support the team, prepare for the meeting, coordinate updates, and benchmark reviews with an objective eye.
EXECUTION OF THE PLAN
This phase of the strategic plan is critical to attaining your goals and objectives.
First, communicate the goals and plans throughout the organization. It is important for the team at all levels to understand what the goals and plans are for the company, as well as their role and responsibilities in the plan.
Next, here are six steps to implementing your action plans:
- Review benchmarks, progress and results. The management team evaluates the progress on the plan and determines adjustments to the action plans that need to be made to reach the goals and timelines in the plan.
- Monitor customer analytics, behaviors, customer and associate surveys, industry trends and new business opportunities during the planning cycle and update the action plans accordingly.
- Communicate the progress, accomplishments and plan revisions during the planning cycle with the management team and associates at all levels. Continue to ask your team for input on the plan and performance of the company.
- Ensure that leaders, directors and managers continue the process of capability-building for every team member during the entire process. Build that culture into your organization. It’s an investment that will have exceptionally high ROIC. Kirby Martzall, president of KL Martzall in Lancaster, Pa., worked with me for years to develop this process.
- Celebrate the success along the journey with your team. It is an important opportunity to say thank you in a small, simple way that will pay huge dividends.
- Schedule annual planning meetings.
Lastly, do an objective review of management’s current perspective and thought process. Ask: Does it deliver the results and meet our financial goals, and improve the value of the company? Is it the groundwork for building a strong future for the company? Does it bring everyone together to work as one?
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.