When I visited Jai and Mandeep Singh Rai at their store in Wheata Road, Sheffield, I asked him what his goals for the business are. He was very succinct in the way he described his fiscal goal. He said:
“My aim is to have a turnover of £30,000 per week with a gross profit margin of 30% within 5 years.”
I talked about Jai and Mandeep’s 5 year goal at the Local Shop Summit to illustrate one of the seven retail lessons I shared in my presentation. During one of the networking breaks I had a conversation with Terry Caton who runs a Londis store in Chesterfield and he took the opportunity to challenge Jai’s vision.
Terry said that he had visited MJ’s Go Local Extra, and from what he had seen, he could not see how Jai could hope to lift the gross profit margin to 30%. He felt that the neighbourhood would drive a sales mix where tobacco and other low margin products would have a significant impact on his gross profit. Taking that into account he didn’t see where in Jai’s range there was the opportunity to hold a lot of categories with really high margins.
I explained to Terry that Jai knows that achieving 30% is a big challenge, but in the first year since the store re-development, turnover increased by 50% and they were now more than half way to bridging the gap between what the old store was doing to the £30,000 per week target. This has been coupled with a 7% increase in gross profit, which is two thirds of the increase needed to get to 30%.
I added that what Jai’s 30:30 vision has done is to give him and his wife a framework that drives all the decisions they make about their business. When they work a new supplier they want to build a strong relationship built on respect and delivery. So when sales go well beyond the initial expectation, he talks to the suppliers to reset the buying terms and has recently been able to negotiate a better price with two companies.
Jai and his wife have set their 30:30 goal to help them build success into the business. It doesn’t matter really what the numbers are. The key is about having the drive to get SOMEWHERE. Think about what you might want to achieve, how you can challenge yourself and your store, and make sure you have a business fit for tomorrow. What do you want from your business by 2020? Without a vision for your tomorrow you are likely to be stuck with today.