This article was published in the November 2015 issue of STORES Magazine
In many regions of the country, snow isn’t a surprise in winter. But a growing number of retailers are finding that companies hired to clear their sidewalks and parking lots are failing to meet expectations even during typical snow events, meaning some stores can’t open and others are opening late. All that leads to lost sales, lost profits and lost customer trust.
This past winter, when Massachusetts was hit by three severe back-to-back snowstorms, Retailers Association of Massachusetts President Jon Hurst told the Boston Herald that “conservatively,” retailers in the state lost $10 million for each day they’d been closed or had almost no business thanks to the “relentless” snow.
A survey conducted by the Retailers Association of Massachusetts, Associated Industries of Massachusetts and the Massachusetts chapter of the National Federation of Independent Businesses concluded that sales in the state fell 24 percent between January 26 and February 22 of this year. Retailers and restaurants were hit the hardest, with sales falling 50 percent during that period.
A 2014 IHS Global Insight study found that a single-day, statewide shutdown in New York could result in nearly $152 million in lost retail sales.
COST VS. QUALITY
Phill Sexton, director of outreach for the Snow and Ice Management Association, says that, on average, snow removal contractors fail to clear snow and ice in time for stores to open on schedule 10 percent of the time.
Michael Zator, director of facilities for Atlanta-based Aaron’s and a former senior manager of exterior services for The Home Depot, calls that “a fair assessment.” Aaron’s, which has more than 2,000 stores, specializes in the sales and rent-to-own of residential and office furniture, consumer electronics, home appliances and accessories.
Both Zator and Sexton believe that the decline in performance is attributable to the pressure many retailers and contractors are under to lower costs. When retailers focus too much on cost reductions and are not specific with snow and ice management vendors about expectations for snow removal and ice prevention, quality suffers.
“If retailers always go with the lowest bid,” says Zator, “there is the risk that a provider will fail to meet expectations. That is the risk you sign up for if you focus primarily on cost without validating and verifying the vendor’s ability and capacity to do the work that might be necessary.”
“There has to be a balance between negotiating for costs and determining your level of expectations about the scope of work you require,” he says. “You need to break down service levels by individual stores with the costs per square foot matched up against the logistical challenges.”
Service level expectations will vary due to a number of factors, including geography, property specifications and whether customers consider a store a destination site during severe weather. Since both contractors and consumers need snow management supplies, The Home Depot is perceived as a destination store more than Aaron’s.
Although keeping a store open is important to all retailers, one company may be able to absorb more risk than another, notes Zator, so that should be reflected in the overall service-level expectation. But in all cases, “creating specific expectations of how a job is to be done under varying circumstances is critical.”
“If everyone knows what the scope of work is ahead of the season and across the board, that keeps everyone on the same page,” he says.
Zator also emphasizes that it’s important for retailers to ask landlords responsible for snow and ice management what their service-level expectations are “so we all know what the scope of work is. We all know what the vendor is supposed to do, for example, as snow starts to fall or if there is a threat of ice.”
“Snow is unlike anything else I’ve experienced in facilities management. You can go 20 different ways depending on the circumstances.”
While Zator says that there is no “magic bullet” for improving ice and snow management performance, there are a number of best practices that retailers can adopt to reduce failure incidents and reach an acceptable level of failure risk.
Sexton points out that many large chain retailers use a national general contractor to manage snow and ice programs for all stores, even with thousands of locations across the country. But some are beginning to try different methods, he says; two very large retail brands are experimenting with ways to make a turnkey snow/ice management model more effective “by avoiding putting all their eggs in one basket.”
In some cases, these companies are hiring general contractors on a regional or state level. That means working with more companies, but not the thousands they would have to work with on a local model.
These retailers are also experimenting with different compensation terms and conditions. For example, they will compensate contractors in one half of a state with payments based on a time and materials model, while the other half is compensated on a fixed fee. The results are compared to help these retailers understand which models work best, increasing quality performance while still keeping costs down.
For one of these chains, says Sexton, “their average store generates $250,000 in revenue a day. So for a store with an opening delayed by just two hours, that means a considerable loss. It also gives this chain a competitive advantage in the local market if they can open their stores while competitors can not.”
All retailers need to validate “whether the vendor that they are considering hiring has the capacity to do extra work if needed,” Zator says.
“Do they have the equipment? Are they staging the equipment on their site? If they are going to subcontract jobs, how do they know if their subcontractors have the ability and bandwidth to do the job? This is all what a retailer needs to know upfront before signing a contract.”
If performance specifications are set centrally by corporate facilities departments, he says, it is important to ensure those guidelines are sent to each store manager explaining what to expect in terms of service levels and contact information if help is needed.
At the end of the snow season, Zator stresses, it’s a good idea to hold a recap bringing all snow and ice management vendors to corporate to share what’s been learned.
“We shared perspectives, discussed what might be new, and that helped us as facility managers,” he says. “There were times when we’d make changes about the scope of the work to be done or service-level expectations or implemented a new process.”
The bottom line, Zator says, is that “snow is unlike anything else I’ve experienced in facilities management. You can go 20 different ways depending on the circumstances.
“Retailers have to be flexible, able to react as technology changes things and able to make changes based on what is happening in the field.”