Retail chains
The chain opened stores fast and closed them just as fast. Eight months to build a set of opening conditions and a closing process free of gut feeling.
11 monthsPayback period per store
OVERVIEW
CONTEXT
Each year the chain opened fifteen new stores and closed nearly ten. Most opening decisions started with a location being offered.
There was no shared definition of a successful store. Each location calculated break-even revenue its own way, initial investment for the same floor area varied by almost a factor of two, and no one tracked the payback period after opening.
The expansion team was measured on the number of new stores opened each year, so the pressure always leaned toward opening more. Weak stores were kept too long because closing one was seen as admitting failure, while rent kept flowing out every month.
SOLUTION
Standardizing break-even revenue, investment cost and payback period for each type of location.
Location, foot traffic, staffing, supply, capital and expected break-even — missing one means no opening.
Thresholds and deadlines set in advance; a store below standard for two consecutive quarters is reviewed for closure.
Standardizing everything from merchandising layout to staff schedules by time slot, so new stores reach standard faster.
A manager is coached and certified before a new store opens.
Revenue per square meter, contribution margin and staff productivity, visible store by store.
The five best-performing stores were taken apart to find out what really made the difference: location, product mix, management skill or staff scheduling. The findings became the basis for the standard unit economics and the six opening conditions.
Every new location proposal had to pass the conditions before going for approval. Eight underperforming stores were put on watch; five improved in time and three were closed following the agreed process. The weekly dashboard became a shared tool for operations and finance.
WHAT'S DIFFERENT
A chain doesn't grow by the number of stores it opens, but by the number still standing two years later.
The standard model was built from the company's own best stores, not copied from outside.
The conditions make it possible to turn down a great-looking location without an emotional debate.
With criteria set in advance, closing a store is no longer a personal judgment.
No new store without a certified manager — the most frequently skipped condition.
RESULTS
We used to get excited every time a nice location came up. Now the first question is always whether we have a certified manager for it.
Usually from ten stores up, or earlier if the business plans to expand into new provinces within the next twelve months.
Much less than keeping a weak store open for too long. In this case, customers and staff from all three closed stores were moved to the nearest location.
Yes — and it's usually a prerequisite. Franchisees need proven unit economics before investing.
The first-phase dashboard runs on existing sales data. Further investment only comes up once the metrics are being used regularly in operations.
A NEW JOURNEY STARTS HERE
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