Friends & Family Incentives: The Good, The Bad & The Ugly

Okay, let’s get straight to the point here. When you have friends or family who own, manage or are key players in any business that excites you, it can be great. There are often perks such as free product giveaways, special events and privileged shopping deals. The catch? Sometimes the generosity of these businesses can be abused. Friends… and even family… often expect these types of incentives instead of appreciating them when they happen to come their way.

If you are standing in the shoes of someone who has to decide what makes sense to support your friends and family as customers, you know it can be tough. From everyday discounts to special holiday incentives to freebies and more, business owners are challenged with the drama – yes, drama – of making sure their friends and family feel special when shopping with them. As small business owners, it’s drama  enough just to handle your ever expanding to-do-list, so adding “keep friends and family shopping and happy” often becomes just another chore to check off. Luckily, with a little planning and a lot of heart, keeping your favorite people (or your not so favorite people but blood makes them count) happy can be  as easy as 1-2-3.

1. Set Limits.

Limits, boundaries, deadlines… call it what you want, but the key is to identify what you offer your friends and family in discounts and shopping incentives so that there is no confusion. If it’s written out and identified clearly, it’s easy to blame the “policy” versus having to take the blame yourself. If you still get heat for it, remind them you are running a business and policies are part of your business model. Still getting heat? Maybe you need to find new friends… Or at least accept that they may not be the right customer for your business.

2. Offer Exceptions

If your mom makes the cut, give her a special deal that exceeds your typical discount. On that same note, break rules whenever you want for whomever you want should you feel the urge, need, desire. But only you have this control, so use it wisely. Don’t throw this around whenever… save this for truly special occasions – if at all. Remember, you’re in business to make money – right? Plus, if you throw these types of exceptions around too often, they will become expected. This should definitely not be your goal.

3. Make Them Feel Happy

Sometimes just the feeling of “being special” or “standing out” is all your friends and family may need. Host a special evening just for your fav peeps to shop, offering great deals, discounts and some light appetizers and beverages. Take it up a notch with music, local designers or any other extra effort that shows you really went out of your way to make this special event worth attending. While shopping is the goal, sometimes it’s just nice to show them how much you appreciate that they support you and your business. Of course, this is assuming they are referring people your way, right?!?!

Extra, Extra

To round out these special incentives, discounts and more, make sure to always be thankful of any business you receive – plain and simple. The competition is tough, so friends, family or just some stranger on the street all equally deserve your appreciation as a business owner. Going the extra mile for those you care about is a perk you should enjoy… not dread due to the constant abuse of your generosity. So remember -  create boundaries, write out your policy and invite friends and family to shop away! But please… promise yourself, your friends, your family and me that you won’t become that business owner who depends on them for all your business. All the perks in the world don’t equal up to that making a successful business strategy.

Why Retailers Should Negotiate With Wholesalers

Alright, so this isn’t what wholesalers want to hear. But the reality is that retailers are taking hits when it comes to the suggested retail prices of many of their products in an effort to get sales. We aren’t referring to annual sales, seasonal sales and special events here, but rather permanent markdowns being taken in an effort to make sales- not just move the final few pieces of what is left from a size run or original order.

What Can Wholesalers Do?

The fact is, the price of many products at retail have gone down in their market value, therefore their wholesale price should reflect this. As wholesalers, if you aren’t already offering incentives, discounts or some sort of savings in your sales to retailers – you should be. Of course, this all depends on who you are. Many wholesalers are doing great or getting by because likewise, the retailers who are selling their product are comfortably moving their product. But if your product falls into the category of not making expected  sales, it’s time to help out your retailers.

What Should Retailers Do?

If you are a retailer who is struggling to make sales, consider how you can help your margins before you bring new product into your stores. Discuss options with your vendors that include discounts, incentives or possibly even product buy backs based on sales – or lack of them. Plan in advance how you will manage the markdowns customers are expecting, but also plan to make sure your customers don’t expect more markdowns to keep taking place. Buy less of more so that customers can’t wait around for what they want to still be there, but for less. And make sure your vendors know you are making these changes to support your business overhead and hopefully they will support you along the way, as well. After all, if they fall into the category of products needing to be marked down, then they should be smart enough to know it’s sell for less or don’t sell at all!

At the end of the day, as a retailer or wholesaler you want your products to sell. By supporting each other to make this happen, you can keep each other happy and ultimately – the final customer, too. But be realistic and be fair. These negotiations aren’t for everyone and retailers should respect that…. Likewise, wholesalers should respect their retailers if they don’t get reorders. Whoever said retail was easy certainly wasn’t working in it during a tough economy! Luckily, the battle is often worth the fight.

Promoting Independent Stores and Shopping Local

It’s hard enough to battle your racks against big box retailers such as Macy’s and Bloomingdale’s, but in the recent wave of our recession, discount retailers are also making a mark – and a large mark at that – with  savvy, boutique influenced shoppers. It’s not uncommon to hear a group of ladies bragging about their recent Michael by Michael Kors purchase from TJ Maxx or Tory Burch shirt from Loehman’s. Two years ago, however, they would have been bragging about their purchases from an actual boutique – maybe even your boutique.  Shoppers today, though, are grabbing outrageously insane deals at discount stores from brand names that they feel good about it. With no disrespect to The Limited or Jones New York, the anty has upped when it comes to what you can find at discount stores and shoppers are latching on.

So what can you do as an independent boutique to fight this trend? To start, you need to acknowledge it and accept it. So many boutique owners try and fight the reality of their customer’s habits, believing “they” will be the exception. However in our economy today, there are very few exceptions anymore. Even affluent shoppers with millions in the bank are changing their shopping strategies. The next step for you to do is react so that your customers remember why shopping with you is also to their advantage.

Support The Community & Small Businesses

There are some great local organizations within towns and cities across the country that support shopping local. If your community doesn’t have one, consider being the first to encourage this trend and talk with other small business owners to help you do this. The advantages of shopping local that need to be communicated with your customers include:

1. Protect Local Character & Prosperity – Every neighborhood tells a story. What’s yours? Remind your community of this story – history and present – and in doing so, remind your customers that among the only ways for your community to thrive is to support local businesses.

2. Linking Everyone Together - Local businesses do more than just sell products or services. They link people together, even customers themselves. Consider how your business can support your community by hosting community sponsored events, bringing neighbors together for a purpose, and more. If your business becomes a destination place for others, it will also become a destination to shop.

3. Increase Economic Situation – Did you know that dollars spent locally versus at national chains increase your communities wealth three times more than if spent elsewhere? By spending locally, you are investing in community jobs, local taxes, neighborhood improvement and community development.

4. Supporting Local Entrepreneurs – You don’t have to own a store to support a store. Remind customers that businesses built from entrepreneurs fuel the American economic crisis in a great way. They can do their part by shopping at them! As a business owner, you can support this, as well, by buying American made product and when possibly, locally made product. If you do this, make sure your customers know this, as well! Even if your whole store can’t support this trend, dedicate at least a section to it. Then promote it and sell it!

5. Product Diversity – Independent stores tend to have more unique products that chain stores or discount stores. Remind your customers of this. So what if they can get Tory Burch for 50% off regular price at Loehman’s? That’s NOT the point they should be caring about. Make them remember that shopping local gives them access to some unique, different, more limited edition product assortments while also supporting their community.

Talk To Your Shoppers & Lost Customers

It takes more than just understanding that your customers are shopping elsewhere to improve it. You need to communicate with your customers about why you care enough to tell them you need their support. A few ideas as to how to do this includes:

1. Arrange a Neighborhood Local Shopping Event - Get other stores together and promote a local shopping event. During your promotions, remind customers of all the reasons why shopping local is so important. Let them know that you know it can be tempting not to buy local but that you need their support for the entire community’s sake. Get your local radio stations, television stations, and papers to help create a buzz for this.

2. Promote Through Display – Speak to your customers by listing the advantages of shopping local in your store front window.  Get other local business owners to list the same advantages. Create your own pros and cons and “quietly” remind your customers of this by visibly placing them in a high traffic area both in your store and outside of your store.

3. Create a Buzz – Get your local press outlets to share in your support by creating news worthy stories to talk about shopping local and supporting local businesses! Newspapers, local magazines, community papers, local television stations and more are always on the look out for great stories to tell. This is certainly one of them! Talk to them to make this happen!

The reality is that independent stores are closing their doors across the country. We hear about big corporate buy outs and saving American corporate businesses all the time on the news, but what about us little guys and gals? Speak up rather than sit back to at least try and communicate this important message in your neighborhood. We are all in this together, but unfortunately many of us are closing our doors still.

What’s your story? We’d love to hear from you in the comment section below!

January 09 Retail Sales Up 1%

Great news for retailers! There is hope that retail will survive in our struggling economy. Government research was released Thursday, February 12th, that stated that retail sales were unexpectedly up 1% in January. The Commerce Department stated that this is the first time in seven months that retail sales have rose, offering retailers hope that consumers are shopping.

Reuters had expected January sales to be down by 0.8% for January, so this welcome surprise has people talking. Helping to credit this increase was the significant amount of sales taking place in January from marked down holiday items and post-holiday discounts.

To keep this momemtum alive, make sure to keep your sales going and markdowns moving. Customers aren’t buying too far in advance like they use to, therefore spring items aren’t just yet on their must have lists. But shoppers are taking notice of sales and looking for deals out there. Continue to offer them while still getting your customers excited for spring. One idea may be to offer an additional percentage off a sale item with the purchase of a “just arrived” or spring item. Be creative and be proactive! There are customers shopping – you just need to make sure they are shopping with you!

Customer Loyalty Programs – Are They Worth It?

Have you ever returned to a store of any kind, such as an apparel boutique, nail salon, sandwich shop, pr video rental store simply because they have a loyalty program that you participate in? I personally can tell you that I have a favorite nail salon that not only gives me great no-chip manicures, but after ten appointments I get one free. Or, in my eyes, I save $45 and still get a great manicure. There is also a boutique in my neighborhood that offers 40% off any regular priced item under $100 after five regular purchases. Pretty great, huh? If that isn’t enough of a reason to at least look there when I am in the mood for a new special something, I don’t know what is.

Loyalty programs are a great marketing tool to help retain business and increase sales. When customers are given options as to where to buy and what to buy, their decisions can often be influenced by who will reward them the best for their purchases. As small business owners, you may not be able to give them the same kind of incentives that big box retailers can, but what you can offer them through your own personal loyalty programs can make up for this.

Advantages of Loyalty Programs

Customers have choices in every action they take, therefore it helps to give them a reason to want to make you their choice as to where to make a purchase. Loyalty programs do just that by creating a relationship with customers that allow them to feel connected, and in some sense obligated, to purchase from you. For many customers, this will simply be because they will hopefully save some money. For other customers, they will enjoy the personal connection and customer service offered through your loyalty program. The reward of the program itself can also be an incentive. Whatever the reason is, customers respond to stores that give them something in return for their business. Common examples of this are sales and special events. A loyalty program is simply one more thing you should consider to help make your customers return to your store to shop.

A few loyalty programs to consider include the following. Please note all specifics, such as percentages off, purchase quantities, and other specific details are examples only. You will need to customize these details to cater to your business needs if you should decide to create a loyalty program for your customers.

Loyalty Program Examples

1. Purchase ten pairs of shoes and get your next pair on us! Value equal to $100 or less.

2. Save 50% off your next purchase of $200 or less after 5 purchases.

3. Gift certificate for local restaurant on all purchases over $250.

4. Refer a friend and your next manicure (up to $20 value)  is on us! Make sure your friend tells us you referred her.

5. Receive $10 towards store credit for every $100 spent. Store credit must be spent in store only.

Things to Consider

1. Be very clear with any specifics you are offering or NOT offering. For example, if you want to put a spending limit on a free service or product, note this in your loyalty program so that there is no confusion with your customers.

2. Communicate with local businesses to see if they may want to contribute to your loyalty program. For example, a local restaurant in your neighborhood may be wiling to donate gift certificates to you in exchange for the marketing they will receive by doing this, as well as the possibility of gaining new customers.

3. If you want to include time restraints on your program, be clear about this upfront with your customers through your loyalty program marketing.

When planning your loyalty program, consider all aspects that you want to communicate with your customer, as well as make sure you understand why you want to offer this program so that you can best communicate this with your customer. Hopefully the return will bring you repeat business, increased sales, and loyal customers.

If you have any comments or questions about loyalty programs, please contact me at nicole@retailminded.com.

Managing Inventory In Tough Economic Times

I think we have all faced it by now – retail is tough out there. It doesn’t just seem like stores are closing and customers aren’t spending any money, but rather stores ARE closing and customers AREN’T spending any money. So how, after accepting this brutal reality, do small business retailers survive in what is the worst economic crisis since the Great Depression?

Unfortunately, not everyone business owner will survive the terrible reality of our economy right now. That’s the ugly truth, like it or not. But you can make changes and complete actions that may help keep you afloat.

Inventory Control

Whether a boutique, store, or franchise owner, taking access of your inventory is extremely important right now. You need to be aware of what you have sitting on your shelves both on the store front and in the back stock room. Be aware of what has sold and what isn’t selling, and make plans to find balance between the two. While it’s always important to stay on top of your inventory, now more than ever you need to be aware of your top sellers. Ask yourself a few key questions to help understand why they are your stop sellers.

1. Have they always been your top sellers?

2. If not, why do you think they are now?

3. Are there other products that would compliment your top sellers and potentially sell as well?

Likewise, determine what have become the worst sellers in your inventory and make plans to get them out your door as soon as possible. Easier said then done, yes. However, it needs to be done – even if you have to take a loss on some of your product purchases. Letting them sit on your shelves and make no return at all for you is worse than at least recovering some of your initial investment. By doing this, you may allow yourself to afford smarter purchases for your business today.

A few things you can consider when determining how to move inventory that has not been selling include the following.

1. Call your vendors to see if they would buy back the product you purchased from them. While not all vendors do this, some will consider it depending on your contract, your relationship, and your future business opportunities with them.

2. Markdown your inventory right away if you haven’t already. Don’t just mark it down to 20%, but price it to sell with markdowns of 40%, 50%, and more. Remember that other stores have already done this and customers today know they can get a deal if they look for them. The plan is to get the product out the door, allowing you to purchase new inventory that may sell better.

3. Host a special shopping event that caters to selling marked down items. Add special incentives to purchases made with multiple items. For example, you could have 40% off the first item and 50% off each additional item purchased. Consider adding other incentives to sweeten the deal, as well. Buy one get one free. Gift with purchase. You get the idea.

4. Some small business owners are willing to trade their inventory with other stores. You want to find like minded stores that may be interested in your product to do this. Consider how this may work for your inventory to help control costs and keep product moving in and out of your store.

Don’t be afraid to mark your product down because in doing so, you may take a loss. The bigger loss you are at risk for is not moving any inventory at all and ultimately having to close your doors. Be realistic with yourself as to what is the best scenario for your store, ultimately allowing you to bring in products that sell.

Your New Customer

Customers are not shopping like they use to, therefore buyers of stores should not be buying like they use. What was bought in the past may have been bought for your old customer. Your customer, however, in most cases has evolved into a new customer with new shopping habits. He or she can literally be the same person, but their shopping habits are most likely different. Take this into consideration when making any future purchases, as well as when considering markdowns for your current inventory. To help you understand this better, consider how you may have changed your own shopping habits. Ask yourself what has changed, what has not, and why. Consider this, as well, when thinking of your own customer base.

One way of really getting to know your new customer is to talk to them. You can do this by simply asking your customer what their thoughts are on your product assortment, competition, and how you can better serve them. In addition, you can more formally put these questions into a questionnaire, offering your customers an anonymous way of sharing their thoughts on your store. While I don’t encourage overdosing on email blasts, this is a great excuse to send one out if you have a list of emails to communicate with your customers with. You may also leave the questionnaires by the cash wrap with a sealed box for them to put their comments into. The catch here is that if you do this, you need to be prepared for what you hear. It’s not always easy to listen to constructive feedback, but often it’s exactly what you need to hear to get the ball rolling into a better direction.

At the end of the day, be aware of the strengths and weaknesses of your inventory and who your new customer is. By considering the influence in which they have with each other, you should be able to better control your inventory and ultimately increase your sales. Despite a tough economy, people are still shopping – simply not as much. It’s what they buy, why they buy, and where they buy that will make a difference in whether or not you survive this challenging economy. Be one of the survivors and make the changes you need to in order to stay alive.

Markdowns vs. Discounts – What’s the Difference

When you are running your own business, you know how important every penny is. So when it comes time to give a discount or markdown your product, you need to first understand the difference between the two.

A markdown is a devaluation of a product based upon its inability to be sold at the original planned selling price. An example of a markdown would be if you had a sweater for sale that was originally priced at $100 and after one month of slow sales, you decide to markdown the sweater  to 20% off, making it $80 at retail. Although you just lost $20 of your intended markup on that sweater, you are also inviting more people to purchase it at a price they may prefer than the original $100. Since the sweater had not been selling well at $100, offering a nice, markdowned price can often result in sales that would not happen otherwise. Hopefully a 20% discount will do the trick, however often you will find that you need to continue your markdown strategies based on slow sales, moving product from 20% off to 30%, 40% and more if necessary. Of course, this all should come in time. Don’t rush it but don’t wait too long, either. You want to sell the product while it’s still relevant to the season, the trends, and more.

A discount is a reduction in the price of an item or transaction based upon the customer making the purchase. Examples of this would be an employee discount, senior citizen discount, and frequent-buyer discount. Many retailers offer discounts because they find that customers return to their store versus others because of the discount provided to them. They often enjoy the advantages they feel that discounts often give, such as being a preferred customer and therefore getting special treatment. Some boutiques offer friends and families discounts, which benefits both the retailer and those getting the discounts. If you are getting business because you are offering discounts versus letting potential customers be more selective as to where they shop since they do not have any special treatment from anywhere, then you are making money you would’t be otherwise. It’s a win-win on both sides. How much you decide to provide in your discounts is up to you, but I think 10% is just a little kind, with 15% being more friendly and 20% being great. More generous discounts, such as 30%, 40%, or even more should be made with careful consideration. Afterall, you are trying to run a business and make money doing so!

Both a markdown and a discount can be temporary or permanent, depending on how you market them to your customers. An example of a temporary discount would be if recent high school granduates received a percentage off all their purchases with proof of diploma witihin 30 days of graduation. A temporary markdown example would be if you had a one day sale, offering markdowned prices for only a specific amount of time. Temporary discounts and markdowns are commonly used at retail to entice consumers and should always be considered in your marketing strategies. You can use both discounts and markdowns as part of your sales strategy to help make the most out of your inventory sell thru and ultimately, your sales goals.

Too often I have visited boutiques that do not markdown their product at all. Months later I will visit the same boutiques and find that many of the same, regular priced items are sitting on the shelves at the same price. Customers have the right to be selective in their shopping decisions, as do you as a buyer of your store. But it needs to be recognized sometimes that all your store purchases may not be slam dunks. Nearly all stores have markdowns at one time or another, and almost always at the end of a season. Wasting your retail floor space with products that are not selling will not help you at all, so consider how markdowns and discounts may be able to work for you in your sales strategy.