Surviving Retail In January

The holidays are over, the mad rush to shop has passed and consumers are buckling their wallets tight. Or are they? Traditionally, consumers will shop New Year sales for larger purchases, such as cars, appliances, electronics, furniture and other more expensive ticket items. However, for those of you selling clothes, accessories, home decor and items priced more affordable, it can be a struggle to make your sales goals in January. A few survival ideas include the following:

1. Provide a variety of prices.Consumers may not be willing to spend as quickly as they were before the holidays, but they will still spend if something intrigues them enough. Make sure to catch their attention at every price point that your store caters to… and possibly a little lower than your norm to get a few additional sales. These prices can be regular priced or products on sale. Either way, make sure you make them worth wanting through your displays and sales pitch.

2. Don’t put everything on sale but rather showcase what you want to sell. Even if you know something has been in your inventory for too long, your customers may not. Highlight this product by freshening up it’s display, how you merchandise it, what you merchandise it with and how your sales team supports it. Taking a fresh approach towards merchandising and ultimately selling older goods can often surprise you in the results… quick sales or unexpected sales to surprising customers!

3. Consider who your audience is and if whether or not you are reaching out to the right demographics. Often the biggest mistake retailers make  is not knowing who their customers are. January is  the perfect time of year to evaluate your business, and with that comes evaluating who your customer is. If you believe you are missing a core customer, find ways to reach this new audience. Consider various marketing tactics that include business to business marketing, promotional mailers and more. Your new audience may be just who you need to reach in order to obtain the sales goals you set for your business.

4. Give thanks to those who have already shopped at your store. Why not let your customers from 2009 know just how much you appreciate their business? By offering an incentive for them to return to your store, you open up the opportunity to gain additional sales. You can do this through having a customer appreciation sale, a special event, offering an incentive based coupon or in many other ways. Be creative in how you reach out to your customers and what you offer them so that they will actually want to return to your store. 10%, 20%, even 30% may not do it alone.

4. Stand out from your competition. Whether it’s through visual displays, product assortment, customer service, sales or special events, make sure you stand out from your competitors. Customers who shop local or independent boutiques are typically aware of their shopping choices, so be  ahead of the game by being the best at the game. Work hard to stand out and be the best in your local area – not only through product assortment and customer service, but special events, exciting sales and more. January markdowns and cluttered sales racks can get old. Bring something new to the table that your competition is not.

5. Introduce new selling strategies to your business. Consider selling at local markets, cross selling with other boutiques, swapping stale merchandise with friend boutiques for new product, selling merchandise online and much more. Be creative and think out of the box – whatever your box may be. By introducing new avenues to make sales, you increase your opportunity to make money.

Finally, be realistic and work hard. Now is not the time to get cozy and sit back. Dive into 2010 with ambition, dedication and new ways to get your business ahead. Stay focused, keep learning and always look for ways to grow your retail business in what is still a tough retail market.

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.

Managing Markdowns Before Your Season Starts

As new seasons approach, the excitement of new product fill your store as both you and your customers anxiously await all the new goods that are about to arrive. Many retailers think optimistically that their vendors will ship on time, the weather will be just right and sales will be a success. The reality is, however, that this is rarely the case – particularly in today’s challenging economy. To help plan for the likely scenario that you will need to mark some goods down, you can start with the decisions being made when you are placing orders.

Planning a flat season is a good way of managing your inventory and most importantly, your dollars. Unless you have had significant growth over the last six to twelve months and firmly believe your growth will continue, planning for a flat season is the safest bet for your business. It’s likely that vendors will have excess inventory of their own that you can get in last minute should you see the need to, but let them carry excess inventory versus you in an effort to control your margins. The goal is to keep your inventory lean and avoid long periods of time between product arrival and product sell thru when possible. For example, fall fever may start in August with back to school in full gear and the traditional summer months coming to an end, but if you know your customers will still be wearing shorts in October, hold off on having too much Fall arrive too soon. Customers are buying later than they use to as a result of the economy, so pushing your delivery times back, as well, helps to keep your floors fresh and current according to the buying trends of your customers. As independent retailers versus big box players, you have more control over the ins and outs of your product arrival and selll thru and should lean on this information as you make your purchasing decisions and delivery date decisions, as well. Finally, keep some extra dollars available for product purchases made in the midst of the season. As much as we want to believe we will know what is the best seller before it even hits our floors, you may find a surprise or two that you want to bring into your assortment. Save cash as part of your sales plan so that you can chase these orders and move them quickly on your sales floor.

Planning for markdowns is inevitable for most retailers, but your goal should be to plan for as few markdowns as possible. If you take the controlled steps outlined above into consideration during your next buy season, it’s likely you will see a big difference in your markdowns once products arrive. Maintain a strong, realistic mind set when making your decisions and remember - let the vendors have excess inventory in their stock, not you!

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!

Retail Real Estate – Do You Know What Yours Is?

Have you ever wondered what the specific value of space is in your store? A good way to equate value to your retail floor space is to access the best parts of your retail floor plan and determine the worst spots, as well. In doing this, you will be able to understand your retail real estate.

What Make a Hot Spot in Retail Real Estate

Is there a spot on your floor that everyone seems to notice first, no matter what is being merchandised? Traditionally, this spot usually includes store front window displays, aisle displays, and the merchandising space by the check out counter. In addition, wall space can often provide valuable retail real estate since it lifts the eyes of the consumer and draws attention if merchandised well. Locate the best real estate spots in your store and begin to take inventory of the product featured in these spots and their sell-thru. Then, as time progresses, start to utilize these spots to turn inventory over through the use of retail real estate. Are you looking to highlight new product? Use your real estate hot spots to do this. Need to get rid of some access inventory? Again, use your real estate hot spots to help you move your product. Make sure you acknowledge the change in your retail real estate as your product and season changes, therefore adjusting your floor plan, as well. When you move fixtures, your retail real estate may adjust, also.

What Makes a Weak Spot in Retail Real Estate

Have you ever noticed a spot in your store that no matter what you merchandise there, it just doesn’t seem to sell or even get noticed? This is a retail real estate weak spot. Nearly every store has them and yet many stores don’t know how to use them. The reality is that you probably need this space for your products, so good or bad, you have to use it. A few ideas to help make the best use of this real estate is to showcase product here that are double exposed somewhere else, which is a common practice for retailers to do (show your product in more than one spot to ensure visibility). Another idea is to put something here that customers know they want, such as stocked items including t-shirts or socks. In other words, offer something in this weak spot that customers come to your store for and will find no matter where it is placed. Finally, you could always use this space to feature your sale items. Everyone likes a sale nowadays, so put your weak real estate to good use by showcasing your great markdowns and must haves at discounted prices!

By understanding how your retail floor space works for you, you can then use this to your advantage when merchandising your store. Make sure you know your retail real estate to make sure that it is working for you!

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!

Buying When You Already Have Too Much Inventory

Many small business owners are inspired to own their business because they want to surround themselves with their passion, hobby, or interests. While this can prove successful for some, it can also prove challenging for others when it comes to retail. For most people, buying for your store is not as easy or as fun as shopping for yourself.  In fact, it can be down right difficult, frustrating, and scary. Suddenly, a big “for sale” sign isn’t as exciting as it use to be for you since the possibility of what you buy for your store may end up on a sale rack if it does not sell well.  Because it’s your sale and your money, this can bring added stress to the already endless list of stress that the world of retail has.  However, that said, sales are part of the package when you sign up to work in retail, however there are ways to help limit how much of your inventory ends up on the sales racks.

To help control inventory, particularly in an economy when shoppers aren’t separating themselves from their wallets as easily as before, retailers should take a complete analysis of the current inventory assortment based on the points below. Consider how these points will help you with your current inventory sell through so that when you make future buy decisions, you will find your inventory balanced more evenly and your register filling up more quickly.

Product Sell-through vs. Square Footage of Product Allocation

How much space does the product you sell take up in your store? Is the product in your store that is not selling taking up more space? The goal is to maximize your store with products that are moving. You should markdown the product that is not selling to help increase the chances of it selling sooner, eventually opening up your store space for more products that have proven successful. It also allows your open to buy dollars to become more available, allowing you to potentially introduce new product. Make sure that you do not let slow moving product sit on your floor too long without marking it down, then make sure to continue to mark it down until it sells. It is wasted space if it is just sitting there. The first 30 days of any new product on your floor should allow you to understand if customers want this or if you will need to mark it down eventually. The goal is to have the products that sell faster, or even at all, take up the majority of your floor space. We all make poor buy decisions, so deal with these mistakes if necessary to get to where you want to be next time in your buying decisions.

Product Hot Spots and Weak Spots

By now, as a retailer, I am sure you have discovered the power of merchandising. Whether you have or have not paid much attention to this, make sure that you take the time to determine the retail real estate in your store that helps move products while on the contrary, determine your store space that doesn’t seem to help increase product sell through. By understanding this, you can maximize your sales. There is always going to be “dead space” on your floor and like it or not, you may need to use this space to merchandise some of your product. Make sure you merchandise and re-merchandise your product routinely so that you offer customers a refreshed shopping experience, but also the opportunity to move products from the hot spots to the weak spots and vice a versa as needed.

A merchandising note – If you have product that customers come to your store for, this is the product to put in a weak spot versus a hot spot since they already know they want it. Use your hot spots for products that you need to sell, not only the ones you know will sell. Mix it up!

Excess Inventory Control

Unless you are one of the few retail buyers who is always on target with what their customers want and you know will absolutely sell, it’s possible you have extra inventory sitting around. The goal for you is to move it. And move it now! Don’t wait for the possibility that it may come back in style or that the economy will get better. Mark it down and get it sold. Hold a special sale. Or sales. Offer discounts for special customers. Whatever your plan is, the plan should be to not let this product take up space on your retail floor or in your back room – even if you hate the thought of selling it for less than you planned to.

Controlling Your Buys

It’s so tempting to bring in a ton of great new things to your store and just start over, so to speak, when you have a lot of things that you know are not working for you. BUT – hold back. Find control and find balance to bring these new items in without cornering yourself in a position where your current inventory will financially put you in a hole. Unless you have the resources to be flexible and to buy without concern, then make sure you strategically plan to get your currently inventory out of your store before bringing in a ton of new things. I don’t believe that you can hold off on buying anything new, however. Customers want to be surprised and tempted and enticed to buy, so you need to give them that with what is in style, with what they want, and with what you know they need. That said, find balance and control with what you already have and what you want so that you can better manage your inventory needs.

Still looking  for more help? You may check AdvanceWare for its scalable and flexible inventory software (http://www.advanceware.net/) that is suited for Quickbooks users, wholesalers, distributors, online retailers, importers/exporters, 3rd party logistics warehouses, and any other inventory-based businesses to help you in your inventory needs. In addition, you can find some video demo at http://www.advanceware.net/videodemos.asp

 

 

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.