Specialty retailing is one of the most exciting segments of homegoods retailing today. The Specialty Retailer University at the International Home + Housewares Show, held Saturday, March 13, was a full-day educational session focused on tools to make your specialty retail business both more efficient and profitable, with noted speakers presenting information on inventory and buying plans, how design in merchandising can attract and sell, how to create a community of retail customers, getting into the mind and buying thought process of today’s consumer and how social media can take care of your customers.
Here is a summary of the learning from the 2010 Show.
Building Your Business by the Numbers |
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By Bob Coviello, president, HTI Buying Group
In this presentation, Coviello gave solid advice about how to start a retail business.
“First, if you are ready to open a business, start with location, location, location,” he said. “You can have all of the capital in the world, but you need the right location. Do the most research on that aspect of your business plan.”
The next step to build your business is to draw the footprint, calculate the GLA (the gross leasable area, the square footage), including any kitchens and bathrooms, because you are paying rent for that space, even though a customer may not necessarily use it.
Layout the store next, he advised, which includes researching and selecting fixtures, positioning them correctly, and ensuring that your aisles are a minimum of three feet by six inches. A racetrack design forces a consumer to walk completely walk around the store and view all of your product offerings.
"Ninety-five percent of the public is right-handed. So when they enter your store, they will turn right when they enter a store. Think about that when you design your store.”
“Try to drive sales per square foot,” he added. “Produce as much sales as you possibly can in every square foot of space you rent.”
You should join an industry buying group, consider engaging an industry consultant, who will give you contacts to network. Buying groups only started in the last 15-20 years, but they are powerful forces in the industry.
Next, Coviello recommended developing a sales plan, and a Proforma Profit & Loss statement. ”If you do your store right, it will mature in five years. This P&L is how you measure your performance.” The three components to your P&L should include merchandise cost, freight in and shrink.
He stressed the importance of constantly measuring your sales plan. “You want to measure your failures and successes on at least a monthly basis. Don’t wait until the end of the year,” he noted.
He advised that a retailer should advertise (it should be 3-6 percent of gross sales), and should also consider amortization (1 percent of gross sales), bank charges (2-2.5 percent of gross sales), depreciation (2.5 percent of gross sales), insurance (1.3 percent of gross sales), supplies (1-2 percent of gross sales) and utilities (1 percent of gross sales).
“Start thinking about phasing out gift wrap out,” he suggested. “It’s a huge cost. Find a fancy bag instead. Or, charge for it. It’s gotten out of hand and it’s also very labor intensive.”
He discussed critical expense, such as rent, payroll and a store owner’s salary. Rent should be 8 to 10 percent of sales, payroll should be 10 to 15 percent of sales, and your salary should be 10 percent of sales. The sum of these expenses should not exceed 25 percent of your gross sales, he suggested. If it does, you should trim your salary first. “Let’s face it: if the store is not making it, it has to come out of your pocket first,” he suggested.
Last, he noted that five years is store maturity; it makes you a survivor, as 50 percent of businesses generally fail each year. To become a survivor, your performance after five years should be at least $400 per square foot. If you are not at that level, you should seriously consider your product assortment, and adjust it, if necessary.
“Let’s face it: there is not anyone in the world that needs your merchandise,” he said. “It’s all feel good merchandise that we sell every day. So the name of the game is to have the right selection of products so when someone truly wants a product, you have it in your store.”
Top 10 Ways to Renovate or Refresh Your Store Affordably |
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By Linda Cahan, author, and contributing editor, Gifts & Decorative Accessories
Cahan gave attendees the top 10 ways to renovate or refresh a store affordably.
Even the smallest thing you do will improve the look of your store and your view of it, she said. These include:
- Clear the clutter. She suggested taking it one area at a time, even one shelf a week. Sometimes it only takes one hour, she said, and it will do wonders for the look of your store. Clutter can also be signage, she suggested, so keep that in mind as well. For example, take down signs after a sale is finished.
- Focus on focal walls. Walk out of your store, walk back in and look at it. Write down the first five things you see very quickly. Ask others to do this as well. Be honest. Those are your focal points, like it or not, she said. Then, look at those focal points and make them interesting, like adding color to them. Color gives a story an identity, she said. Don’t worry about clashing; every nature color works together, she said.
- Use angles to lead customers around your store. Round tables and corners encourage sales much more than squares, Cahan said, especially at the cash register. Research how you can use angles to get people to move into places they don’t normally move. But pick and choose what you use; don’t make the entire store an angle. “There’s no magic here,” she stressed, “play with it.” Big angles can be done with fabrics, by stacking plates, or by scattering books, she suggested.
- Update focal fixtures. Look at every focal end point and see what you can do to draw people to that area, she said. Ask others to help, as they might have a different idea than yours. Go into an Anthropologie for inspiration, as they do great things with their fixtures, Cahan said.
- Add make up (repaint). Color can do wonders to the identity of your store, Cahan suggested. For example, yellow is the first color seen and it is bright and creates a focus; green calms people to make them stay longer in an area; light blue actually expands space and is imaginative; use purples for accent; pink makes people relax and it does sell; grey kills light and merchandise so only use it on the floor; use red as it sells but don’t use too much, especially in large areas; blue is great for sending a trust message, as does brown.
- Redo your signage inside and out. Your identity comes from your signage. Remember who your community is and carefully adapt your signage to it. Your signage should also include your store name, a reminder of your store name, another reminder and yet another, she stressed. Your store name should be seen at least times as people walk through your shop, she suggested.
- Light it up. People notice a dark store; they will not notice lighting, Cahan said. You don’t need to spend a lot of money in this area; you just need to ensure that people can see your merchandise. The more natural light you are able to use, the more your sales will increase. Solar tubes are huge and efficient, she said. Fluorescent bulbs fade the minute you put them in, which means you are living with half the light that you started with. A black ceiling requires three times the light just to have the same amount of light as a white ceiling, Cahan said, so every color shade you move away from white will cost you.
- Add color to your fixtures and shelving. Redo your exterior with paint/plants/signs, and add personality to your store, she suggested. The more people stop to look, the more they see and the more they buy. Make it fun to change the energy of your store. It can be as simple as adding contact paper behind a few shelves.
- Refresh the exterior. Your exterior is your welcome to people what they think of you and when you do a good job in this area people will notice. The more you add, the more welcoming your store will be. People love to feel like they are going into something special. Think about ways you can make each customer’s experience a special one.
- Bring Feng Shui principles into the design and décor. To summarize, Cahan suggested that retailers create a balance between light and dark, soft and hard, warm and welcoming in your store. Make it fun and interesting; get rid of anything that blocks your entrance, including doors that don’t open. Move fixtures that impede people from walking through the door, add light to dark corners and perimeters, and wherever you can use natural elements. Be aware that every space in your store, from the storeroom, restroom, area behind the cash register and more, impacts people, whether they see it or not.
Creating a Community of Customers |
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By Linda Wyner, author, and owner of Pans on Fire
Attorney and food columnist Linda Wyner is the author of the book Food for Thought: Musings on the History and owner of a gourmet cookware retail store in Pleasanton, Calif.
Wyner offered a hands-on presentation aimed to show attendees how to grow a business based on her personal experience.
Six months ago she was ready to shut her retail store, she said, but since then, has experienced so much growth that she is ready to open another store later this year. Wyner’s retail store, Pans on Fire, is a 1,000 sq-ft store, with an 800 sq-ft cooking school. There are 20 classes per month held at the store, in addition to three private events per week. This is an area she hopes will experience more growth.
“I’ve learned over the few years I think that there is a shift in consumers. People are not eating out, they are eating in. But the problem is that they don’t know how to do it,” she said.
We need to teach people how to use the products that they buy, she said. One tool to do that, she said, is the ARTS program. Social scientists have identified that people learn a variety of ways: aural, reading, tactile focused, and symbolic.
Aural listeners need to hear to learn. Visual learners need to read something to learn. If you have to pick up something and handle it you are considered a tactile person. Symbolic focused learners need diagrams to learn. Not all of us are one way; most of us can embrace. More than two-thirds need to read or listen to learn. If you can peg your customers this way, you can find the hook to get their attention, keep it, and buy something from your store.
In her cooking classes, she follows the same plan, using her instructors. “It’s almost like an infomercial without being one,” she said. “You give them recipes, put a spoon in their hand, use aural cues, and symbols to instruct them. Our instructors are constantly monitoring the students through these methods. And people walk out of the class wanting to buy the tools they used in the class.”
Over the Hill, Under the Radar: Old(er) Money Goes Shopping |
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By Tim Henderson, senior director, Iconoculture
Iconoculture is a leading consumer research and advisory company that provides consumer insights to help retailers understand what’s going on with consumers, why it’s happening, and what it means for your business. Henderson provided insight into why focusing on other shoppers beyond the “Mom shopper” are important for retailers.
In particular, he discussed “silver retail” or consumers who are baby boomers or 50+ and older, yet who have potential buying power. There are zillions of companies that have been marketing to teens forever, he noted, but there are older people with unique needs, and companies and marketers are finally waking up to that fact. “We don’t like talking about aging and graying hair and the like. But the hard truth is that no matter what you do, age will eventually catch up with you,” he said.
Yet, the good news, he noted is that silver retail has a $2 trillion buying power potential, he said, and they are looking for an empowering product to help them with age related issues and stay useful. “There is a reason to serve the senior consumer,” he noted. “The stereotype of the senior consumer has not caught up to the reality. Many seniors are very active and your product can help them to continue to be active.”
The four issues that irritate 65+ shoppers include overcrowding with no staff, large stores with frequent relocation of products, unsuitable product sizes and difficult packaging and a lack of seating and shelf heights compatible with the age group. The four leading issues for age 55+, though include hard to reach items, items hard to find, crowds difficult to navigate and prices hard to read. “These are the fundamentals of retail,” Henderson said. “These are issues that you face as well. If you get these right, then you are well on your way to serving the senior consumer,” who he says want authenticity, thrift, balance, reality, simplicity, trust, confidence and practicality when they shop.
Two ways to serve seniors, he said, include age aware and ageless products. Age aware products are ones designed with the senior lifestyle needs in mind. Ageless products are designed for all users across the generations. “In my opinion, ageless retail is much more important than age aware. Don’t box yourself,” he said. Retailers that are practicing this include Kroger, Tesco, Walmart, Harris Teeter and Kaier’s.
He noted that despite an incorrect perception, senior consumers also shop online, because of the convenience and because there are products online that appeal to them and that they might not find locally. “Increasingly, they want to buy products online that may be embarrassing to buy in a store,” he said. Senior e-stores that do well, in his opinion, include elderdepot.com, firststreet.com, seniorstore.com, ppninc.com and seniorshops.com.
To conclude, he said that retailers should be aware, be ageless, reach out to them and their caregivers, in addition to creating product offerings for them. You can also build loyalty by hiring senior associates, review your packaging to ensure that “wrap rage” is kept at bay, train or retrain your staff in how to serve them and be vigilant about avoiding senior stereotypes.
Social Media: Power to the People |
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By Vicky and Richard Kung, creators and owners of Museum of Robots
Social media is an increasingly popular way to grow a business, and Vicky and Richard Kung discussed some of the best ways to do so in housewares retail.
“Social media is really about passion, conversations, talking to your customer and nobody knows your business than you do,” Vicky Kung said. “So talk to them with social media, but engage them with passion about your business.”
Social media offers an opportunity for a brand or product to get into the conversation that consumers are having, she said. The audience is growing: 75 percent of the U.S. population is active on the Internet and usage spans ages. Across all age groups (13-75+), 35 percent of the online population uses social networking; 81 percent research products and 32 percent rate a person or product online.
Thus, she said that social media is interactive and immediate, so required is a social media strategy of both talking and listening. It can support sales by providing a brand or product a platform to engage in dialogue and more authentic than the one-way voice of advertising or press releases.
Vicky Kung noted that retailers really only influence one-third of any purchasing decision; what consumers are saying amongst themselves is 60 percent of the purchase. “And that is why social media is such a key thing to get involved in,” she said. “It’s clearly a power to the people situation.”
Who should talk, who should blog or twit in your business? Kung stressed that it should not be your most junior, least informed, or newly hired person. Instead, the find the people in your organization that are the most passionate and most knowledgeable about your products and give them the power to engage.
And what do they talk about? It may not be what you think, she said. “Remember, it’s not about you. It’s about them. Think about what information and whose perspective is of value to your organization. If you collect customer feedback, read their emails, conduct surveys or log customer service requests you already have data about.
A listening strategy is important as well, she noted, and a basic Google search of your store is a good way to start. A listening strategy continues to evolve once you’ve joined the conversation too, as the specific mix of tools and venues depends upon where your consumers are and how you’re engaging them.
Both speakers outlined ways that a retailer can get started with social media, including brining in people who are already versed in the technology, following other tweets and Facebook pages and monitoring blogs.
Overall, both speakers stressed that social media does not have to be a huge part of your marketing. And if you don’t have a current program, then start small. You can always add more, but a lot of Twitter pages have been started this way.
The speakers concluded by saying that while social media is not a standalone outreach program, it is one that ultimately should work in tandem with other marketing efforts, building on conversations that consumers are already having about brands and products, to create a program of engagement marketing that is grounded in authenticity, transparency, sharing and listening.
