Buying plans and Inventory Plans for a Hi Profit Store: Understanding the Concepts for Maximizing the Rewards of Gift Shop Success
Presented by Michael Russo, Industry Advisors, Inc., Johnstown, Pennsylvania
Ph—814.288.1348
info@industryadvisors.com
www.industryadvisors.com
Though more than 90% of gift shop owners get into the gift business because “they love pretty things,” knowing and working with the numbers is the crux of business success. Trends of the past 5-6 years have shown how important independent retailers are to the market, as they are on the front line with new products, knowing suppliers and understanding customers. The current single biggest concern by retailers today is: “How can stores stay alive?” The gift industry is currently $300 million, and growing at a rate of 3-5% per year after 9/11. As Americans’ number one favorite activity is shopping, the role of the retailer is to provide a “feel-good experience” to enable sales.
To survive, independent retailers need to be more creative and innovative, while going back to the basics of operations and accountability. Given overlap in the industry and the economic situation, your identity makes a difference. Identity is reflected in staffing, communication, customer service and your vendor/buyer relationships. Though The Harvard Review notes that the first thing retailers do in a down economy is cut staffing to the bone, be frugal but careful to carry enough staff to provide customer service. “When was the last time you received really good customer service?”
Customer service is, in fact, eroding due to cuts in training, staffing and marketing, which affects the wonderful experience of shopping. Today’s vendors are more than just order takers. They have information about the market, which they should use to retain accounts. Let vendors provide you with industry and product information, including display, pricing trends, successes. Make vendors your partners; it is easy to make that initial order, but the challenge is in the reorder.
Make sure you have enough staff to cover peak periods. Empower them to cover sales for customers, while also handling display, stocking and cleaning. “Bodies in store” maintain your identity. “What do we need to be teaching our staff?” Inform them of policies, but also be flexible. Invite your vendors to come in and train your people, who will want to then sell their merchandise because they know the products. Make sure your staff knows your systems, what happens when the computer goes down, for example. Staff who are informed, motivated and appreciated will put in the effort. They know that when there are no sales, there is no real business, which equates with profits and their salaries. Train your staff via job descriptions. Detail what you want employing to do for you, and hire those that are responsible and approachable. Enable staff to do their own performance reviews annually, with a follow up boss’ review.
Merchandising and display are the silent salesmen for your business. Your customers know that prices are increasing for both production and transport. You need to add value to the items to make the sale: benefits, status as best seller, etc. to make them feel good about the product. Now is the time to check margins and restructure for proper markup of 60-65% or more if you can negotiate it. Doubling cost to create a retail price for a product no longer works. The more your staff knows, the more your business grows. Nothing spoils a shopping experience or store image more quickly than a poorly informed sales associate.
You will beat your competition not based on price, but on “value added”—that you treated well and personally remembered, with a rapport which builds up customer loyalty.
To effectively compete, you need to create your own image. Buy enough products to have a selection, which actually invites multiple sales due to meaningful displays. Display and merchandising are the silent salesmen of your business. Add profit from your vendors through case pack discounts, early buy discounts, inner pack discounts, extended dating, and you don’t need to pass on these vendor savings to customers. Establish regular retail pricing, then discount from that. In the gift industry, current mark up rate is 60%.
Gift cards are powerful retailing instruments, but they can’t be registered as a sale until they are redeemed. New products keep your customer coming back, so you need to keep them up to date. When Christmas goods are still out at Easter, customers don’t see what’s new. 3-5% of your inventory should be markdowns to keep inventory fresh.
No one has time to hunt for gift items. Make it easy for your customers to find and price each item. Don’t put the price on the bottom of any item. Make it both visible and attractive. If the customer can’t find what they want, they will go elsewhere. Retailing is about making the real restate of your store earn money. If it is not making money, discount it then get rid of it. Set up an assortment plan and refer to this to see how each product is doing in your collection, then reorder from there. Make sure certain items in store are never “out of stock”. The key is to have enough stock on hand to have inventory for your sales plan. Never Out Stock Plans and Open To Buy Worksheets are essential tools and responsibilities for you as a buyer. You need to be involved in planning, marketing, training, analyzing and buying. A down turned economy is actually a good thing for independent retailers, as customers do spend money to feel good themselves and buy for o thers; you just need to understand and work the numbers.
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Building and Designing a Hi Profit Store: More Sales in Store—Retail Feng Shui
Presented by Joel Berman, Joel Berman Architecture & Design, Chicago, Illinois
Ph—773.275.5968
joel@bermanarchitecture.com
www.bermanarchitecture.com
When opening a store, the issue is not just to open, but also to periodically reevaluate the business. Berman’s client mix is retail (50%), restaurants and bars (30%), wellness and medicine (20%), and homes (10%), and he prefers to work with start-ups and small businesses. His approach is to draw vignettes when he first meets with a client, so the ideas he actually sketches form the continuing visual basis for discussion, followed by digital rendering to quickly communicate ideas. He uses web-based project management software to collaborate with clients, contractors, engineers and consultants.
Case studies reflect his approach and results.
Case Study 1: “In Fine Spirits” is a small new retailer in the revitalized Andersonville neighborhood in Chicago. With just 800 square feet of space and little cash, the owners wanted to be very user friendly in educating their customers about wine, while encouraging wine purchase. Solution was to reinforce the branding throughout the store with actual logo positioning, use of similar color ways to the logo, as well as create POS displays throughout, while also reducing cost using modular displays without millwork.
Taking on a small retail customer should be collaborative with the client on what he/she wants to express, then to guide the client. Typically, a small retailer tends to be more conservative, and the architect’s role is to bring the client to a more creative point, while maintaining the essence of the brief. Nearly 80% of small business clients start by saying they know what they want, have a lease with timeline of opening, then the architect works back from there with designs, permits and build outs. In Fine Spirits solution was successful due to reinforcement of the brand, user-friendly space, flexibility of displays, low-cost approach to materials, and quarterly change of art to keep the space fresh.
Case Study 2: “Urbanest” is a large 7,000 square foot retailer, also in Andersonville. The owners offer furnishings and accessories with emphasis on lighting. Solution involved getting this client up and running on deadline, then to improve with time. Consumers do like this periodic design change because it refreshes the store. Using Create & Barrel and CB2 as references to the owners’ sense of style, design approach also used the Chinese materials that the client had access to. The environment for the space always needs to attract the customer base, so it is important to define who the client is what is their image and who is their target audience. The environment needs to enhance what you are selling. Solution for Urbanest was successful because the space was designed to highlight lighting, rotating vignettes of furnishings, which use same products but merchandise differently. Use a mix of lighting: compact fluorescent, LED, etc., because it enables flexibility of display and color of light.
Less exciting than design, but just as important, is negotiating a lease, Most of the problems stem from who is responsible for what part of construction. A “Tenant and Landlord Responsibility Matrix” developed by Berman helps all parties (landlord, contractor, tenant) define who does what, and can be added onto the lease documentation. While retail construction does note always need to involve an architect, a retailer does need a general contractor. The Contractor’s mark up of 10% is worth the fees, because it enables you as the retailer to run your business and avoid running back and forth for permits.
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Designing and Merchandizing a Hi Profit Specialty Store
Presented by Nicole Maile, Product Design, Crate and Barrel/CB2, Northbrook, Illinois
Merchandising products is threefold: planning, discipline and instinct. Crate and Barrel (CB) founder Gordon Segal runs this company with the motto: “stay humble, stay nervous,” which applies to all retailers. While it is important to note successes, it is essential to embrace failures as growth opportunities. CB has grown to a large company of 150-160 stores in the U.S. To do this job well, the company does what everyone should consider: don’t compromise on quality, design or function.
Retail is a difficult business in the best of times and this is not the best of times. Companies will close; the field is too crowded and uninspired. A slow economy gives these retailers few exciting products to inspire customers. CB is only limited by imagination, but the company also supports 6,000 employees. There is pressure to create, but responsibly. Good planning, discipline and instinct remain at the forefront of good business practice. Do it yourself or hire those who have these qualities. Though CB is a 46-year-old company, founder Segal selected, trained and tried to keep his staff since first opening. Most staff stay for 25-30 years and the first wave is now retiring.
Product is what CB is known for, with vendors all over the world. CB does not employ in-house designers, but uses freelancers and vendors. CB and CB2 have identifiable branding because of little executive turnover at the top. They define, then redefine design to make CB and CB2 look consistent.
The bottom line is not the first element in CB’s path to success. The company’s passion is for product, and it is large enough to segment the business with four brands: CB, CB2, Land of Nod and CB Outlet, along with three catalogues and three websites. Branding efforts include print ads, email ads, product packaging, gift cards, corporate sales and gift packaging. Weddings are huge business for CB, with 100,000 couples registered.
The biggest challenge to retailers today is green awareness. CB does green initiatives through its products, packaging, marketing materials, conservation and recycling. In developing eco products, the company considers that the best approach is to embrace “small truths” about the products, materials, and methods without too much hubris. Essential to retail success overall is the merchandising process, including planning, action and support stages.
If you have the luxury to develop your own products, do it, because it makes you unique to the market. If you are a good merchant, you can find something to inspire you. Travel is still a wonderful way to get ideas. Top cities right now include London (for both modern and traditional), Paris (romantic traditional), Southeast Asia (global) and New York City, as the place to explore new ideas in the U.S.
It is essential that you plan for display before you buy, order and ship. CB empowers dedicated staff to do local displays, so no one store looks exactly like another. Everything that CB carries is in all of the stores, on the website and in catalogues, so all dovetail across channels. CB’s products and colors are the same with negligible differences across the country.
Being out of stock is the main contributor to profit loss, so protect yourself with your vendors, including reasonable ship date and cancellation date in contracts. No product is too small to get your full attention. Display it, label it and price it for maximum profitability, because you bought it. Trend preferences come and go, and we do not operate in a bubble. If retail is an art, be your own best critic.
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Driving Success: Balancing Life as a Hi Profit Specialty Retailer
Presented by Susan Reardon, The Growth Coach
Ph—708.482.0600
S.reardon@thegrowthcoach.com
www.thegrowthcoach.com
Retailers are concerned about time: is there ever enough time to do it all? The business standard that 20% of your activities produce 80% of the results applies to running a retail business as well. Look at the return you get for your efforts and drop what does not give you a return. You can make a decision to success by:
1) stepping back to the original thoughts of what you wanted and felt when you started your business,
2) facing the reality of what you don’t do and be willing to change, and
3) put energy and effort to change after an honest evaluation.
Taking these three steps into consideration, you will succeed. The sequential process of reflection, goal setting and accountability is a proven plan to help you achieve what you want in both your business and personal life. Business owners are not alone in setting goals. Don’t set annual actionable goals, but 90 day “goals on steroids”—big goals that will make a difference. Most of the time, the process falls down when we are not accountable. The third step of accountability is the most challenging. Essentially, accountability is what makes it happen and in 90-day segments. If you do this, at end of year you will have achieved your goals. In challenging times, it is all the more important to start this process; you are 100% responsible for your success or failure.
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Technology That Drives Marketing From the Web to E-Commerce to Search Engine Optimization for Hi Profit
Presented by Brandon Wilson, Distant Horizon, Lockport, Illinois Ph—800.932.9550
www.distanthorizon.com
You can consider that the World Wide Web is a small business guerilla-marketing tool. If you open one business to serve local business vs. 100 million households in U.S, serving the latter, larger demographic is the most pragmatic decision. Retail stores are costly to open, staff, stock and operate, while web stores are cost and time effective and reach audiences that will never pass by or through your premises.
You only exist to sell products, not information, so make sure your site sells every one of your products. Only put information on your site that makes money for you. Make sure that a business person vs. a graphic designer designs your site and knows how to start and run a profitable business.
Budget for your Website as if it were another business. Typical costs are half of what a brick and mortar business would cost. Build your site as if 4,000 persons per month will see it. The only purpose for your site is to make money for your business vs. what the site looks like. If your site is under performing, fire your current graphics, mind set and designer. Your site should be easy for you to change products and contacts, as well as add events, press and testimonials.
Optimizing your search engine should make it easy to change and update. Your website can start out as a two hour per week endeavor and end up with a full time employee to run it. Push administration of your site down to as low as you can get; even teens can manage a site. Customers are now searching for all things on line, even large, heavy items, and ease of use is imperative. A proven structure for your site includes a top navigation of logo, headliner and phone number; a side navigation of existing product categories; and a boom image in the center, along with merchandising news. Put your products on the home page and try for three or less clicks to buy. Control content yourself to keep it timely, with product data, news events, success stories and testimonials. Check and change the details twice each month.
Anything in your business worth mentioning is worth putting on the websites. Sell items on line that you are afraid to purchase inventory on yet; use your site to generate special order business. When you finish your site, you need to promote it—in advertising, editorials, on business cards, envelopes and direct mails. Google is currently the number 1 search engine. As Google is thought to have a 62% market share of the search engine market, use Google for web marketing and use good ad words. Don’t get distracted by advanced concepts: fee based search engine optimization, in bound link services, video animation, RSS feeds and integration of accounting services, when you don’t know the basics.
If your site is well constructed, people will see your site more than any other market related thing you can do. Don’t sit and wait for your customer to walk in the door. Find them in the 100 millions households using the web. Do it right with product descriptions with good photos, real time credit card processing and real time shopping calculations. There is simply no better tool to promote your business by selling your products.
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