Survivor's Guide to the Economy
What changes have you made in your store to keep your business healthy in the slow economy? This is the question I asked recently as I spoke with New Age retailers around the country. Many told me they had developed important and effective strategies for store survival, including both fundamental changes in the way they do business and smaller adjustments in procedures or focus. The best part? You can benefit from their success by applying these ideas to your business, helping you not only survive during the slow times, but thrive as the economy once again picks up steam.
1. Focus on smart inventory management
Be very selective in buying products for your store. Stick to replenishing consumables and the best-selling items. Be sure to add a few new products but only those that can bring the most return on your investment.
If you’re worried about not having enough new product, you can keep your store looking fresh by moving displays to different areas or creating new displays with existing merchandise. You may find a product that hasn’t sold well for months suddenly sells out after you move it to a different location in your store.
How you purchase inventory is also crucial to keeping your finances healthy. As tempting as it is to buy merchandise with terms of net/30, this can lead to a number of bills coming due at the same time and put a real strain on cash flow. If you pay for your inventory when you purchase it, you have much better control of your cash flow, and you won’t be tempted to over-buy.
Consider purchasing point-of-sale (POS) software that will help you plan and track your inventory and give you clear information to help you make the best decisions for your business. This is an investment that will quickly pay for itself—knowing where you stand financially will help you keep your business strong.
2. Consider consignment for pricier items
Jewelry can be among the most expensive items you purchase, but it is also one of the products your customers look for in your store. The cost of silver has risen dramatically in the past year, causing the price of silver jewelry to increase as much as 50%. This means it will cost you more to purchase inventory and could slow the turnover rate.
One solution for stocking jewelry and other higher-priced items is to enter into consignment agreements with artists and craftspeople in your area. They are looking for an outlet to sell their products, and providing that space allows you to fill your displays with interesting items customers won’t find in the typical superstore. A small card displayed with the product describing the artist’s background or inspiration can help increase sales, as the piece becomes more personal to the potential buyer.
If you don’t know any local artists, visit a craft show or festival in your area that has booths with locals selling their products. This gives you a chance to see their work and talk to them in person, helping you decide whether a consignment partnership is likely to work well for both of you.
3. Emphasize events in your store
Many retailers say even as customers cut back on product purchases, the popularity of spirit-lifting, problem-solving events and classes is rising. Expanding your events program can be as simple as bringing in a new reader or as elaborate as renting a space for a large function featuring an author or musician. You might find that rearranging your store to create a space for a small event will be worth the effort as you attract new and existing customers into the store.
Consider making an arrangement with a tarot reader, astrologer, and psychic to give free “mini” readings. This can work out well for both you and the readers, as they can find potential clients and you benefit from the increased traffic.
If larger events seem more your speed but you’re concerned about the cost, consider co-hosting with other compatible businesses in your area. For example, a local health food store might be willing to partner on an event to bring in a speaker about healing, natural medicine, or herbs, sharing both the expenses and the profits with you.
If the size of an event demands a site separate from your store, look for inexpensive venues. In many towns the library or other public buildings have meeting rooms that can be rented for little or no money. Wherever the off-site event takes place, be sure to set up a table with merchandise appropriate to the topic, which gives your store great exposure and can help increase your customer base.
4. Buy in bulk and look for bargains
Look for quantity discounts from vendors and order less often to take advantage of those discounts. While you may have to be a little better organized with your buying, the result will be an improved bottom line at the end of the year. This is another way POS software can help you plan and manage your business.
Many vendors are offering specials on their products to help increase their sales and yours. If you use a vendor on a regular basis, ask if they can notify you of sales through email or a sales call. Saving 5% or 10% means you can offer your customers a discount—and everyone loves a sale, especially right now, when every penny counts.
5. Reward customers for paying with cash
What is the real cost to your store every time a customer pays with a credit card? With all the fees on credit card purchases, you may find it’s higher than you think—sometimes the fee is more than the purchase itself. Consider offering customers a small discount (perhaps 5%) for purchases made with cash. If you find business is slow in the morning, give the cash discount on purchases before noon. This might help bring customers in earlier in the day. In a slow economy, consumers are looking for all the bargains they can find.
6. Cut shipping costs
Shipping prices continue to escalate and can adversely affect the price of the product you purchase. Talk to your vendors and ask them to ship in the cheapest possible way, or ask for discounts on shipping. Some vendors will only ship with one carrier because it is more convenient for them, but that may not be the least expensive way for you to receive your merchandise. If the vendor isn’t willing to try to help you reduce your shipping costs, look for vendors that will work with you.
7. Save on supplies
How much are you paying for bags? Encouraging your customers to “bring their own bags” is good for the environment and your bottom line. And it’s easy to give them incentives to do so. If a customer brings their own bag, give them a ticket for a drawing held once a week in your store. You can give away an item that hasn’t sold well or something you received as a sample from a vendor. It doesn’t have to be large to make it fun for the customer.
8. Lose unnecessary fees
Ask your service providers and vendors to give you electronic statements rather than paper ones. Often they will charge $10 to $15 per month for paper statements, and this can add up.
Also, check with your bank to see if there is a less expensive alternative to your current checking account. Banks occasionally change their fee structure or the types of accounts they offer, and if you have had your account for a few years, there might be a better option for your business.
9. Connect with your customers
Take advantage of the internet and social media to keep your customers engaged with your business. Establish a Facebook page for your store and tell your customers about it. Ask them to “like” your store so they can receive updates from your page. Many retailers say this is an excellent way to post sales and special events. It is a simple thing that takes a few minutes a week to keep current, and the only cost is your time.
Additionally, for very little money, you can put together an e-newsletter to send to customers who provide their email addresses. Make it something they’ll want to open and read. You might include a horoscope, an uplifting quote, or news from your community. It’s a low-cost, easy way to keep your store fresh in your customers’ minds.
10. Boost profit margin with used books
Used books offer a good mark-up for the store while giving your customers what they want: low prices. It encourages them to buy locally and keeps them coming back in to see what’s new in your used book inventory. It also creates goodwill by helping customers with limited incomes afford books they otherwise might not be able to purchase.
11. Set your store apart with great service
You may not be able to compete with big-box stores or internet stores on price or convenience, but what you can give your customers is better service. Consider offering free gift wrapping on purchases made as gifts. That little extra effort can make all the difference in the world for a busy customer, especially during the holiday season. And it doesn’t have to be expensive: a simple roll of kraft paper, some tape, a little ribbon, and you have made a customer’s day.
Your store should be a comfortable and welcoming place for your customers. Make sure they know you’re glad they stopped by even if they didn’t buy anything. This will help create a sense of community, which will build loyalty. You can grow that sense of loyalty by establishing a frequent buyer program—again, good POS software can make things much easier, tracking all purchases according to customer name and phone number. With each purchase the customer earns points, and when they have reached a designated amount, the computer emails them to say they can redeem their points.
12. Analyze your store traffic and adjust to fit
Do you open at 10 a.m. but seldom see a customer until noon? Is your store always crowded just before closing time? Is there one day of the week that has much less traffic than other days? By looking at these patterns, you may discover your store hours need to change to better accommodate your customers—and doing so could even save you money without losing any business.
Always remember why you decided to start your business, and keep your vision clear as to what you wish to accomplish. Chances are your original vision will guide you in the right direction, even through ever-shifting economic tides.
First published in Vol. 26 No. 6 of Retailing Insight. © 2011 Continuity Publishing Inc. All rights reserved.