Shop Talk: Practical answers for tough business questions
Question: A few months ago, we felt we had no other option than to close our store. My partner and I sent out an email and a Facebook message to our customers that we were closing and that all merchandise would be deeply discounted for quick sale. The response was overwhelming, and customers spent like crazy. Some even requested not to be charged the sales price because they wanted to support us! Now, because of the wonderful support we received, we have enough cash flow to continue in business. This should be great news, but I have two questions: Is it ethical to continue to be open, even though that was not our original intention? And, how do I let go of my resentment that people had no problem spending large sums of money when merchandise was on sale, but we wouldn’t have been in that predicament if they had supported us by making purchases all along?
Answer: Even though your intention when you announced the sale was to close the store, it is really a cause for celebration that the sale was successful enough to generate the cash flow for you to stay open. I can’t imagine the news would not be met with enthusiasm from your customer base. If your decision is to remain open, the best approach is honesty. Being direct and truthful will circumvent any question of being unethical or inappropriate. Just announce it like you did in your question to me, share your joy and surprise at this turn of events, and hold a special celebration to show your gratitude.
Your second question is harder to answer. I understand your logic, but I think your resentment is misplaced. It sounds as though you are blaming your customers for the failure of your business, rather than owning the fact that things obviously didn’t go as planned. Perhaps your earlier predicament had more to do with how the store is funded and managed than with customers not spending enough money. That may sound harsh, but customers don’t owe us sales or support.
As store owners, we can encourage customers to shop locally and spend more by offering great products, but they are not to blame if the sales generated do not support our operation. If we get into a cash-flow crunch, there are many possible reasons (e.g., excess inventory, poor purchasing decisions, lack of adequate initial funding, fixed expenses too high, little advertising, etc.), and it is unproductive to place blame upon the community for the shortage.
It is normal and natural for customers to take advantage of deep discounts, especially when they think you’re closing and the stock you carry will no longer be available in their area. So, rather than resent them for not spending more money on a regular basis, accept their normal spending habits and reduce your expenses so the usual sales generated cover your expenses. It’s your job to tempt customers with all the incredible and meaningful merchandise you can find and then advertise to tell them about it. If for some reason they don’t respond at the level you need, it’s the business, not the customers, that needs adjusting, and you may want to rethink continuing if your projections don’t show at least a small profit on the bottom line.
First published in Vol. 27 No. 4 of Retailing Insight. © 2013 Continuity Publishing Inc. All rights reserved.