What does this crazy equation mean?

No, it is not new math but rather an equation for successful retail sales.  Allow me to explain…

How many times have retailers moved merchandise around in their store only to see sales accelerate or dive?  Perhaps there is a spot in the store where nothing seems to sell.  Pose the question, “Is it the product or is it the place?  Do I have enough of the product for a selection?  Do these products mix well with the other merchandised items?”  With the high cost of retail space, not addressing these x,y and z’s of the big “M” (for merchandising) costs you dollars every day.  If the x, y and z of your store don’t add up, than neither will your dollars.

It is very important to consistently take the time to evaluate your floor and adjust your merchandise as things change in your store.  If you see customers gravitate to an area, you know something is catching their eye.  If they are picking up items, you know they can easily access items to consider.  If they hold on to any of these items and look for more, they may be considering a second piece of the same item or something to coordinate with the one in their hand.  This is an excellent opportunity for you or your sales staff to jump in and engage in conversation, “This is a beautiful (or other descriptive word) item (candle, pillow dish) you have there.”  If the customer is interested, tell the story or benefits of the product, or just offer to hold the item for this customer.  I can’t tell you how many times I see customers ready to bite, but floor staff is too busy to engage or discover the reasons why.

Conversely, if you see a customer pick up an item look around and then put the item down, they may be looking for more or a similar item in a different area of your store.  They may also be confused as to what the item is or what to do with it.  If they completely walk by something, perhaps you need to consider that there is nothing catching the customer’s eye:  products don’t mix, items are too small or one dimensional, or the display is too confusing to understand.  This is also a good opportunity to pick up on what you might have missed.  I believe there is no dead space in the store, only space that hasn’t been properly addressed.

If you are prudent, answers to quick simple questions and intuition of human behavior may guide you to correcting a merchandising issue, provide ideas for expanding on successful products or classifications, or give you good direction for purchasing products for the next season.  Merchandising time the total of space, assortment and relationship to like items will equal sales.  M(x+y+z)=$

Next blog…Train your staff to merchandise and restock properly.

Even though those retail registers are doing the holiday ring, it is now time to think about spring!  It’s corny, but true.   So here are some of my thoughts to get things rolling for spring and assure you first quarter success.

Have something fresh on your floor first week in January.  Buying is at frenzy now, and will roll over into the New Year only if there is something new for customers to see.  Here are some reasons for putting new collections and assortments on your retail floor:

• Customers may have gift money to spend.
• Some customers didn’t receive what they wanted or needed during the holidays so they are heading for guilt free purchasing for themselves.
• As customers put away the reminders of the holiday season they are likely to replace things in their home that are more appropriate for the spring.
• Nothing better in winter than the bright promise of spring.  People like cheering up when it is dark and gloomy.  They will spend money to feel better.

So where do you point your feet?  Easy!  I recommend buying into those vendors who have a proven track record with you and whose collection can transition from this season to the next.  Then I would risk a small percentage of business on something brand new, something that you have been inkling to try for a while.  Perhaps you bring in a collection of something you passed on in the fall because you didn’t want to commit the funds to try it.  The risk is minimal in comparison to surrounding an entire season on this particular look or product.  You never know, this could be the start to some new trend or direction in your store.

Here are some ideas for the transition

• Chinese New Year – February 3^rd.
• Valentines Day
• Bridal and Wedding – many cities have their big bridal shows in January

So miss the post season doldrums by freshening up your floor quickly.  Consider now, what vendors will be able to ship goods to you fast and complete.  Now is also a good time to negotiate extended terms or discounts as everyone is eager for business.

Don’t put off today what will be here tomorrow.  Start a list.  Make a call.  Get going while your holiday energy is high.

Something caught my eye today on my email that I had to exclaim, “Right On!”  I had recently purchased some refill syrups for my Soda Stream on the company website because my local retail didn’t carry the flavor I was looking for and they were not going to order it for their stock.   Although I generally don’t like to order on line, here was a case where the retailer wasn’t going to help me out and basically pointed me into the internet (oh, shame on you know who).   After ordering on line,  I received my shipment, and by the way retail genius, I ordered more from the website because you kind of ticked me off. 

However today, I get this email from Soda Stream that points me back to all the other retailers in the area that carry their products SO I CAN SHOP REGIONALLY!  The email says, “Great news! Soda Stream is now available at several retail locations just around the corner. It’s never been more convenient to fill, fizz, flavor and enjoy!”  This company gets it!  Don’t grab the sales and run, send ‘em back for more!  Build brand awareness!  Okay, I understand that this company directed me to mostly a bunch of corporate accounts, but the concept was definitely there.   I have twenty places in my area to get what I want.

I started thinking, “What if all of the companies that sell directly on line did the same thing?”  I think I am going to start presenting this example to some of our vendors who think selling directly should only go one way!

Singularly, this is the most common catchphrase we have heard or perhaps said over the past year.   It is a very large retail club that has sung the business blues.  Well congratulations!  If you are reading this article, still have your retail doors open for business and anticipate staying in business, the worst may be over for you. 

That being said, now is not the time to be a deer in the headlights, an ostrich with you heard in the sand, or run around like a chicken with your head cut off.   This is the time to quickly put a game plan together to head towards what may be your best opportunity to a financial payback for your strife over the past year or two.   Here are my ideas to consider  

1)      Have a summer clearance sale and raise some cash for new merchandise.  If you have been remerchandising old merchandise, cut your losses and move on.  Cash has always been king and even if it does not amount to too much, it is more than not having anything or having made an effort.  Remember that the first mark is always your best, so make it your goal to move it out not down again.  If you have some cash to spend, you will immediately feel better and perhaps a bit more in control.

2)      Make a plan, work the plan, and change the plan as the plan needs to change.  My motto has kept me healthy in business for many years.  Without a plan, I would feel misdirected and out of control of my own destiny.   On the flip side of not having any money, I always have to pose the question, “Do you have a plan to make money?”  If not, then it really is going to be a struggle to move away from the recession if you don’t know what you want to do, have measures for performance, and timelines for implementing ideas.  Your plans can always change as you and your business evolve.  The chances of succeeding are greater with effort than while stationary.

3)      Budget, budget, build a budget and stick to it.  If you have rent, payroll, and other cost of doing business, then you need to figure out how to pay for them with the goods you sell.  This usually means continuing to purchase merchandise to sell.  The old saying “you have to spend money to make money” is true.  Having a budget can assist you not spending more than you anticipate selling.  The economy has not changed the risk in business or the need to purchase goods,  it has only made it more important to put pencil to paper to facilitate purchasing.

4)      Fill in on successful merchandise!  It drives me to distraction when customers sell down quick moving items and then let a collection die by not buying back into that which sells and has sold quickly.  Further, it can cause me to hyperventilate when I hear, “Oh yeah, I know it sold well, but I haven’t had time to put together a reorder.”  Hello…you are missing out on sales!  Before you venture towards purchasing completely new items, don’t you think it is best to launch a percentage of purchasing towards what has already proven to be successful?

5)      Offer a wide assortment of price points.  In the lowest point of the recession I heard several retailers move the entire price structure of their business down in an effort to meet the spending habits of the recession.  The result was that they (these retailers) ended up selling roughly the same volume of merchandise, but the gross profit margins for their business were so low they struggled to pay for their overhead.  While you many think your customers cannot afford or will not pay for higher price point items, the opposite may be true.  Customers haven’t changed in wanting to spend their dollars wisely at all price levels, but also purchase things that have value to them.  You will need to have higher priced items to maintain healthy sales and margins.

6)      Timing is everything, so time your receipt of merchandise properly.  Once upon a time, you may have been able to take most of your goods in big chunks, but now it makes more sense to have items flow in on a more regular basis.  Smaller and more consistent orders is what I am looking for and expecting from our retail partners.  There is always time to reorder, just allow your representative access to your business so they can help you with this.

7)      Get your orders in early before the good stuff is gone.  From my perspective, I can see that vendors have taken much slimmer position of inventories.  This could dramatically affect your business, particularly for new introductions and last minute reorders.  Vendors do not know what you plan to order until it is an order and their inventories (and allowances for reorders) may be short without this information from you.   I believe it is best to stack deliveries from any particular vendor over the course of a few months to ensure that goods and cash flow are even.  Write your orders now for September, October and November deliveries and fill in as needed along the way.  We can always add to an existing order or move a delivery around if needed. 

8)      Experiment with at least one new category.  You may be hearing from your customers what they are looking for, but cannot find.  Listen to their request and figure out how you might be able to create additional market share for your business.  This might be as a result of picking up a successful collection from a retailer in your area who has closed their doors.   I have been carefully adding new vendors or helping existing vendors develop new classifications to the About Home package with this same phylosophy in mind.  Each season I see the result of this with the collection of products we represent improving and our sales growing too.

9)      Say “yes” until there is a reason to say no.  It is amazing what you might discover when you keep your options open.  Too many times I see retailers say no, put up obstacles to information or declaring “been there, done that.”  Keep flexible and see what comes your way. 

10)   Don’t stress the little stuff.  It is much easier said than done, particularly as we have navigated through such a brutal economy with undoubtedly a ways more to go.  We all have to be focused on succeeding not complaining. 

When I write this all down, you may agree that it may seem rather basic.  Perhaps that is what this economy is about; returning to or keeping with business basics.   I too, have to follow these ideas above and will make a point to post this blog on my bulletin board above my desk.