For retailers, February and March are the cruelest months. Christmas spending is over. Yet to arrive is the warm weather that renews customer interest in buying and going out. Sales are flatter than an open bottle of Valentine's Day champagne.
What's a business owner to do? Consider that bottle half-full. The upside of a down stretch is that you can take stock and try new sales and marketing tactics without putting much at risk.
There's another reason to re-assess. Retail sales rose over a year ago for the holiday season through January 2011, but U.S. Commerce Department data shows growing disparity among consumers. Upper-income people fueled much of the rise. Middle- and lower-income households still await economic recovery.
Take heart: Retail geared to the non-rich can do very well. The following tips come from small businesses that have managed to flourish through the great recession and recent lousy weather.
1. Cultivate a brand identity. It doesn't matter whether you're a café, car wash or carpet cleaner; creating an image is vital when you're competing for the broad middle swath of consumers.
Torya Blanchard owns Detroit-based Good Girls Go to Paris Crepes, which she launched as a 48-foot-square kiosk in 2008. Today, it's a 2,000-foot-square café next to the Detroit Institute of Arts. Another branch is about to open in Grosse Pointe, Mich.
"You have to make a brand for yourself no matter what your business – especially in retail," says Blanchard. Good Girls waitresses wear retro-looking net snoods on their hair and chic black uniforms, a look echoed in the ubiquitous company logo. A t-shirt about to go on sale to customers features "Good Girls" above a wink-wink image of a banana nutella crepe.
Blanchard also has linked her company's image to that of a city making a comeback. "It was such a novelty when I stated my success couldn't have happened anywhere but Detroit because of the low start-up costs," she says, "We got huge coverage from it."
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2. Shift some paid publicity to free. Experts often say don't cut your advertising budget. That's true if you can't reach customers any other way – which is unlikely nowadays.
Blanchard skips the pricier daily newspaper and puts ads in three local giveaway weeklies that she terms "high-impact, low-cost." Free publicity comes from partnering with deal-of-the-day merchants like Groupon. Good Girls also generates good buzz by donating to four different charities, including Detroit's prestigious Cotillion Society event. And of course, the company is on Facebook.
Facebook frowns on direct pitches. But you can use your page to invite referrals from customers and suggest they post positive feedback on Yelp and Citysearch. Or put a laptop opened to one of these sites at your counter and politely invite clients to spend a minute doing just that.
Finally, there's you. Each summer when Detroit's Eastern Market gets into full swing, Blanchard personally runs a stand. "Even if it's slow, I'm there in my hair net reminding people of our image."
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3. Refresh your customer service attitude. Delivery, gift wrapping and product personalization are important. But as online vintage costume jewelry store owner Cindy Brown points out, these are just the tactical results of an internalized mindset.
"You have to be genuine with customers," says Brown, who runs Cinsababe's and Quindy's and blogs about selling for online marketplace Ruby Lane. That means "genuinely interested in what they're doing with your products, offering genuine deals and being genuinely nice."
Example: A customer buying an $8 necklace mentioned it was for a '60s theme party. Brown had a stock of vintage love beads and suggested them as party favors. The customer bought them all. Another client from Australia asked Brown if a gift box and wrap came with purchase. Brown said yes – then ran out to buy them. The thrilled customer since has bought over 500 pieces.
Part of being genuine includes attunement. "If someone's in a rush, that's not the time to push additional selling," says Brown. "But if a shopper's chatty, listen for the opportunity." All it takes, she says is "basic kindness, common sense and a little extra effort."
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4. Play around with the 80-20 rule. Also known as the Pareto Principle, this often-cited "law" states that 20% of products account for 80% of sales. The problem is, you can't identify top sellers you don't carry.
So hard-goods merchants should consider the slow period an opportunity to experiment by taking a few new items on consignment. Service-based retailers can introduce incremental add-ons. It's also a good time to introduce offerings priced higher or lower than your usual range, just to see what works.
February-March events like Restaurant Week or Spa Week can be great vehicles for experimentation. The original goal of these discount extravaganzas was to draw new customers; recently, they've become a way to retain old ones through tough times. Now think of a third purpose: a limited-exposure chance to market a new prix fixe menu or fancier facial.
The 80-20 rule has a corollary that holds 20% of customers represent 80% of profits. Identify this group and you'll be able to focus your product mix and maximize your most profitable sales.
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5. Now, deal with that other 80%. Moving goods and services is harder during the in-between season. Herewith, three ideas for dealing with the inventory that's not part of your hit parade.
Lower profit margins. Pricing should be based on what the market will bear, and customers buy from merchants that price below major retailers. The lower margins may be worth the boost in sales, customer retention and reducing inventory.
Bundle products like the big boys. Cindy Brown got the idea from Wal-Mart and Best Buy. "We'd purchase a computer system and it was, 'Buy this component and you'll get a free printer or buy the printer and you'll get a free monitor upgrade,'" says Brown. "So I thought, why can't this work for jewelry?" If a customer buys a pricey necklace, she offers discounts on second and third items.
Go online and auction. Some retailers find the fees associated with eBay or other virtual marketplaces to be a bit of a pain. On the upside, though, it's a way to visually clear your store of slow-moving goods, get new customers for your database and – however painful – obtain broad market feedback.
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6. Evaluate your curb appeal. Sometimes, the problem isn't goods or services, but their presentation. That's something Nelson King has learned first-hand, in his earlier career doing store design for Cartier's and now as the owner of White Dog Hill Restaurant in Clinton, Okla.
Named a 2010 "Success Story" by the Oklahoma Small Business Development Center, the restaurant is a labor of love that began in 2000 when King bought a decrepit former country club built in 1925 and began renovating it. Doing much of the work himself, he poured his knowledge of customer-friendly design into the place, creating inviting nooks and giving a distinctive feel to different rooms.
White Dog opened in August 2007 with just two items: a steak and a burger. Yet almost immediately, customers became possessive of the place. "Even very early on, folks would come in and say, 'Oh, that's my table' or 'We want that view over there, it's really us" says Nelson. Fast-forward to 2011 and White Dog is a local institution; so far, every Friday and Saturday except one has been sold out.
The restaurant does not have a website nor any plans for one. But one of the employees set up a Facebook page and posts updates on reservation availability. Which proves that you don't have rush out to hire a pricey architect or web designer. Often, solutions are simple and guided by customer feedback. Was the customer able to find things? Then think of ways to make shopping more inviting and fun: color, coziness, a website with a first-person voice.
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7. Get the best out of your employees. It's a cliché, but you really do want to foster a sense of family, which breeds initiative. Employee assessment and attitude checks lay the foundation for success.
In a business known for turnover, most of the young staff at White Dog Hill Restaurant has been there since it opened three-and-a-half years ago. Consequently, they know customers and their preferences. They've taken it upon themselves to support White Dog with Facebook and Twitter postings. A former dishwasher is now a bartender with a fan base because of the customized music mixes he plays.
King's management philosophy is, "Every single cog in the place is horribly important. I preach ad nauseum that I can't make the place work without you, and you and you."
Back in the olden days when shops closed at 5 p.m. and owner-employee ties were more formal, teamwork wasn't as essential. But in today's 24/7 retail environment, relationships have to be 24/7.
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