This year's Black Friday and Cyber Monday shopping weekend was a significant boost for U.S. retailers, raking in around $53 billion nationwide. That's a number that far surpassed most projections. But while big box stores head into the rest of the holiday shopping season armed with slashed prices and seemingly endless inventories, small retailers have what can be a daunting task of trying to compete.

"It's a game we have to play—but we play by different rules," says Lexy Funk, CEO and co-founder of Brooklyn Industries, a clothing retailer that boasts 14 stores in cities including New York, Portland, and Chicago.  "If we discounted 70 percent off of everything for the whole month of December, like a big chain would, we'd be out of business."

After 11 years running a small-but-growing retail business, Funk has learned how to maximize holiday transactions, which make up about 23 percent of Brooklyn Industries's annual sales figures. Here, she shares some lessons from the front lines.

Tune in to your best customers. Not every customer wants what the mass market offers. Instead, focus on personality, personalization, or one-of-a-kind items. Funk says this year Brooklyn Industries is offering a line of handmade leather bags. "While we charge more for this item; it is unique to us. It's what our customer comes to us for," she says. Her team chose to promote these bags as holiday gift items, and, so far, the bags are bestsellers. "People are willing to pay more for something that is special to them and can be special to someone else," she adds.

Promote "light" doorbusters. While her stores can't afford to give massive discounts, Funk says this Black Friday, Brooklyn Industries found it profitable to use what's called a "light" promotion. "We did 25 percent off before noon," she says. "And we debated that for weeks, asking whether our customer would even want this. But we took the risk and it worked. We did see the best Black Friday sales we've ever had."

Prepare, prepare, prepare. For Funk, preparing for the holidays begins in July. She says that's due to how much time her team needs to gage inventory. Several years ago, she says she also realized another holiday hurdle: operations. "For example, a typical store that does $7,000 of business in a day, might do $30,000 on a Black Friday," she says. "Managing a store during that kind of surge is insane. Do you have gift boxes? Enough [of the] sweaters that you promoted? Do you have enough people operating the registers? It's the little things you don't think of that now we try to think of in advance."

Consolidate your holiday campaign. This year, Funk says Brooklyn Industries let the design team take over photographing and staging merchandise for the catalogs, promotions, and the website—as well as designing the window displays. "Our set creators made these wonderful recycled polar bears that were used in the shoots," she says. "Once that was done, those same props went to the stores to be featured in the windows. It really saved us time, money, and made our message stand out across the board."

Forget about January...for now. Funk says she's learned to avoid focusing too much on preparing for January sales during the holiday shopping weeks. "Basically, I learned it's better to keep your people focused on the holiday until its over. We get quite a rush of last-minute shoppers. You can't have staff trying to prepare for something else and serve the current rush," she adds.

Hold a post mortem. Lastly, Funk advises other small retailers to have a quick meeting with your team after the holidays to discuss what worked and what didn't. "Even for the best planners, there will always be something that comes up you weren't ready for—like bad weather or transit strikes," she says. "The only way to move forward is to learn from them, and add them to your notes for next year."


Video Transcript:

00:00 Lexy Funk: Cyber Monday is sort of one of these things that is just created out of nothing. It's like Valentine's Day. Black Friday becomes Black Weekend. People used to open their stores at 9 in the morning, now they're opening at midnight. Cyber Monday wasn't anything and now it's something, so how does that whole world jive out? We always call our Black Friday, actually Super Saturday. And the Super Saturday is the Saturday before Christmas. And for us that's the biggest day of the year. And that's the day when a store that normally will do $6000 or $7000 on a Saturday will do $30,000 in one day.

00:41 Funk: I mean the holiday season is huge. It ends up being a little less than 22%, 23% of the whole year and that's really just a 6-week period. So it's very large and these... If you do it right you can have these huge swings where you're doing... You can have a day where you're doing almost the same as what you would do in an entire week. What we layered on this year was we did 25% off your entire purchase before 12, before midday. And we had lots of discussions. "Well, does our customer even want to get up before 12? Will it be significant?" And a lot of retailers do that because they're in mall settings and they want to get the customer in the door to their store versus the store next door. We're on street corners, but we still felt that it would be a fun way to give something to our customers back that was time related. And it seemed to be very, very effective.

01:39 Funk: This is our 11th year in retail and 11 Christmases of... You always make a mistake. It's just a question of like what mistake and do you know that there's a mistake. I remember three years ago, I mean we just hadn't calculated our bills correctly and we had this sweater promotion going on the week before Christmas. Only there weren't enough sweaters in the store. So I spent two days working in the warehouse with our warehouse manager just like... We were just taking the sweaters off the shelves, putting them into the bins, hand carrying them into the stores. Our district manager at the time was putting it into his car and distributing it. And there were many, many Christmases where we just... We kind of just didn't calculate it or the demand was so much greater than what we thought that basically we weren't as efficient as we thought we were about getting the product out of the stores... Out of the warehouse and into the stores.

02:38 Funk: Black Friday was very, very successful. I mean, last year we were up I think maybe 30% or 40% on Black Friday. But then on Saturday and Sunday, the business died. So it was almost as if everyone was so focused on Black Friday and did everything on Friday and then Saturday and Sunday they stopped shopping. But November was good. We had a 5½% comp and we're expecting a 7% to 8% comp for December, but it's very tricky. Weather, the media, what everybody else is doing really plays into it. You feel like we've done the best we can in terms of our product improvements, in terms of this new domestic line of bags, in terms of our T-shirts. So there's elements of our product offering that we think are superb, but at Christmas it's almost as if it's more about how the wind is blowing than about what we're doing on the ground.