September 26, 2008
The Small Store Guide to Holiday Survival
Tough times mean that consumers will be more likely than ever to turn away from small independents and head to big box chain stores in search of savings this upcoming holiday season. But, according to a BusinessWeek (BW) article, it doesn’t have to be that way if small merchants focus on their strengths and stay out of a price war with larger rivals.
“The independent and the small business person are fighting a much steeper battle for sales in a shrinking market,” Eugene Muscat, professor of management at the University of San Francisco, told BW.
Deloitte Services, the National Retail Federation and TNS Retail Forward have all issued holiday sales projections with numbers coming in the 1.5 percent to three percent range.
Frank Badillo, senior economist at TNS, said that small stores are more likely to succeed if they target wealthier consumers. “Upper-income households often perceive of value in very different ways from lower-income shoppers,” he said.
Daniel Butler, vice-president for retail operations at the National Retail Federation, said it is key that independents make sure to take care of their best customers. “That is the secret weapon that small independents have against big national chains. If I’m savvy and communicate with my customers well, I can draw loyal customers into my store before they go into the national chains,” he told BW.
Prof. Muscat said independents should offer special affinity sales to their best customers to create a deeper bond. “That’s a lot smarter than putting a ‘70% Off’ sign in front of your store,” he said.
Small merchants should also take advantage of the continued relative strength of online sales versus in-store. According to TNS Retail Forward, online sales will grow nine percent this year.
NRF’s Butler said stores should leverage brick and click synergies. “If you have a website and do business online, you want to make sure you’re cross-promoting your web site with your in-store traffic and vice versa,” he told BW.
Also important, according to experts, is cost control. Independents should be focused on keeping inventory levels lean and staffing to meet shopper traffic patterns.
Discussion Questions: What do you think independent stores need to do to succeed this holiday season?
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No way around it–indies are definitely in for a very rough holiday season. But they do have some key advantages. Along with personal relationships and customer service, I add unique product.
Let’s remember this is the holiday season. While consumers will certainly tighten their purse strings, for many the season is also about celebrating the love, appreciation and gratitude they have for loved ones. Part of expressing those intangible emotions is via a tangible, special gift. Consumers will find ways to keep spending down, including nixing some gift recipients from the previous year’s gift list. But in most consumers’ lives there exists a few special people who will still get a special gift. Indies should highlight their unique product as being that special gift for that special someone.
This holiday will be no different than any other. If you are brilliant on the basics, you’ll still have an increase in sales. It may not be spectacular but when did we assume that only double-digit increases meant we were successful?
What won’t work is the same as any other holiday too–lowering standards, cutting help, cutting hours, not advertising, complaining it is the “other guy’s” fault that you aren’t busier. It’s still the same game, only the media will want to tell a story of failure and hopelessness. Don’t let them.
I agree, service will be the main difference. In a small store, you are more likely to meet and know the manager, head butcher, florist, baker, etc. You can get that special cut of meat, or order custom cakes, and know it will be done right. In our local market back in Indianapolis, the manager carried our bags out to the car!
That is what the small store can offer–the look and actuality of service.
Ironically, I just delivered a seminar last evening to a group of independent retailers on how to ensure they have a successful Christmas selling season. There are no shortage of ideas to share (too many for this space). Some key points include:
– Invest more in Key Volume Items. Never, ever run out of these.
– Avoid early markdowns. Don’t panic in early December. Sales patterns have changed and shifted to later in the month.
– If you don’t already sell them, get Gift Cards now! (They’re God’s gift to retail).
As my early gift to any independent retailer who sends me an email request, I will send you a short document with dozens of tips for having a successful Christmas. Independents can have a great Christmas, but only if they step up their games.
This is a great opportunity for small stores! We’re increasingly observing small retailers being much more focused on customer marketing, delivering higher service levels as well as simply executing better.
Smaller stores being more able to recognize customers (in-store as well as through direct marketing–both email and postal mail) gives them a real advantage. How many big boxes can do this?
Small stores should follow some of the same fundamentals as their larger competitors: First, know your target customer and strategize accordingly. If you offer a value positioning, stick to it…and if your strategy is more about offering great customer service and merchandise content, be “best in class” among the competition. If you haven’t already taken these steps, it’s late in the game to be offering this advice.
Second, make sure your financial house is in order. Credit markets are obviously tough right now so it’s imperative that your balance sheet and cash flow are in good order, especially heading into peak inventory requirements. If you need to shore up relationships with your bank and other financial resources, do it now.
Small retailers cannot just change their customer base nor should they. Holiday sales growth will not exceed one percent over last year. The smaller retailers must leverage their advantages. First, is to provide true customer service. Know your customer and what they want. They need to stock some lower priced merchandise for customers that will be trading down on dollars, but not gifts. Expand special order so the customer does not leave the store empty handed. Second, play up the gas savings of shopping local.
Independent stores need to carefully stick to what they always do. They have been successful for a reason. That may be a unique product offering, unique service, or an attraction to a unique clientele. People have been coming to their store for a reason. Don’t take that reason away during the Holiday Season. Even a single independent store is a brand in the customer’s mind.
With that in mind, one addition may be very helpful. Remind your customers why they have been coming to your store, via email or snail mail. Tell them about the items they can’t get at Toys “R” Us. Tell them about the free gift wrapping service they can’t get at Walmart. Tell them the staff will help them find something unique and special, even if it is not carried in the store.
What’s going to be key in my independent pet store is having the new and different–that’s just not in Petcosmartland Discounts. My customer would prefer not to drive to the big box, and they’d like something that’s not found up there anyway.
My sales are up substantially this year, and I expect December/December increase of 5-10%, similar to the increases seen so far this year.
Independent stores need to get creative to succeed this upcoming holiday season. What can they offer that big box retailers can’t? Personalization!
Also, the small retailer knows the community and can out maneuver the “big box” with creative marketing. How about giving a ‘friends and family’ discount to local sports programs, chamber of commerce members, Rotary Clubs, Lions Clubs, etc? Or offering personal shopping? A small retailer can go to their local Rotary Club and speak on the new concept in their store for men and busy female executives, that they will take the list and do the shopping, wrapping and–voila–the customer is ready for Christmas morning. The small retailer needs to do an assessment of why they are better and market their strengths creatively.
One thing independents must do–but often think they can’t afford–is market themselves like crazy, starting yesterday.
Fact is, they can market effectively for very low cost if they use direct and online marketing together. Here’s how to do it yourself on almost no budget:
1. Target your audience. If you’re a wine and cheese shop, for instance, go to the library and look for a reference book called SRDS-Mailing Lists and use the index to find wine and cheese buyers. Then find a list that will sell you a geographic radius around your shop (you’ll probably have to pay the 5,000 name minimum). You can also just buy all the residences within a certain radius of your store from a web site like infousa.com; that’s cheaper overall but not as targeted, so your response rate will be lower.
2. Now have some fun thinking of an offer that would really bring in the traffic–a free bottle of wine just for coming in the store? Or, spend $50 on Saturday between 10 am and noon, and we’ll give $15 to your favorite charity? Or…think of something really outrageous!
3. Put together your mailing piece. I like a 6″ x 9″ envelope package because it mails for the same postage as a #10 business envelope, but it stands out more in your recipient’s pile of mail at home.
Your package will include the envelope, a response card and a letter with an attached dimensional object.
The envelope is the single most important piece of the package. It should be in an unexpected color, and it should carry news about the offer. For example: “FREE wine inside. Open for details!” The non-address side of the envelope should carry the message too, with a few more details.
The response card has one purpose: to capture the recipient’s contact information and permission to market to him/her by email from now on. That’s why he/she MUST give it to you to get the free bottle of wine or redeem whatever offer you’re using. So it should have blanks for all the relevant info, especially name and email address. You might want to ask some questions about their favorite wines and cheeses; when they usually serve wine; whether they like to go to tastings or on winery tours; whatever. The answers can give you ideas for more promotions and events–and ways to expand your business–down the road.
The letter is your chance to introduce yourself and make a personal connection to the customer–and close the sale. An easy way to open your letter is by attaching a little plastic dimensional (a tiny wine bottle?) from someplace like Oriental Trading Company (http://www.orientaltrading.com/) and explain how that ties into your offer of a free bottle of wine just for coming into the store and looking around.
Important: talk to the customer from the point of view of what’s likely important to him/her–not you–and make it more about the experience of being in the store and the extra services you deliver and the events you put on that turn your store into a hub for the local wine community.
Finally, the little plastic doodad is important because it makes your package lumpy. Very simply, lumpy packages get opened more than flat ones.
4. After you mail your piece, keep the cards as they come in and start building your email list. Use an automated email tool on the web where you can maintain your list, design and write emails as a series and have them go out at preset intervals and integrate the signup forms with your web site. These sites also keep you on the right side of the law, so you don’t fall into the habits of the illegal spammers by mistake. I use aweber.com, but there are a lot of them out there, including infusionsoft, which will also run the rest of your marketing (according to the emails it sends me).
5. Like it used to say on the shampoo bottles: Lather, rinse, repeat.
The bottom line: Independents win by communicating with customers on a personal level and creating a sense of community that builds over time, with service, personal relationships and an experience those customers will never get from a big-box store.
Especially if they’re in a location with enough parking. 😉
Small merchants do have a distinct advantage over the big guys and that is that they can easily provide personalized service to their customers. Because the merchandising mix is lighter, smaller outfits can maintain image and standards much more easily than larger operations. The product mix itself can be tailored to meet the needs of the local selling area.
I have always found it is easier to get things done in smaller stores. My advice is to differentiate yourselves from the larger stores. Offer outstanding and personalized service to your customers. Really cater to your local demographic. Optimize the merchandise mix to community wants and needs. Keep up the image! Image is everything. The customer makes a decision about you from the parking lot so maintain those strict standards.
As somebody who spends a lot of my time working with small, independent retailers, this is a subject close to my heart.
For small, independent retailers, the keys to a successful holiday selling season is no different than the keys to success day in and day out. No longer can small, independent retailers compete on price, nor can they merely offer the same goods as their Big Box brethren. Yes, they must target a more affluent customer, but that primarily means taking a commanding position in the local market with a compelling offering of products in a clearly defined specialty niche. That offering must be coupled with sound business fundamentals; lean inventories, guarding of margins and prudent cash flow management, and more and more, a memorable customer experience.
It’s no longer enough for a small, independent retailer to merely be a place that sells stuff. The store must connect directly with customers in a unique, compelling, emotional way. Customers shop at the Big Box stores for mass marketed basics, but look to small and independent retailer to satisfy their passion for unexpected treasures, captivating discoveries and irresistible enticements.
The customers of small and independent retailers are looking for value, but they don’t assess value merely in terms of low prices.
Yesterday, I was in Build-A-Bear, a store that started out and built its chops as a small, independent retailer. They are the classic experience retailer. Build-A-Bear took the stuffed animal business to the next level by creating a compelling, destination experience for their customers. Build-A-Bear offers their customers tremendous value, but value that’s not necessarily denominated in dollars. Look around in most any local market and you’ll find small, independent retailers thriving by offering their customers their own unique, compelling experience.
Today, success for small, independent retailers flows directly from a compelling customer experience; the result of a well planned synergy of imaginative store design and layout, intriguing merchandise assortments and presentations, passionate, engaging salespeople, and exceptional execution. The customer experience must elicit an emotional response. Emotions make it memorable. And that memory will keep customers coming back over and over again.
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No way around it–indies are definitely in for a very rough holiday season. But they do have some key advantages. Along with personal relationships and customer service, I add unique product.
Let’s remember this is the holiday season. While consumers will certainly tighten their purse strings, for many the season is also about celebrating the love, appreciation and gratitude they have for loved ones. Part of expressing those intangible emotions is via a tangible, special gift. Consumers will find ways to keep spending down, including nixing some gift recipients from the previous year’s gift list. But in most consumers’ lives there exists a few special people who will still get a special gift. Indies should highlight their unique product as being that special gift for that special someone.
This holiday will be no different than any other. If you are brilliant on the basics, you’ll still have an increase in sales. It may not be spectacular but when did we assume that only double-digit increases meant we were successful?
What won’t work is the same as any other holiday too–lowering standards, cutting help, cutting hours, not advertising, complaining it is the “other guy’s” fault that you aren’t busier. It’s still the same game, only the media will want to tell a story of failure and hopelessness. Don’t let them.
I agree, service will be the main difference. In a small store, you are more likely to meet and know the manager, head butcher, florist, baker, etc. You can get that special cut of meat, or order custom cakes, and know it will be done right. In our local market back in Indianapolis, the manager carried our bags out to the car!
That is what the small store can offer–the look and actuality of service.
Ironically, I just delivered a seminar last evening to a group of independent retailers on how to ensure they have a successful Christmas selling season. There are no shortage of ideas to share (too many for this space). Some key points include:
– Invest more in Key Volume Items. Never, ever run out of these.
– Avoid early markdowns. Don’t panic in early December. Sales patterns have changed and shifted to later in the month.
– If you don’t already sell them, get Gift Cards now! (They’re God’s gift to retail).
As my early gift to any independent retailer who sends me an email request, I will send you a short document with dozens of tips for having a successful Christmas. Independents can have a great Christmas, but only if they step up their games.
This is a great opportunity for small stores! We’re increasingly observing small retailers being much more focused on customer marketing, delivering higher service levels as well as simply executing better.
Smaller stores being more able to recognize customers (in-store as well as through direct marketing–both email and postal mail) gives them a real advantage. How many big boxes can do this?
Small stores should follow some of the same fundamentals as their larger competitors: First, know your target customer and strategize accordingly. If you offer a value positioning, stick to it…and if your strategy is more about offering great customer service and merchandise content, be “best in class” among the competition. If you haven’t already taken these steps, it’s late in the game to be offering this advice.
Second, make sure your financial house is in order. Credit markets are obviously tough right now so it’s imperative that your balance sheet and cash flow are in good order, especially heading into peak inventory requirements. If you need to shore up relationships with your bank and other financial resources, do it now.
Small retailers cannot just change their customer base nor should they. Holiday sales growth will not exceed one percent over last year. The smaller retailers must leverage their advantages. First, is to provide true customer service. Know your customer and what they want. They need to stock some lower priced merchandise for customers that will be trading down on dollars, but not gifts. Expand special order so the customer does not leave the store empty handed. Second, play up the gas savings of shopping local.
Independent stores need to carefully stick to what they always do. They have been successful for a reason. That may be a unique product offering, unique service, or an attraction to a unique clientele. People have been coming to their store for a reason. Don’t take that reason away during the Holiday Season. Even a single independent store is a brand in the customer’s mind.
With that in mind, one addition may be very helpful. Remind your customers why they have been coming to your store, via email or snail mail. Tell them about the items they can’t get at Toys “R” Us. Tell them about the free gift wrapping service they can’t get at Walmart. Tell them the staff will help them find something unique and special, even if it is not carried in the store.
What’s going to be key in my independent pet store is having the new and different–that’s just not in Petcosmartland Discounts. My customer would prefer not to drive to the big box, and they’d like something that’s not found up there anyway.
My sales are up substantially this year, and I expect December/December increase of 5-10%, similar to the increases seen so far this year.
Independent stores need to get creative to succeed this upcoming holiday season. What can they offer that big box retailers can’t? Personalization!
Also, the small retailer knows the community and can out maneuver the “big box” with creative marketing. How about giving a ‘friends and family’ discount to local sports programs, chamber of commerce members, Rotary Clubs, Lions Clubs, etc? Or offering personal shopping? A small retailer can go to their local Rotary Club and speak on the new concept in their store for men and busy female executives, that they will take the list and do the shopping, wrapping and–voila–the customer is ready for Christmas morning. The small retailer needs to do an assessment of why they are better and market their strengths creatively.
One thing independents must do–but often think they can’t afford–is market themselves like crazy, starting yesterday.
Fact is, they can market effectively for very low cost if they use direct and online marketing together. Here’s how to do it yourself on almost no budget:
1. Target your audience. If you’re a wine and cheese shop, for instance, go to the library and look for a reference book called SRDS-Mailing Lists and use the index to find wine and cheese buyers. Then find a list that will sell you a geographic radius around your shop (you’ll probably have to pay the 5,000 name minimum). You can also just buy all the residences within a certain radius of your store from a web site like infousa.com; that’s cheaper overall but not as targeted, so your response rate will be lower.
2. Now have some fun thinking of an offer that would really bring in the traffic–a free bottle of wine just for coming in the store? Or, spend $50 on Saturday between 10 am and noon, and we’ll give $15 to your favorite charity? Or…think of something really outrageous!
3. Put together your mailing piece. I like a 6″ x 9″ envelope package because it mails for the same postage as a #10 business envelope, but it stands out more in your recipient’s pile of mail at home.
Your package will include the envelope, a response card and a letter with an attached dimensional object.
The envelope is the single most important piece of the package. It should be in an unexpected color, and it should carry news about the offer. For example: “FREE wine inside. Open for details!” The non-address side of the envelope should carry the message too, with a few more details.
The response card has one purpose: to capture the recipient’s contact information and permission to market to him/her by email from now on. That’s why he/she MUST give it to you to get the free bottle of wine or redeem whatever offer you’re using. So it should have blanks for all the relevant info, especially name and email address. You might want to ask some questions about their favorite wines and cheeses; when they usually serve wine; whether they like to go to tastings or on winery tours; whatever. The answers can give you ideas for more promotions and events–and ways to expand your business–down the road.
The letter is your chance to introduce yourself and make a personal connection to the customer–and close the sale. An easy way to open your letter is by attaching a little plastic dimensional (a tiny wine bottle?) from someplace like Oriental Trading Company (http://www.orientaltrading.com/) and explain how that ties into your offer of a free bottle of wine just for coming into the store and looking around.
Important: talk to the customer from the point of view of what’s likely important to him/her–not you–and make it more about the experience of being in the store and the extra services you deliver and the events you put on that turn your store into a hub for the local wine community.
Finally, the little plastic doodad is important because it makes your package lumpy. Very simply, lumpy packages get opened more than flat ones.
4. After you mail your piece, keep the cards as they come in and start building your email list. Use an automated email tool on the web where you can maintain your list, design and write emails as a series and have them go out at preset intervals and integrate the signup forms with your web site. These sites also keep you on the right side of the law, so you don’t fall into the habits of the illegal spammers by mistake. I use aweber.com, but there are a lot of them out there, including infusionsoft, which will also run the rest of your marketing (according to the emails it sends me).
5. Like it used to say on the shampoo bottles: Lather, rinse, repeat.
The bottom line: Independents win by communicating with customers on a personal level and creating a sense of community that builds over time, with service, personal relationships and an experience those customers will never get from a big-box store.
Especially if they’re in a location with enough parking. 😉
Small merchants do have a distinct advantage over the big guys and that is that they can easily provide personalized service to their customers. Because the merchandising mix is lighter, smaller outfits can maintain image and standards much more easily than larger operations. The product mix itself can be tailored to meet the needs of the local selling area.
I have always found it is easier to get things done in smaller stores. My advice is to differentiate yourselves from the larger stores. Offer outstanding and personalized service to your customers. Really cater to your local demographic. Optimize the merchandise mix to community wants and needs. Keep up the image! Image is everything. The customer makes a decision about you from the parking lot so maintain those strict standards.
As somebody who spends a lot of my time working with small, independent retailers, this is a subject close to my heart.
For small, independent retailers, the keys to a successful holiday selling season is no different than the keys to success day in and day out. No longer can small, independent retailers compete on price, nor can they merely offer the same goods as their Big Box brethren. Yes, they must target a more affluent customer, but that primarily means taking a commanding position in the local market with a compelling offering of products in a clearly defined specialty niche. That offering must be coupled with sound business fundamentals; lean inventories, guarding of margins and prudent cash flow management, and more and more, a memorable customer experience.
It’s no longer enough for a small, independent retailer to merely be a place that sells stuff. The store must connect directly with customers in a unique, compelling, emotional way. Customers shop at the Big Box stores for mass marketed basics, but look to small and independent retailer to satisfy their passion for unexpected treasures, captivating discoveries and irresistible enticements.
The customers of small and independent retailers are looking for value, but they don’t assess value merely in terms of low prices.
Yesterday, I was in Build-A-Bear, a store that started out and built its chops as a small, independent retailer. They are the classic experience retailer. Build-A-Bear took the stuffed animal business to the next level by creating a compelling, destination experience for their customers. Build-A-Bear offers their customers tremendous value, but value that’s not necessarily denominated in dollars. Look around in most any local market and you’ll find small, independent retailers thriving by offering their customers their own unique, compelling experience.
Today, success for small, independent retailers flows directly from a compelling customer experience; the result of a well planned synergy of imaginative store design and layout, intriguing merchandise assortments and presentations, passionate, engaging salespeople, and exceptional execution. The customer experience must elicit an emotional response. Emotions make it memorable. And that memory will keep customers coming back over and over again.