Two terrific seminars at Project Las Vegas gave much insight into how specialty stores can improve their sales and margins. Here’s a synopsis of the first one; stay tuned to mr-mag.com for a recap of the next.
In his seminar, Management One president and CEO Marc Weiss discussed the challenges of keeping up with change, noting that change in the past two to five years has outpaced the prior 40 years. He then addressed a few general trends retailers must understand to stay in business. These include speed to market, convenience, product scarcity,
Among his tips:
*Step out and be first.
*Fail fast: don’t be afraid to make mistakes but rectify them quickly. (Data mitigates the risk.)
*Scarcity of product is a tremendous draw: customers are more likely to buy when there’s a fear of missing out. Curating small fashion groupings of niche product to a targeted audience willing to buy at regular price can be more profitable than a focus on best-sellers.
*Better to underbuy and not take markdowns, thereby acclimating your customers to buy now at regular price.
His case study was a young merchant named Maureen with three women’s boutiques in Philadelphia. Her sales were steady but her cash flow and margins were problematic; she was always overbought and was considering getting out of the business. Working with Management One, she reorganized her classifications by price and staggered shipments, spending first on those classifications driving her business. Explaining her cash flow problems to her vendors, she began ordering $5,000 worth of goods rather than $60,000; her talented staff sold through everything they received.
During this reorganization, she questioned the high rate she was paying her sellers but soon realized that her people and their customer relationships are the driving force of her business. It was a risk that paid off in spades: by staggering shipments and paying her sellers (who are treated as entrepreneurs and make their own decisions about sending flowers, etc), purchases declined by $600,000 but sales went up by $1 million.
Another trick of the trade that Maureen so graciously shared: the power of booking appointments, of having a select wardrobe waiting for the customer when she comes in. By sending customers a $200 gift card to use at their next appointment, her average sale jumped from $500 to $2000.
For more info, check out management-one.com.