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February 2009
Focusing on Real Marketing Opportunities!
In a challenging economy you can continue to advertise the same
way you've always advertised using the same kinds of ads with
the same kinds of merchandise. Or you can adopt a marketing
strategy that for decades has proven to bring the largest number
of real buyers into stores.
It has long been touted by direct-marketing gurus that the most
cost-effective way to get the absolute highest return from your
marketing efforts and advertising dollars is to take your
message directly to those consumers who already know your stores
and the merchandise you sell. Who are these consumers? They are
people who have bought from you in the past. When the timing is
right and you advertise merchandise you know they like with
pricing that compels these customers back through your doors
quickly, you will see real results.
Rather than trying to cultivate the interest of customers who
have never been in your stores, marketing to your own in-house
customer mailing lists allows you to consistently deliver your
advertising message to those people who are most likely to buy.
Yes, getting new customers is important, but in this economy it
is far more cost effective to bring previous customers back
again and again.
TARGET YOUR MARKETING
It is always advantageous to have a segmented list in order to
target specific customers who have previously purchased
merchandise in specific categories. While it depends on what you
sell, a targeted offer of the right merchandise at the right
price to the right customer most often results in more sales. If
you do not have a segmented database, there's no time like the
present to start building one.
Let's say yours is a mattress specialty store or a furniture
store that sells mattresses. With the average lifetime of a
mattress at six to ten years depending on the quality, you can
send a mailing to past customers who in all probability are
ready to buy a new mattress. The message should focus on how the
improvements made in mattress manufacturing since they last
purchased a new mattress will help them get a far better night's
sleep than they may currently be getting from their old mattress.
In a tough economy consumers are more likely to respond to a
marketing message that demonstrates what makes one product
clearly better than another. Facts and figures help create value
and high value is what customers want right now--feature- and
benefit-rich products for less money. The more you focus on the
features and benefits, the more you will sell. Including a
coupon for an extra discount or free gift with purchase will
compel customers to act now.
Sporting goods retailers will want to target specific categories
such as runners, golfers, or workout enthusiasts who have bought
running shoes, golf equipment, or work-out apparel, etc. We know
with a high degree of certainty that customers who buy certain
kinds of merchandise usually will buy more of that kind of
merchandise if the reasons for buying are compelling enough.
When an offer comes from a store they know and have done
business with in the past, customers are more likely to respond.
This way of marketing can be used with gifts and home
furnishings, hardware, musical instruments, appliances, jewelry,
window treatments, shoes and apparel, tires--just about any kind
of merchandise. It can also benefit service providers such as
auto repairs, floor refinishing, and upholstery cleaning.
In many ways marketing to cautious consumers means catering to
their level of comfort and reinforcing the confidence they had
doing business with you in the past. Repeat mailings generally
work better than a one-shot effort for both postal mail and
email.
The Candy Battle in Times Square!
In October of 2002, The Hershey Company opened a store at the
corner of 48th Street and Broadway in New York City. The store
features a massive 215x60-foot sign arrangement displaying logos
of the company's famous brands--Reese's, Heath, Mound's, York,
Payday, and, of course, Hershey's bars and Kisses. Visitors can
buy all the candy they want along with other gift-type items.
Unfortunately, the store itself is small, dark, visually
unimpressive, and in need of updating.
Being the first of two stores from famous candy makers, the
Hershey's store probably impressed visitors until December of
2006 when M&M's World opened across Broadway on the
opposite corner of 48th Street.
Competing with a store that sells similar merchandise across
town is one thing, but competing with one that sells similar
merchandise across the street takes a whole different approach.
While one could debate which sign is more spectacular--Hershey's
or the giant wrap-around M&M's World sign--there's no doubt
M&M's World itself wins the battle for customer attention.
The store is visually dynamic with colorful displays, innovative
merchandising, and a fun atmosphere.
A Valuable Resource for Independent Retailers
Since the very beginning I have rejected overtures from a wide
variety of companies wanting to advertise or promote their
services in this newsletter. What you are about to read is an
exception for two reasons. First, I believe the services offered
by The Retail Owners Institute® are of such value and importance
that every independent retailer should be using the service.
Second, co-founders Pat Johnson and Dick Outcalt have spent many
years helping retailers better manage their businesses and they
understand as well as anyone I know the challenges independent
retailers face.
ABOUT THE RETAIL OWNERS INSTITUTE®
For the last nine years, the retail consulting team of Pat
Johnson and Dick Outcalt have been assembling a unique self-help
web site, The Retail Owners Institute® ("The ROI"), at
RetailOwner.com. It assists retailers worldwide with
basic financial training, assistance, and easy-to-use tools. The
service is much like WebMD for retailers. Amazingly, last year
over 200,000 retailers accessed it!
A wealth of information about cash flow, open-to-buy, turnaround
strategies, financial statements, bank negotiations, etc. can
be found there. Plus, there are benchmark numbers for more than
50 different retail segments, from hardware stores to
convenience stores to shoe stores. You can see how you compare
to your industry's average performance statistics.
As Pat and Dick added more and more of their previously
published how-to articles, then their full-day basic financial
seminar, 10-minute webinars on retail financial topics, and
recently four dynamite simple calculators specifically for
retailers, their own "economics" loomed. Access to about
two-thirds of the site requires membership, but it costs only
$24.95 per month. Such organizations as Hallmark Cards, Pet
Industry Distributors Association, Consumer Electronics
Association, QuickBooks Retail Solutions, and others sponsor
full access to the members-only section for their
retailers. For instance, Hallmark Gold Crown retailers can click
through from Hallmark Gold Crown Retail University directly to
the entire ROI site any time they have a financial question,
24/7, and do so courtesy of Hallmark corporate.
The president of one national retail trade association recently
said, "There's not much we can do to help our members' top line.
But by offering them all of The ROI, maybe we can help them with
their bottom line." Pat and Dick's mission is to continually
make The ROI more and more useful to owners of retail businesses
everywhere. They welcome your ideas, constructive criticism, and
suggestions. You may contact them directly: Patricia M. Johnson
and Richard F. Outcalt, The Retail Owners Institute®,
800-499-7531, email: TheROI@RetailOwner.com.
NOW IS NOT THE TIME FOR MORE LUXURY TAXES!
Don't you just love politicians. Legislators in the states of
New York and Illinois are proposing to add a 5 percent luxury
tax to all watch and jewelry purchases that exceed $20,000. If
these folks would look at which segment of retailing saw the
largest downturn in sales for the 4th quarter of 2008, they
would learn that many of the nation's best-known luxury goods
retailers suffered 25 percent decreases or more.
Another very good example of what happens when luxury goods are
taxed happened several years ago. The government decided to tax
larger boats and yachts. In the first year after this tax was on
the books, boat retailers saw dramatic decreases in sales.
Taxing luxury goods during a severe recession is absolutely
insane. If you are a jeweler doing business in those states,
it's time to stand up and let your state legislators know this
could end up costing the state a considerable amount more
revenue than the taxes would provide.
REDUCING COSTS DURING A RECESSION!
 The Sacramento Bee newspaper ran a story this week about
one of my long-time friends Greg Bauer. Headquartered in
Sacramento, Greg owns eight Rack N Road stores in California,
Washington, and Utah. The stores sell all of those racks you can
buy for your car or SUV to haul bicycles, skis, snow boards, and
kayaks.
Over the years Greg and his people have built a terrific
business, but like any small business in this economy, they have
had to find ways to reduce operating costs. According to the
Sacramento Bee article last year Greg began looking for ways to
reduce costs. He told his landlords that he needed their help if
his business was to survive. The article went on to say, "He
asked for an average rent decrease of 25 percent for the next 18
months." He didn't get the 25 percent average but he did get 20
percent, which amounted to a total of $120,000 in annual rent
reductions.
There are two important lessons here for every business. First,
you absolutely will not get a rent reduction if you don't ask.
And second, when you can get your landlord to look at the
long-term (10 to 20 years) rather than the short term (18-24
months) you have a better chance of getting some concessions.
Until Next month...
Get a Sneak Peek at George Whalin's New Book
Retail Superstars: Inside the 25 Best Independent Stores in America is being
published by Portfolio, a division of Penguin Group, and will be available in bookstores and online May 28, 2009.
Visit RetailSuperstars.com and see why we're so excited
about this book.
To preorder, click here.
If you have an opinion or thoughts about any of the topics
posted, I invite you to comment at retailerblog.com It's easy to
do. And if you have a topic you would like to see addressed on the blog, send me an e-mail at george@whalinonretail.com.
An Invaluable Resource in Tough Economic Times!
George Whalin's book RETAIL SUCCESS! provides real-world
solutions to the challenges retailers face in these troubling
economic times. This book, filled with George Whalin's retail
expertise, is written in the same easy-to-grasp style as his
monthly newsletters.
Go to our
web site
today where you'll find several other books in addition to
RETAIL SUCCESS that George recommends.
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