Top 10 Retailing Tips
Use these tricks of the trade to gain and sustain your business.
By J. Tol Broome Jr. -- Gifts and Dec, 2/1/2008 12:00:00 AM
It takes a special breed to be a retailer. Long hours, intense competition, fickle customers, changing inventory trends and susceptibility to economic fluctuations are just some of the factors that make retailing quite interesting.
Toy, game and hobby retailers face these challenges, along with a few more. The product sold is very specialized and requires an extensive, industry knowledge, and the type of customer patronizing a toy store ranges widely from the casual browser looking to spend a few dollars to the serious shopper interested in a gaming console package.
Here are 10 tips to help toy proprietors become more successful small business owners:
1 Nail Down Your Niche: Many retailers make the mistake, particularly as they grow, of trying to be all things to all people. It seems like a good idea to try to offer something for everybody so that no one walks out empty handed. The problem with that strategy is that the business often loses its identity in the process.
Any business, no matter how large or small, must meet the needs of its customers to remain a successful business. As toy, game and hobby retailers, you need to ask yourself: “What needs am I trying to meet?” Does your shop have a lot of smaller dollar transactions with a fairly high volume in terms of the number of customers? Or do you sell to a relatively tight knit customer base that focuses on more expensive offerings? Or maybe it is some of both. Whatever your mix, gear your efforts to attract, and, more importantly, re-attract these valuable customers.
It may sound simple, but many retailers lose sight of their niche. And the point at which a retailer begins to forget which needs are being met is usually the point at which the business begins to experience what can be an irreversible downturn.
2 Know Thy Customer: Go to any seminar on retailing, and one of the first things that will be discussed is the importance of personalized service. Yet, if you walk into many retail establishments, you will often experience anything but service with a smile.
There are a couple of things you (and your employees) can do here to leave a lasting impression on your customers. First, call them by name. People like to be known, and hearing their names recalled in your store will create a friendly atmosphere of familiarity.
Second, try to remember what your customers typically purchase. If their focus is plush toys, then show them the new items you have that might be of interest. Showing your customer that you care will definitely bring them back, even if you might not have anything in your shop of particular interest during their visit.
Third, smile. No matter what Murphy's Law may have brought your way that day (maybe you woke up with a virus, only to find when you got to the shop that your computer seems to have contracted the same), you don't need to share your gloom with your customers. They have come to your store for a positive shopping experience. You and your employees can enhance that enjoyment with a simple smile.
3 Control Costs: Many retailers spend so much time trying to sell their wares that they forget to track how much money is spent. But it doesn't take much unnecessary overtime and wasted postage expense to put a big crimp in the bottom line.
Even if you don't particularly enjoy spending time on the numbers side of the business, you must discipline yourself to utilize regular expense analysis. Your bookkeeper/accountant can help you organize the numbers into a format in which they can be easily evaluated. The areas on which you will want to focus include utilities, telephone, supplies, salaries and wages, advertising and postage, among others.
4 Dare To Be Different: If you operate a shop in a market that does not include another stand alone toy store, be thankful. You are definitely in the minority. If you do have other toy, game and hobby retailers in your immediate market, differentiating yourself from the competition is vitally important. How do you do it? Just follow tips number one and two above. If you nail down your niche and offer your customers good, personalized service, you should be successful in making a name for yourself, even if you are one of several toy stores in your immediate area.
5 Track The Trends: Once upon a time, there was a company that was one of the most successful in America. The product: buggy whips. Then, something called a gas-powered, motorized vehicle came along. The automobile didn't really catch on at first and the big wigs at the buggy whip company just laughed and said “neigh” at making anything other than whips for horse-drawn carriages. Within a few years, however, the buggy whip firm had been trampled. Why? Because its owners failed to keep up with the trends in the transportation industry.
Toy shop owners must track the trends as well. The buying public can be fickle. Something can be hot one season and nearly forgotten the next. A retailer who fails to keep an eye on the industry can quickly find himself on the path to serious problems.
6 Margin Your Profits: Ask many retailers how they can increase their profits, and they are likely to reply “by selling more products.” But that credo doesn't always hold true. If your sales growth comes from the items that yield the lowest profit margin, it may have little or no impact on the bottom line.
The key is to sell more of the items that bring the highest profit margin. For instance, your inventory might include a large stock of fashion dolls that make an average $5 profit per item. Also in your inventory you might have some video game consoles that bring in $100 profit per unit sold. You'd have to sell 20 times more of the dolls to make the same profit as on one game console. It may seem rather obvious, but it is surprising how many retailers sometimes lose sight of the importance of the margin.
7 Manage Your Inventory Investment: Careful inventory management can make a big difference in the success of any retail business, yet it is often one of the most overlooked areas of a merchant's success. It certainly holds true for small retailers.
Retailers generally have far more money tied up in inventory than in any other area of the business. Yet, they often lack an organized plan for stocking the store. There are several questions you should ask yourself to ensure an efficient inventory management system. Which items sell well? Which items do you sell very little of? Does some of your inventory move better at certain times of the year? Which suppliers offer volume discounts or early payment discounts? Which suppliers offer the best terms? How long do you have to hold different pieces before selling them?
Just because you own a toy shop doesn't mean you have to carry every type of toy, game and accessory on the market. If you have some “stale” inventory in your store, think about marking it down to move quickly, even if it's only a break even proposition. But, don't replace it. This will free up funds for faster moving inventory and allow you to keep the cash flowing into, rather than out of, your store.
8 Ask And You Shall Receive: You can often save yourself a lot of time and sometimes a lot of adversity by utilizing contacts in your community. Other retailers, bankers, accountants and small business advocacy groups can offer valuable advice to help you run your business more effectively.
For instance, even though the guy next door runs a drugstore, he might have had some useful experience in selecting advertisers. And the ladies' dress shop owner two doors down might offer help on when and how to promote sale items.
Your banker and accountant will often provide helpful financial input to help you improve profits and strengthen your overall financial position. Many retailers are unaware of the existence of small business advocacy groups that offer valuable free advice. Some of these organizations include SCORE (Service Corps of Retired Executives), Small Business Institutes, Small Business Development Centers and even some colleges and universities.
9 Location! Location! Location! Real estate agents will tell you that there are three factors that have the greatest impact on the marketability of real estate: location, location and location. The same rule of thumb often applies in retailing in terms of the ability of a toy store to attract customers.
Are you located in the most optimal spot for your store? Do most of your customers travel a short distance to your shop or is it a cross-town journey?
If your store is not located near your customers, you may want to seriously consider a move. Since many markets have actually experienced downturns in lease rates for retail space, you might even be able to save money with a move.
10 Focus On The Future: Many retailers have a hard time focusing past next week, let alone next year when it comes to planning for the future. Yet, failure to focus on the future has caused many a seemingly successful small business to flop.
Whether your business is struggling somewhat or doing well today, it is vitally important to keep an eye on what you will do “tomorrow.”
In the financial area, a couple of planning techniques are recommended. First, a budget should be prepared each year to compare to actual performance on a month-to-month basis. If your store is not meeting the budget, you will have an easily accessed tool that will help you understand why you are not meeting your budget and provide you with the information you need to correct the problem. At the end of the year, look at the summary of the entire year in relation to the budget and analyze what you did right and use it to identify areas for improvement.
The second financial tool is a long term plan that you can revise every year. Some business owners employ a three-year planning system, while others prefer a five-year plan. But the important thing is not how far into the future the plan projects, but that you are doing some long term financial planning. The long term financial plan allows you to analyze the potential impact of the dreams you have for the business on the future financial position of the company.
You also need to look to the future to plan for such areas as management succession (should something happen to you), changing economic patterns in your market area and possibilities for an increase in competition that could take business away from your store.
There is little question that it has become more of a challenge to be a retailer in the new millennium. Hopefully, a few of these 10 tips will help you in operating your toy, game and hobby shop more efficiently and more profitably.
I have just read your top 10 tips on retailing, it hit the nail on the head with every point. Thanks
di lawler - 2009-07-15 00:53:00 EDT
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