In a declining economy, how do you ensure that your store stays profitable?

Sandra Allison, Allison Wonderland Cape May, NJ

For the last two months my income and sales have been up 15 percent, so either the falling economy I've been preparing for never materialized, or we've taken the right steps to overcome it. I've cut my expenses by 97 percent. I cut payroll by working more hours myself. I'm buying carefully — more often in smaller quantities. I cut out newspaper advertising because I did a marketing survey and discovered it was doing nothing. So I increased my newsletter frequency instead. I am dealing strictly in cash, so I pay no interest, and I'm using early buys and shipping specials to save 25 percent on shipping. Using a stamp instead of printed shopping bags saved over $1,000. I'm focusing on my bestsellers, but I'm also bringing in new merchandise to entice customers. I'm spending more on display and visual merchandising so the merchandise sells itself.

Daniel Hill, Botanicals on the Park St. Louis, MO

Everybody is screaming that the economy is horrible, so the general retailer in St. Louis puts everything on sale, lets their store look really bad, and cuts back on staff. We've cut back staff, too, but we've tried to do it in non-customer services areas like the stockroom. We've also instituted a strict supply request regimen and cut back advertising by more than half. We also had our first Christmas-in-July sale. We're trying to generate some profit from new holiday product we would normally sit on till September. The margin is higher on Christmas than on everyday, so we can afford to take a discount and still come out smelling like a rose. Fortunately, we have a floral department. When the economy is bad flowers do well because they're a cheaper alternative for gift giving.

Irv Losman, Tiara Galleries & Gifts Rockville, MD

During a challenging business climate all retailers must be conservative in their spending. But that doesn't mean that the retail floor looks any different to the customer. Here at Tiara we have put more, not less, emphasis on display and variety of merchandise. We've brought in new lines of leather accessories, jewelry, and canvas artwork to add to impulse buying and excitement. It is true we're not buying as deep as before but we are buying as broadly as ever. Another part of our strategy is to highlight relationships with our existing customers. Direct mail is the key, along with personal phone calls. Lastly, we go over basic customer sales associate skills and product knowledge with our employees again and again.

Patti Renner, Renner's Invitations Akron, OH

Actually we've had — I wouldn't say no problems — but we've conquered the challenge of meeting our monthly goals consistently, and those goals were established last year when things were going really well. The customers are spending less but we have heavier traffic than we have had in the past. We added newspaper advertising to our marketing mix with a small but consistent ad in every issue. Our latest ad highlighted gifts for $20 and less. When people call, especially for weddings, we reinforce our ability to work within their budget more than we had to last year. It is working. We also purchased a sign to go on the sidewalk. We change the message every two weeks so that it reminds people in the passing cars that we're here and that we have interesting things to sell.