Special Orders Make Shops Special

Q: We have a fine gifts and accessory store in Bucks County, Pennsylvania. We offer tabletop merchandise such as china and crystal, as well as smaller items such as candles, jewelry, and baby gifts, and are happy to take special orders for certain items. But how do we handle a request for a bowl we no longer carry, or a ring in a size that's not in stock? While we're known for our customer service, it's frustrating when we have so many beautiful items to choose from and all a person wants is some item we no longer have. Any suggestions?

A: Fulfilling special orders is one of the things that sets specialty shops apart from big box retailers, so it's important to continue this service even if it's sometimes problematic. Usually, your efforts will generate goodwill that's worth the inconvenience. But make sure you don't accept an order that you're unlikely to be able to fill, or order merchandise that you'll get stuck with if the customer changes his or her mind.

Of course, vendors often have a minimum reorder number. In our store, we explain to customers that they'll have to wait till the next time we're ready to place a large order, and if possible give them an estimate of when that might be. We also check to see if there is a minimum case pack, and let the customer know that if they want a certain placemat, for example, they'll have to take 12.

If the customer wants us to order something we don't normally sell, or really don't want to stock any more, we ask for a 50 percent payment in advance. This lets us know that the customer is serious about wanting the item, but it isn't a binding agreement. (She could change her mind and request a refund of the deposit, and we'd have to give it back.) I'm also hesitant to hold onto a customer's money if I'm not ordering right away, so I might take a credit card number and wait to ring up the deposit at the time I place the order. If there's been a long interval, call the customer at the time the order is placed to make sure she still wants the item. This will help avoid dead-ended special orders.

Occasionally, we've even bought something on the Internet for a customer, or found it at another store. Exceptional service is one of the main ways to build customer loyalty and positive word-of-mouth. Although the monetary compensation for a special order may not be adequate for the amount of effort that goes into it, hopefully your customers will be so happy that they'll sing your praises to their friends.

Q: My partner and I are opening a leather goods store in a few months, and we disagree about how much money we should spend on our initial advertising campaign. Are there budgetary standards in the gift industry that might help us settle this argument?

A: There are certain broad guidelines as to the percentage of sales that should be budgeted for advertising (usually 3–5 percent of annual gross sales). However, as a new retailer you're at a disadvantage because you don't really know what your first year's sales will be. Obviously 5 percent of $100,000 is a lot less than 5 percent of $500,000.

You can, however, get a ballpark idea if you look at the amount you invest in inventory. Unless you're a brilliant retailer in an incredible location, you're unlikely to generate more than $200,000 in sales if your average inventory is valued at $50,000 retail. That would represent turning your inventory four times in one year, which is not likely; most stores average one to three turns a year.

As a new business, you need to get word out about your store, but I wouldn't advise spending more lavishly than most other local specialty retailers. Take a look at the size of their print ads, their television exposure, their Yellow Pages advertising; that will give you a good idea of what you can afford. A few years ago, there was a new store in our area that conducted a television campaign that seemed very impressive … until I found out (when the store closed) they spent $10,000 on ads that brought in only $30,000 in sales.

When selecting advertising — whether for radio, TV, or print — think about your target market. Concentrate your budget on one or two media, and include enough repetition to make a strong statement. There are also many low-cost methods of announcing your arrival on the retailing scene. Local coupons, delivered door to door (not in the mailbox, that's illegal), or a sidewalk sign or outdoor banner will announce your arrival.

And don't forget to send out press releases, together with a digital photograph of your store. Invite a local charity to be a beneficiary at your grand opening, and let the media know. Free publicity helps stretch your advertising budget.

Once your store opens, ask customers to sign up for your mailing list, and if possible, an email list as well. Targeted emails, sent with the permission of the recipient, are a free way to keep in touch with your customer base. Be sure to use the list sparingly, and occasionally offer something special so that customers reap a benefit from being on your list.

When customers come in, ask how they heard about your store. The feedback will tell what type of advertising is best for you, and hopefully your expenditures will have been modest enough at the start that you can continue promoting effectively every month, adding new customers at a steady rate.