Keep Warm, Stay Cool

Q: I started worrying about the increases in our utility costs when gas prices went up so dramatically last summer. Our shop is only showing a small profit as it is, so higher gas and electric bills could put us in the red. Any suggestions for lowering our energy costs?

A: As retailers know, stores can be very expensive to heat and cool. There are rarely any windows that open to take advantage of pleasant outdoor temperatures, so storeowners are almost always either heating or air conditioning. In addition, high level lighting required for visual merchandising is expensive — and only makes the store hotter. In addition, stores have long operating hours, which means costs are higher than a typical nine-to-five operation.

I suggest starting your quest for lower energy costs by getting a usage analysis from your local utility company. You may discover areas that can be better insulated, or windows that could be redone in double-paned glass. Your current appliances, such as the water heater, furnace and air conditioner, may not be as energy efficient as newer models. The cost of replacing these appliances might be justified by lower utility costs in a few years. It's also possible that you'll be eligible for public service company rebates encouraging wise energy use.

Some of the energy conservation ideas suggested for homes can also cut costs for retail stores. We installed programmable thermostats last year to make sure that employees don't accidentally leave the heating or cooling at a high level when the store is unoccupied. If someone is working early or late, there's an override setting.

The best development for retailers trying to cut down on utility costs is the proliferation of low-energy lighting options. Compact fluorescent lights (CFLs) can be used to replace most types of light bulbs traditionally used to light merchandise. These bulbs produce the same lighting level, last six to 10 times longer, generate less heat than other bulbs and use up to 75 percent less energy. In areas that already use fluorescent lighting, such as offices and warehouses, switching to high-efficiency T8 and T5 tubes can really cut costs.

Turning electronic displays, computers or lights off or down when not in use should also help cut your utility bill. Be sure to perform routine maintenance on heating and cooling systems, changing filters, cleaning condenser coils and checking the airflow.

Making the Most of the Holidays

Q: This will be the first Christmas season for our shop, which sells gifts and accessories for dog and cat lovers. I've read that we could do as much as 40 percent of our business in November and December. How can we best take advantage of this opportunity?

A: Many gift and decorative accessories retailers depend on the income from the holiday season to get them through at least part of the following year. You're right that maximizing your sales in November and December will be important to your store's success.

By November, you've hopefully already ordered most of the product you'll need for your first holiday season. If not, it's time to get those last orders placed so the merchandise will be ready to display before you get really busy. Keep in mind that not everyone celebrates Christmas. If it is appropriate to your market, include Hanukkah or Kwanzaa merchandise in your mix, or concentrate on universal themes such as love, peace or winter.

Before you sit down to Thanksgiving dinner, you should have all of your holiday merchandise in place. Give priority to higher ticket items that may only sell well in the fourth quarter. You want the highest possible return from your inventory dollars and floor space in the holiday shopping season.

Shoppers also appreciate extended hours during December. To accommodate them, you'll probably need to hire extra staff. The earlier you hire, the more time you'll have for training. Don't forget the need for someone to do restocking when the store is closed. Keeping the shelves filled through the season is likely to increase sales.

As the holiday frenzy begins, shoppers often feel stressed. The more enjoyable and efficient you can make their shopping experience, the better. Provide gift-wrapping, and offer to ship purchases. Make visits to your store more enjoyable with special events such as book signings, free treats for pets or entertainment. Shopping at your store might well become a holiday tradition.

Early in the season, you'll get a sense of what merchandise is selling quickly and what isn't. Take a low markdown on the slow sellers to avoid selling at a deeper discount later. Reorder best sellers if they'll arrive in time, and if you won't mind having some carryover. As tempting as it may seem, it's almost always a mistake to reorder holiday items.

Check your outstanding purchase orders and back orders early in December to make sure you have a cancel date that will prevent merchandise from arriving too late. You'll want a minimum of stock on hand in January, which is a slow month.

Seasonal merchandise should only be marked down before the holiday if it has not been selling well at full price. Otherwise, it's best to wait until after the holiday to do a clearance sale. Start at 40 percent off instead of 50 percent, so that you'll earn back your wholesale cost, including shipping. A post-holiday sale frees up dollars to buy new merchandise for the start of the year, and avoids storage costs.

And be sure to take notes on the best and worst merchandise of the season — these notes will be invaluable as you start to plan for next year's holidays.