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Olive & Bette’s owner Stacey Pecor has a sign on her desk saying, “There’s only one boss, and that’s the customer.” The phrase, from Wal-Mart founder Sam Walton, rings true for Pecor more than ever in a recession.

This story first appeared in the December 11, 2008 issue of WWD.  Subscribe Today.

“One of my best customers, who has been shopping at my stores for 17 years, asked me why she should shop with me when my neighbors have everything marked down,” said Pecor, who has four stores in Manhattan. “And she’s right. We hardly ever had to put things on sale, but here we sit at between 50 and 70 percent off. We have to do anything she wants these days, anything to keep her shopping.”

Many retailers are struggling to keep afloat during the economic turmoil, and contemporary fashion boutiques are no exception. They are all looking for the right promotions, exclusive merchandise — anything to get shoppers to spend. Pecor said sales in September were up considerably, and she thought the economy could not be as bad as media reports had described — but that was before the economic storm hit full force in October.

“September was amazing and then October was a bloodbath,” she said. “It was such a blow.”

To keep customers interested, Pecor said she is concentrating heavily on offering the best in-store experience — last week she held a Rebecca Taylor trunk show and she plans an accessories day, where accessories designers come into the store for personal appearances. Pecor is also working on expanding business outside of the store.

“We do about 30 percent of our business outside of the store, where we send our best customers merchandise we think she will like,” she said. “That has been very successful — one customer in particular just purchased $10,000 worth of product that way.”

Pecor said this has been a good way to do business amid financial challenges, since customers who have the money to spend feel less guilty about shopping if they don’t step into the store.

There are a few best-selling items even in this environment. Pecor said she cannot keep her $236 Ugg boots in stock and she has been doing extremely well with a pair of $248 boyfriend jeans from AG.

“They came in, fit well and we sold out of the jeans in the first week,” she said. “It just goes to show you, if you have something new that excites the customer, it will still sell. We just need more items like that.”

For Rick Weinstein, director of sales and marketing at Searle, which operates eight stores in Manhattan, the effort to lure shoppers to the stores is a daily challenge. Searle is constantly working to differentiate itself from discount stores by selling merchandise that people can only find at Searle. Each day, the store is throwing an “event of the day,” where customers are given a new deal.

“More than ever, we have to compel customers each day, especially as people have literally removed themselves from shopping,” Weinstein said. “And these events have to be really exciting, something they feel they have to check out.”

One day last week, Weinstein said he held an event in the stores in which a pair of shearling boots was given away when a customer spent $1,100 or more. The promotion was successful, with 100 pairs of boots distributed.

“It’s all about managing day-to-day,” he said. “We look at our sales hourly.”

Weinstein is also working to keep inventory lean and to bring in more accessories — especially scarves and belts, which are selling well. He is looking for new vendors to sell, which could help to invigorate the customer. But Weinstein said he is concerned about business in the coming months.

“We are both lucky and unlucky to be in Manhattan,” he said. “We are lucky since our stores are in high-traffic areas of the city, but we are unlucky because we are in Manhattan, where all of these higher-end shoppers are losing their jobs. This is where they live, and that is a problem.”

For Randi Siegal, owner of the three Rapunzel’s Closet stores in Palm Beach, Fla., growing her business in tough times is all about the opportunity on the Internet. She has just relaunched shoprapunzels.com, with improvements to help drive sales.

“The pictures are better; it is more user-friendly, and our checkout process is streamlined,” she said. “We added a blog and included a more detailed denim guide. We now include personalized thank you notes and seasonal promotions. For example, we’ve included mini flip-flop Havaianas key chains in orders for October. In November, we included a small pack of candy corn, and in December we’ve been including mini packs of holiday Jelly Bellys.”

In addition, Siegal said she has been holding one-day sales online and increased the percentage off from 20 percent to 25 percent to drive more traffic to the site. She said she has also started to mark down older merchandise more frequently and at a higher percentage, and she allows coupons to work on sale merchandise as well as on full-priced items.

Although Siegal said her Palm Beach locations are still doing well, she is beefing up her online presence to open her business to a much wider audience. This could be a good move, she said, since Palm Beach is such a vacation destination, and vacations are prime territory for cutbacks.

Erin Crandall, head buyer at Shopbop.com, said the site has featured extra promotions and more must-have exclusive items.

For the holiday season, three celebrity Shopbop customers — Chloë Sevigny, Anna Faris and Sarah Michelle Gellar — have been asked to create wish lists of Shopbop items they would like to own. Through the promotion, shoppers are encouraged to create their own wish lists they can e-mail to friends and family members. As a bonus, those who create lists will be entered to win a $3,000 Shopbop shopping spree.

“It’s been fun to see what people are adding to their lists,” Crandall said. “And we’ve seen that people really like the celebrity element.”

Maren Roth, owner of the Rowe Boutique in Columbus, Ohio, said she is feeling the effects of the recession but has managed to keep her business under control.

“I am really trying to be more price conscious by investing in brands that have consistently been strong sellers for me, but also looking for new unique, nondepartment store brands that you really won’t see anywhere else, but that won’t break the bank,” she said. “I have been slowly introducing enough price-friendly brands that my customers are hardly surprised to see a $475 Julie Haus dress hanging next to a $110 French Connection dress. They know they will be able to still find something great at both price points that will be both beautiful as well as unique.”

To keep customers coming back, Roth is starting a customer points program called “Rowe Dough.”

“For every $100 you spend, you get a punch on your in-store Rowe customer card. For every 10 punches, you get 20 Rowe Points, also known as Rowe Dough,” she explained. “I have lots of loyal customers, so instead of giving so many discounts, they will earn dollars toward their next purchase.”

While all these promotions are intended to drive sales for holiday, Searle’s Weinstein said he is really nervous about what’s to come in 2009.

“It’s like judgment day for us. There are just too many stores out there for all of us to survive this,” he said. “The best will survive, but how are we ever going to get the customer to pay full price again? If people aren’t going to take on more debt going forward, how are we going to make money?”

 

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