EDITOR’S NOTE: On this page and page 14 is a special report, reprinted from WWD The Business Newsletter for Specialty Stores, a new monthly newsletter from Fairchild Publications, publisher of WWD. It will act as your survival guide for the ’90’s, providing valuable and pertintent information for specialty retailers. It will help:
* Increase your sales
* Decrease your costs
Find out why some specialty stores are thriving and others are closing their doors.
The newsletter will examine key issues for specialty retailers, including customer service, merchandising, promotion and advertising, direct mail, hiring and turnover, fixturing, technology, inventory control and other topics. For further information, contact Karen Bernard at (212) 630-4999.
TOPPLE BIG-STORE PRICE TYRANNY
It’s Thanksgiving morning and you decide to spend a few extra minutes in bed with the morning paper and a cup of hot coffee. As you eagerly thumb through each section, you see page after page of product and image advertising. New coats, great sweaters, terrific gifts for your entire family. Every ad catches your eye with sharp photographs, descriptive text and appealing settings. You can’t wait to start shopping: This is what the holidays are all about. And then you wake up.
Most specialty retailers hate newspapers on days like this. Take a wild guess why:
* Three-day SALE
* One-cent SALE
* Liquidation SALE
* LOWEST PRICES of the year
* Early-riser PROMOTION
* Season-ending CLEARANCE
* OFF-PRICE is the best price
* Storewide DISCOUNTS
* BARGAINS galore
* Extra bonus COUPONS
And my own personal favorite:
* We’ll beat any price; no payments, no interest ’till February ’97.
I keep hoping the industry will move away from this obsession with price-only advertising, but I know better. There’s no going back. Still, it’s obvious this fixation is detrimental to the specialty retailer. Competing on price is not the best course for small stores. Specialty stores need full margins to cover expenses and turn a reasonable profit. Every year, more and more small stores discover the futility of competing on price. It’s not a game we can win.
If big stores and chains choose price as their message, where does that leave the small stores? What is our message? Unfortunately, as most big-store advertising has moved in this direction, the small retailer has simply stopped advertising. This only adds to the impression that price rules the world. We’ve become an industry with only one voice and only one message.
Small stores need to fight back. They need to present an alternative to the sale and price advertising of the big stores. The most successful small retailers talk about price as little as possible. In their stores and in their advertising and marketing, they talk about everything but price. They talk image, service, selection and convenience.
Most specialty stores rarely use television, radio and cable. These ads are expensive to produce and have to be repeated frequently to be successful. The costs are pretty high. But there are other options. Available and inexpensive computer technology has revitalized an old stand-by of the small store – direct mail. If specialty retailers use their computers for nothing else, they should maintain customer data bases. Service bureaus were fine 10 years ago, but are an extravagance today.
Targeted direct mail works best when repeat business is possible and desirable. Not many years ago, direct mail was obsessed with quantity. The more names the better. That’s no longer the case. With mailing and printing costs constantly on the rise, the strategy has changed. Many small stores have lists going back to the beginning of time — lists of 10,000, 15,000, 20,000. These huge lists are mostly useless. Customers have moved, changed their buying habits, even died. It’s time to start over and this time place the emphasis on quality, not quantity. Include only your best customers, the ones you’ve seen in the past six months. Be selective about adding new names. Do away with the guest book and design a customer card to be used with discretion. Give precise instructions to your staff and carefully monitor the card’s use. Frequent mailings may cost you 10 dollars a year — per name — so add customers to your list with care.
To be successful, all advertising, including direct mail, must often be done frequently. It makes no sense to develop a list that’s too big and expensive to use. Reaching 500 or 1,000 good customers six or eight times a year is far more effective than reaching 5,000 or 10,000 twice. And a picture is worth a thousand words — that clichA has never been more true. People read less and less; they’re too busy. Keep the cards simple, yet memorable.
A targeted campaign must have a consistent focus. Don’t get bogged down in the design details. The idea here is simple, recognizable images that reinforce your message. Increasingly, specialty stores are taking advantage of photography and artwork available from their suppliers. Manufacturers spend thousands of dollars on wholesale advertising. It makes sense to reuse it. You’ll need permission, but that’s usually not a problem.
One of the most economical ways to put your message to potential customers is by renting a targeted mailing list.
List brokers sell names and addresses. These businesses maintain lists from hundreds of sources. They know who we are, what we do, where we work, how much we make; they know about our hobbies and interests and a great deal more. They have available names and addresses sorted by zip code, income, profession, kids, no kids, hobbies, pets, etc. These lists are available for one-time or multiple use.
Besides this targeted campaign, you also might want to do a mass mailing to names rented from one of these list houses. Twice a year or maybe in early December, it might make sense to mail another 20,000, 30,000 or 40,000 cards. Since the recipients will be mostly noncustomers, you might have to modify the printed message, but be consistent with the overall campaign. Some stores might want to offer an incentive to entice these new prospects, but tread softly and avoid the temptation of price.
Specialty retailers are in danger of being overwhelmed by the bigger stores. Advertising is one way we can continue to be heard. Sale and price is not the only message, but has become the loudest message. It’s time the consumer heard another voice.
Bill Pearson is a strategist, analyst, lecturer and writer. His company does merchandise management and general consulting for specialty apparel retailers. Retail Analysis & Planning is located at 1625 Knollwood Drive, Pasadena, Calif. 91103; voice: (818) 584-9734; fax: (818) 564-8473; E-mail BP4RAP@aol.com.
ADVERTISING & PROMOTION
THE BUS STOPS HERETHE GREAT OUTDOORS
Outdoor advertising was the original marketing medium. Ancient Egyptians and Romans communicated public messages on stone tablets and painted walls. These ads became a serious art form in 19th century Europe when manufacturers and merchants commissioned renowned artists to create posters. Outdoor or out-of-home advertising is booming again. The Outdoor Advertising Association of America (OAAA) reports revenues from this medium in the third quarter of 1995 were more than half a billion dollars, the highest on record for any measured three-month period. For the first nine months of last year, outdoor advertising spending was $1.36 billion, an increase of 10 percent over the prior year. Retailers contributed the third largest portion of this growth expanding their use of outdoor 17 percent.
Out-of-home advertising has become one of the hippest media around, a trend set by such household names as Calvin Klein, Donna Karan, Benetton and Tommy Hilfiger. In the past decade these fashion and retail leaders have discovered the impact outdoor advertising can have on the public and on the press.
Retailers like Bisou Bisou (LA), Barneys New York, Emporio Armani, The GAP, Old Navy, Kenneth Cole, Brooks Bros., Mervyns and Sears have incorporated outdoor advertising as an important part of their campaigns, as have malls across the country. What is outdoor advertising? The 8, 24 or 30-sheet or “bleed” poster, bus shelter displays, ads on the sides of transit buses, commuter rail and subway posters, airport displays (including the sophisticated back-lit diorama), bulletins and shopping center displays.
There are two basic outdoor units, the poster and the painted bulletin. For the poster, the design — created by the retailer or agency — is reproduced on paper by silk-screening, letterpress or lithograph printing, then pasted on designated outdoor panels. The larger, painted bulletin is prepared by an outdoor artist on a company’s premises or on location, which is more expensive. Billboards are generally on leased property and are rented by outdoor advertising companies.
As a guide to creating effective outdoor advertising, bear in mind that it is generally viewed at a distance. Therefore:
* Keep the words to a minimum, the illustration large, the colors bold and the background simple.
* Clearly identify the product.
* Do not use all capital letters; these are less legible than lower-case letters.
* Make sure there’s plenty of space between letters; read from afar, letters can merge into each other.
* Keep the type face simple — the simpler, the better.
Outdoor advertising is quite a bargain. In a cost-per-thousand comparison prepared by OAAA, outdoor advertising cost half as much as radio advertising, three times less than newspaper ads and seven times less than television commercials. OAAA has a package of information on this medium and resources that can help retailers use it successfully. The OAAA Marketing Division is located at 12 East 49th St., 22nd floor, New York, N.Y. 10017. Phone: (212) 688-3667. Other useful organizations are: American Association of Advertising Agencies (212) 682-2500; Association of National Advertisers (212) 697-5950; Department of Transport (202) 366-4000; Outdoor Advertising Suppliers Association (202) 371-5566; Traffic Audit Bureau for Media Measurement (212) 213-9640.
COMMUNICATE PROFITABLY WITH YOUR SUPPLIERS
When we realize that virtually every aspect of our business and personal life requires negotiation, the benefit of being a better, more efficient negotiator is clear. Good negotiation skills are often the difference between just getting by and getting what we want. It doesn’t matter if we run a small boutique or a multinational store group, we all have to communicate and convince effectively.
What is negotiation anyway? Simply put, negotiation is working side by side with others to achieve some beneficial result.
How retailers negotiate with manufacturers and suppliers, even customers and employees, is critical to the company’s success. Certain strategies are key in any negotiation.
ACT COLLABORATIVELY, NOT COMPETITIVELY
The right attitude while negotiating is critical to our success. It is not “us against them.” Remember you never negotiate against someone; you work with people to come to a mutually beneficial result. See the other person as a bargaining partner. It is critical to recognize that the other person has to come away with a benefit when working with you. People tend to pay more attention if there is something in it for them. Show them how giving you what you want will benefit them.
DEAL AS INDIVIDUALS, NOT AS INSTITUTIONS
It is very important to personalize the situation. When you focus on a flesh-and-blood person with feelings, you can better see how the situation looks from their point of view. You are not talking with the Tchula Shoe Company; you are talking with Charlie Marks, who represents the Tchula Shoe Company.
RECOGNIZE THAT POWER IS BASED ON PERCEPTION
Many small retailers fail to realize what power they have, thus letting others take their power away from them. If you recognize that you have power, you will be perceived that way. Suppliers are in the business of selling goods or services; if you are in a position to buy those goods or services, you have power. Today we are in a buyer’s market, not a seller’s market. That means there is competition in the marketplace for your business (your customers know there is competition for their business, don’t they?). With all the consolidation and closing of stores in the past few years, suppliers have recognized the importance of selling to the smaller specialty store retailers to fill that gap.
Remember, the other party wants something from you or they wouldn’t be talking with you. Don’t let anyone take away your power.
INCREASE YOUR EXPECTATIONS
You usually get no more than what you expect to get. If you don’t expect to get the deal from your vendor, you probably won’t. Henry Ford said: “If you think you can or you think you can’t, you are right.” We all know that when we act with a self-confident air, we cause others to see us that way.
KNOW WHAT YOU WANT
Nobody knows your business as you do. Being able to state specific proposals gives you strength. Inexperienced buyers, in preparing for a store event, will tend to say: “I’m going to see what they offer me.” Smart ones say “This is what I want.”
Before going into the negotiation, have a confidential, three-tier list: must-have, would-be-nice-to-have and can-do-without. This keeps you focused on the real issues and lets you know what concessions you can afford to make. If you wait until you are in the middle of the discussion, you won’t be able to determine the list rationally. If you are negotiating as a team, be sure everyone on the team is fully aware of what is on the list.
Do your homework before going into a negotiation. Knowledge is power. Research the company with which you’ll be dealing. Is it a cutting-edge one or a staid one; still growing or tired? What drives the person with whom you will be dealing? Money and finances? Making sales? Creating design? You don’t have to be the person with the most expertise in a negotiation. All you have to do is be the person who is better prepared.
MAKE TIME YOUR ALLY
Time is at the heart of every negotiation. Key to timing is a deadline. Try to learn your counterpart’s deadline without giving away yours. Most concessions occur close to someone’s deadline. Giving away a deadline hands your counterpart an advantage.
If you are working with a vendor in a showroom and tell him you have to be out of there in 20 minutes because you have to get to another location, yet you want something from him, who’s stressed? Not him. Remember, 80 percent of concessions occur in the last 20 percent of the negotiation session.
I remember discovering that a D.H. Holmes dress buyer was waiting until Thursday afternoon, before going home from market on Friday, to work with a major vendor. If she did not get what she wanted from this vendor or was not satisfied with his line, where could she turn at that late hour? Nowhere. We changed her schedule with that vendor to Tuesday.
When you are working with a supplier on a line, would you wait until after you have given him the order to ask for something you want, like markdown money? Certainly not. The time to settle that issue is before writing the new order. “I want to work the new line, but first I want to discuss the sales history of your merchandise in my store.” The same strategy holds true for promotional monies, delivery dates or whatever it is you need from that company to help your business together.
Liz Tahir is a retail specialist, consultant and trainer. She specializes in merchandise planning and management. Liz Tahir & Associates is located at 201 St. Charles Ave., Suite 2500, New Orleans, La. 70170; (504) 569-1670; (800) 506-1670.
Every retailer has experienced (undoubtedly too many times) the frustration of seeing a customer leave their store without making a purchase because the customer was unable to come to a decision on a gift selection. What size? What color? Whatever.
There is a way to increase the likelihood of making a sale to the indecisive gift giver. The answer? Gift certificates.
There was a time when gift certificates were an expensive luxury for the small retailer, but no more. With the advent of desktop publishing and the proliferation of the personal computer, gift certificates of high quality and impressive appearance are within easy reach.
Colorfully printed gift certificates are now available that can be imprinted on your laser or ink-jet printer, or mass produced on a copying machine.
Depending upon the source, they come in a variety of colors and some are further enhanced with gold foil.
Usually sold 100 sheets to the box, these gift certificates are two-up or three-up on a sheet — and at a cost of around $20 a box of 100 (200-300 certificates) or approximately $40 a box of 100 for the special gold foil paper — they present an affordable alternative for enhancing your store’s marketing efforts without incurring the expense of professional printing fees.
To insure that your customers know that gift certificates are available, an attractive counter card or two can be created.
An advantage of producing these certificates on your own computer is the ability to customize them to each selling season or event.
By using an inexpensive clip-art program, you can add appropriate decorative touches for Christmas, Easter, Valentine’s Day, Mother’s Day, Graduation, etc. Since you have no minimum to print as you would if dealing with a printer, you create only what you need, even on a daily or weekly basis.
Two excellent sources for gift certificate papers are: Queblo, 1000 Florida Ave., Hagerstown, Md. 21741, Tel: (800) 523-9080 and NEBS, Inc., 500 Main St., Groton, Mass. 01471, Tel: (800) 225-6380.
Even if you now offer gift certificates, it could prove beneficial to investigate the possibilities of producing your own certificates in-house to lower costs and increase sales — a win-win situation.