Saturday, July 11, 2009

Your Products Tell Your Story

It probably seems like common sense that to be successful in retail you have to have the right products. Unfortunately common sense is all too uncommon.

With the massive glut of retail on this planet, the specialty and niche independent retailers keep hearing the message, “You have to differentiate”. “You can’t carry the same things as the big boys and compete.”

Unfortunately, too many indies go too far with this concept and end up stocking product so niche that they cannot sell it in their market. Or product that differentiates only a little, but at a much higher price giving them no advantage in product or price. Or don’t stock a category deep enough to offer the kind of choice that would attract a wide audience.

There are almost as many mistakes in product selection as there are retailers. Yet, many of these mistakes can be avoided.

Product selection is no different than store location. When you scouted out the site for your business you checked:

  • Lease rates
  • Drive-by traffic
  • Foot traffic
  • Restrictions on signs, hours, and parking.

You checked out the neighborhood for:

  • Demographics
  • Competition

Selecting the right product, you have to take all those same factors into account.

  • Where will you merchandise them? (Location)
  • Can you sell them for a price that earns you a profit? (Lease rate)
  • Will they draw traffic into your store? (Drive-by traffic)
  • Will people ask for them by name or do they need to be shown? (Foot traffic)
  • How long is the season for this product? (Hours).
  • Does it fit into the concept of your store? (Neighborhood).
  • Who else is selling it or something like it? (Competition)

One common mistake is to chase after anything that seems to sell quickly, regardless of whether it fits in your store. Our Kroger store sells beach chairs (in the middle of Michigan?). Another former grocer in town sold hardware – didn’t work out too well for them. Our Menard’s Hardware store sells food. Yes, you can buy ketchup & mustard to go with your grill. Like I’m really going grocery shopping at the hardware store.

Have you made that mistake, too?

We jumped on the Beanie Baby craze and rode that wave for a short time. It was a wild ride. The hardcore fanatics were getting updates from UPS on days we would get shipments. They would be at our front door before we were even unloading the boxes at the back door.

We dumped those BB’s on a table in the middle of the store and stood back while hoards of shoppers pawed through them. An hour later we took down the table and went back to our normal work.

Yeah, the short-term profit was nice. Until the company got greedy. They made a requirement that you had to buy more of their not-so-hot-moving product. At first we followed along, until seeing that half our profits were eroded away by the unnecessary merchandise we were forced to buy. Add in the greasy feelings of dealing with an unethical company and we decided enough was enough.

Funny thing… We didn’t lose a single regular customer. Those BB customers weren’t our regulars and never became loyal customers. They just bought their BB’s and ran, never to be seen again. No crossover, no add-on sales, no loyalty. No place in our business model.

Whether you have a 16,000 square foot store with the largest selection of toys in the country, or a 600 square foot store with the hottest selection of salsa on the planet, your product selection is the biggest statement your store makes to the public.

Is your product selection sending the right message to your potential customers or do your buying mistakes make the most noise? Believe me, it is a mistake we all have made.

Another mistake we make on products is in how we give it away to our customers too cheaply. Are you a For-Profit store or a Not-For-Profit store? Check out Pricing for Profits in the Freebies section of PhilsForum to learn some easy ways to sell more and make more at the same time.

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