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Retail SMART |
Feed
Off the Large Retailer |
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By:
Dennis A. Conforto
A-Z Media Group, Inc. |
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One of the key steps involved in
solving your retail dilemma is to grow your sales per square foot
to $350 or more. To achieve this, you need to have a store that is the right size in the right location.
The Law of Retail Space
If your goal is to make money in retail, then sales per square foot is the key. Why? Because if you create a store that is too big then you will follow the law of retail space: if you have space you will fill it. A common mistake made by many retailers is having retail stores that are just too big or too small for the given marketplace they are in. If the store is too large then you will carry too much inventory. This will affect your ability to reach your goal of a sizable post-tax profit.
Of course, it is possible to have a store that is too small for its marketplace. If this is the case, you run into the problem of not having enough selection, thereby directly impacting sales. Given the choice, choose to have too little space rather than too much: It is always better to start with less space and grow your store to match your increased client base.
Follow the Traffic
If you were opening a store today, you would think in terms of where the most craft traffic is going within your market area. Contrary to what most in the marketplace would say, it’s prudent to open a store next to a Michael’s or a Joanne’s. You’re skeptical? Think about competing car dealerships, restaurants and gas stations that are strategically located near each other to create a destination shopping area by category.
In short, what you want for your retail store more than anything is traffic and lots of it. And, while
it may be true that the larger retailers can have deeper sales, they can’t give better service or have greater selection in your category, nor can they have same selection as your store. Unlike the big chains, a good independent retailer can change her business on a dime.
Use Their Market Studies
Larger operations do lots of studies to determine where to a build a store based on demographics and traffic patterns - take advantage of their research and information and follow suit. Of course the rent is going to be higher because of the fact that it is a prime location, but the rent is higher for them as well; they are ok with that because they did the study to prove to themselves the market and traffic would be there. And if the traffic is there for them it will be there for you.
In addition, you will be able to feed off of their advertising.
You will also be able to feed off of their weakness: they will not pay the price to be as successful as you in scrapbooking. Remember that is just one of many categories they have to manage. You can out-think them, out-run them, and at the end of the day you can out-sell them. Let them bring cars to the parking lot, all you have to do is pick off the customers when they get to the parking lot, with great signage and great window displays.
Learn the Right Lesson
The scrapbooking industry has been taught that retailing is a price war of the big retailers vs. the small independents. Nothing can be further from the truth. Retailing is about who is the better merchandiser and better promoter. You can never get the quantity discounts of a 1,000-store chain, not even with a buying group. The cost savings for a manufacturer of packing and shipping it all to one retailer’s distribution center is just too great. It is their advantage, and there is no need to fight it, because you will never win; it’s the wrong battle for a small retailer to fight. The right battle is selection, service and clever promotions and here you can clearly win.
In the end you will be better, faster and have a real business model that can grow and expand. There is no fighting the big retailer so don’t fight them, rather feed off of them and win.
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