FACED WITH REDUCED BUSINESS and a bleak financial outlook nationally, most retailers are straining to find new ways of bringing in customers and making sales. That is to say, all but a few like Wal-Mart, who seem to thrive in tough times.
“This is the kind of environment that Walton built this company for,” declared President and CEO H. Lee Scott. While his statement might grate on the majority (Scott claims he doesn’t want to gloat) it’s worth paying attention to, mainly to find out how Wal-Mart is doing it.
Some basics apparently apply. Wal-Mart brags that it has a highly disciplined management team, a conservative balance sheet, more stable financial well being, and strong inventory management. But, mainly, Scott insists that the company has “the best prices in the marketplace.”
- Buying wholesale clearance items can help you play this game effectively. The less you pay, the lower you can price and still turn a profit.
DESPITE THE BROUHAHA, Wal-Mart is restructuring its business priorities to deal with the financial crisis. Among other things, the company is scaling back building new mega-stores, investing more in existing outlets. Private brand portfolios are being expanded and new brands that offer higher value are being sought out.
- Presenting your store as a “brand” itself is another effective promotional tool. Retailers in general suggest having your name imprinted on bags and tags put on sales items. This is a critical time to build your store name and connect it to a value concept.
Wal-Mart has also extended its Christmas store hours dramatically. Get up and out by 5 A.M. and you’ll catch some hot Wal-Mart offerings. Other Wal-Mart ideas for selling include creation of a Hot Spot fast-turn merchandising area, where the firm celebrates a holiday like Christmas or the launching of a new brand. Another: a junior’s Gifts-To-Go section, debuting in January.
Wal-Mart has also decreased its SKUs in order to focus on and make a clear statement about fewer special items. “We’re also committed to investing in growth categories, like denim,” an executive noted.
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WHILE J.C. PENNEY CO. IS EXPERIENCING difficult times – third quarter profits fell a whopping 52.5 percent – its management maintains a positive outlook with emphasis on value, affordable products, and greater shopping convenience. For Christmas, President Ken Hicks believes customers will be spending on more practical gifts, and less on novelty. Like Wal-Mart, Penney is putting major importance on private brands, on lifting the level of style and on offering better value.
- According to the National Retail Federation, while fewer dollars may be spent on large, expensive items this Christmas, sales will still be made in gifts such as DVDs and CDs, toys and jewelry.
Pulling together a collection of products they think will sell well, Penney has created a new Red Box display assortment of 60 items priced from $19 to $100. The Red Box contains edgy gift items (talking robots, and Einstein telescopes) and is centrally located in each store for fast selling action. The Red Box areas will stay up until a few weeks after Christmas.
- Creating your own version of a Red Box area can increase sales. For Christmas, choose items that are moderately priced, and that will make good gift purchases. Gift wrapping the items is a big sales plus!
Think about what is attractive, affordable, and useful for your “red box”. Scarf, hat, and glove sets fit the picture with cold weather of the Christmas season.
Penney is also adding more Associates to help customers learn about products. And, it is expanding its e-mailing operations. Its marketing budget is likewise being restructured, with fewer dollars going to network and catalog ads, and more to local TV, mobile and direct mail. The firm also runs ads in local theaters where family films are shown.
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MOST RETAILERS SAY they are watching their inventories closely and while they may be buying less in general; they are still buying “interesting items.” Even normally high- priced stores admit they are scaling back on luxury and buying popular priced products. As one retailer put it, many consumers are beginning to question designer fashion. They find a $6,000 handbag gauche.”
- Retailers are also looking for merchandise that visually communicates value, and looks like it will last a considerable length of time. They are also looking for products that have more than just one season of selling value. Seasonless is the new fashion retailing mantra.
Need some ideas? Gemstone fashion jewelry has the look of intrinsic value and will certainly sell through next spring. Rhinestone jewelry is a wonderful gift that is immediately useful for New Year’s Eve, but rhinestone will see its peak season for bridal, pageant, and prom following Christmas.
Retailers in general say it is essential during tough times to have a deep understanding of who your customer is; otherwise, you won’t be able to buy with accuracy. Knowing what your customers want is key.
- Customers are also willing to spend on extraordinary pieces, things that make a statement. Lily Hamrah, owner of a designer boutique in New Jersey, has hit on a dynamite idea for selling during this bleak period. She has instituted a private charge card (that can only be used at her store) with a rewards program. Customers receive $20 for every $1,000 spent, and the response has been phenomenal. “It’s a private card,” Hamrah says, “so husbands don’t see it.”
Valerie Feigen, co-owner of a New York boutique, says customers are putting more thought into their purchases. They want quality and value for their dollars. More care and less impromptu buying is also going into jewelry purchases.
- Rather than buying generally attractive pieces, customers look for a special single item to go with a particular piece of clothing.
Customer service is high on the sales-building agendas. One retailer is sending items to customers’ homes for approval. Free delivery is also big. Another retailer emphasizes multiple-use items, and is teaching customers how to wear apparel and jewelry in several different ways. “People have just so much money to spend, and this extends the value of their buying dollars.”
Customers are also more willing to spend money with retailers they feel they can trust. “You have to be scrupulously honest,” one retailer said. “If an item isn’t right for the customer, say so.”