Noticed Sales Ticking Upwards?

Why it matters to know "Why?"

How to pick up the pace even more

Many retailers now are being buoyed by gradual upticks in sales. 

If you are one of those, we encourage you to give some thought to "Why?" your business is experiencing sales increases.

You will find that it will be for one of these three fundamental reasons.

  • More customers, or  
  • Higher prices, or
  • More items-per-transaction 

But, The ROI suggests that, when you analyze your results, you will quickly eliminate reasons 1 and 2.

"More customers"? That's a stretch.

Few places are experiencing growth in population. Plus, with the proliferation of online shopping, while your customers don't need to be geographically close, they also have many more choices when they are ready to buy. Your competition may be growing faster than the market of customers.  

Higher prices? Just not in the cards these days.

This is not an environment where many margins are increasing.

Inflation likely will not be a major factor. Plus, not only are retailers expanding online, so are many vendors, so price pressures continue to be downward. 

So, what IS driving sales increases? We think you will find that it is is all about transactions

  • more items-per-transaction; or,
  • more transactions
Whether at the grocery store, gift shop, lawn and garden center, sporting goods store, or wherever they are shopping, many customers are giving themselves permission to buy more, or to replace ("Finally!") those things they've had for several seasons.  
  • Shoppers are feeling some more confidence, and have a decided case of "frugal fatigue". Enough already, they're saying. There are things we have not bought for a very long time.
  • Shoppers are increasingly purposeful in their shoppingWhen they go to a store (or a website), they have an intent to purchase. The traffic you do receive should yield higher conversion rates.
And all that is very good news. These are shopper behaviors that you can focus on, and increase!
  • Your sales staff can focus on add-on sales, to increase the items-per-transaction.
  • Your buyers can bring in more "impulse items" and more complementary products that lend themselves to add-on sales.
  • Your sales staff also can work on improving their conversion rate of "just looking" browsers to actual paying customers.    
Of course, be grateful for sales increases. Who wouldn't be?

But by analyzing and discovering "WHY?" sales are increasing, you can make them even better. Jump on this chance; it's unique!

Who will win? Who will survive?

"Competing" and "winning" in business and trade has been much in the news as the Trump administration begins.

Meanwhile, at the NRF's BIG Show 2017, where technology dominated (510 retail tech exhibitors!) it was reported that in 2016, "Amazon spent more than $15 billion on innovation, which is more than the top 20 retailers (excluding Walmart) combined." 

Yikes! How is an independent retailer to "compete" and "win" in that environment?

Well, consider this perspective: 

  • A lion and a gazelle wake up on the Serengeti. The gazelle knows that to outrun the lion, it need not be the fastest gazelle. It only has to be the second slowest.

The good news for many retailers is that you don't need to outinvest or even beat Amazon. (Whew!) You just need to outperform your weakest competitor! 

  • Amazon is unquestionably a relentless competitor and growth machine. So too was Wal-Mart. And before that, the "category killers" like Barnes & Noble, Office Depot and Toys 'R Us. And before that, regional malls. Department stores. And on and on.
  • The Big Guys will come and go. There always will be another one emerging.

Through all that, independent retailers who stay focused on their own survival – keeping their own competitive edge, knowing their real competitors – those retailers have continued to have a place in the community. And that is truly a win!

Great opportunity for local retailers?

In mid-January, the Wall Street Journal reported that a real estate investment trust that runs class B and C malls across the country "is allocating a portion of space in its portfolio of about 70 million square feet to pop-up stores". These pop-up stores offer 60- to 90-day leases. The REIT is "targeting new merchants, including those that started their business online." 

  • Crocker Galleria, in downtown San Francisco, has a 1,700 square foot Storenvy Popup that began in 2013 as a venue for new merchants. They cite one example of a women's clothing retailer that "started out in a 'fashion truck' in a parking lot, moved to the pop-up space, and now occupies a retail storefront in the three-story mall."

However, we see a great opportunity for an established retailer – like you, perhaps? The mall business is very tough right now, and few landlords are in a position of strength. That means that more of them are open to considering new ideas.

As an independent retailer, maybe you can be very nimble in setting up and operating a 90-day pop-up shop. 

Plus, as an established retailer, versus a new merchant, you could draw in foot traffic, coveted by mall landlords.
  • Maybe you want to experiment with a new concept.
  • Or, close out of a category of goods.
  • Or, reach out to a new market segment.
  • Or...?
Few landlords have retailers clamoring for long-term leases. For them, the opportunity to get some revenue – and its accompanying foot traffic to their property – could have a great deal of appeal. 

Even better, it's a fine way for you to be able to experiment, innovate, and maybe even re-energize your operation. 

Might a grim situation for some landlords be a golden opportunity for you? Something to consider.

What do customers really want? More control

We are living in unsettling times of rapid change and news cycle drama, now accentuated by a U.S. President-elect who values being “unpredictable.” 

Whether it’s the latest natural disasters, international conflicts, aging parents, unexpected expenses, or just trying to open a new bottle of aspirin, life can seem more out of control than normal. Especially during this upcoming holiday season.

This anxiety and frustration can be unsettling to many folks, some of whom undoubtedly are your customers. 

And frankly, as the frustrations grow of having less control, some people will seek more control wherever they can.

Where would that be? That’s right. Your stores. You and your staff must be ready.

“Give the customer what they want” has been a long-standing directive in retailing. Especially for today's customers, it's not about price or selection. What they want today is control. 

This holiday season, many consumers will turn with a vengeance to a new kind of “retail therapy”. Shopping is one place where they still are in charge! But it's not how much merchandise they acquire; it's how much control they can exercise.

How might you and your stores be better able to serve these seekers of "retail therapy" Among ideas for you and your staff to consider:
  • Choose and use technology that gives your shoppers more control (versus just having the gee-whiz “latest technology”).
  • Be more willing to explain “why?” There are reasons behind your careful editing of assortments (or what’s known today as “curating”). Explain how the merchandise in your stores meets your standards. (And why you don’t have everything that is available on the web.)
  • Alas, some customers will abuse this power. They can be rude, or leave merchandise on the fitting room floor, or challenge return policies. It is important to avoid a tug-of-war with such customers. They want less confrontation!
Today's new "retail therapists" – that is, those retailers who understand and cater to customers who want more control –  will be better able to weather today’s tumultuous times. And to help their customers do so as well.

Millennials prefer L-A-T-T-E. Maybe you should too!

The Millennial generation - now ages 17 through 34 - represents nearly a quarter of the U.S. population, and a significant portion of annual consumer spending. 

We recently read of a study that has identified a set of attributes "that overwhelmingly resonate with this age bracket."  In fact, when making shopping decisionsMillennials are 20% more likely than other generations to consider these elements.

As these studies so often do, an acronym has been created to help us remember those attributes: L-A-T-T-E. 

  • Local
  • Authentic
  • Transparent
  • Traceable
  • Ethical.

While each of these attributes provides the means to differentiate your stores, in our view, many independent retailers can leverage ALL of them!

Moreover, in our opinion, these L-A-T-T-E qualities not only resonate with Millennials, but with many others (your customers? your neighbors? You?) who share these same values. 

  • It is not just demographics (quantitative data); it's also psychographics (qualitative data). And the L-A-T-T-E attributes certainly point to qualitative measures.
We think this offers two significant opportunities for independent and local retailers. 
With the L-A-T-T-E attributes, independents are uniquely positioned to take the lead, and make it known that Local - Authentic - Traceable - Transparent - Ethical have long been in your DNA. 

Especially in today's environment, winning the hearts and minds of shoppers is the challenge confronting all retailers. Sharing your love for L-A-T-T-E is an important step!