Selling yourself short
Are you a shop keeper and selling yourself short? I hope to answer this question for you in this blog.
My last blog
In my last blog People in Business, but not really businesspeople I considered how the lack of proper business practices and basic business manners costs small business owners dearly. I looked at how this applied to all small businesses and, in particular, the building industry where these shortcomings are prevalent.
In this blog I will consider the retail industry, especially small retail businesses in the high street, where I think many owners are selling themselves short by making common, but avoidable, business mistakes. But my approach is different from my last blog – I wont just concentrate on the negatives. I also offer some help in what store owners should do, rather than just what they shouldn’t do.
Retailing – disaster or opportunity?
The recent travails of high street retailers (also known as “physical” retailers or “bricks and mortar” retailers) do not need repeating by me. It is well known that all high street retailers have been in decline for several years, buckling under the competition from ecommerce shopping (and, in the UK, under the weight of high rents and business rates). The advent of lockdowns due to Covid-19 has, of course, aggravated this trend.
However, bricks and mortar shopping still has a bright future. Those business owners who know what they are doing are still making good money. Importantly, when things return to a post Covid-19 normal even more profitable opportunities will arise. To quote a leading retail expert: “The death of the high street has been greatly exaggerated. Physical retailers have a precious resource that ecommerce companies covet: the ability to have personal, tangible experiences with their customers.”
The Covid-19 pandemic has weeded out retailing deadwood. It has also caused those owners still standing to think very carefully about their future. In particular, to review their operating practices to ensure that they are able to take advantage of the post-pandemic retailing opportunities. For those of you considering going into retail for the first time it will be important to ensure you are professional in your approach and fully aware of the errors to avoid.
So, what are the main “14 Dos and Don’ts” that owners of small retailing shops on the high street need to consider? We will look first at the “14 Dos”.
What small retailers should do
Small retailers compete for the money spent on the high street not only with other small retailers but also, of course, with big retailers. This can be a daunting task, especially if they are new to the retail business. Their larger competitors have considerable advantages, including an established customer base, solid marketing campaigns, good store locations and well-trained staff.
Business owners can try to emulate what the opposition does, or they you can do things in their own way. But whatever approach they take, here are some ideas of the basic things they need to do, so they don’t sell themselves short.
I have assembled this list of 14 suggestions from my own experience and from what I have read from retail gurus.
1. Build a great online presence
To compete in today’s retail environment you must have an ecommerce presence. Fortunately, it costs less to create a brilliant online shop-front than it does to build one in the real world. Besides going online, make sure you also regularly post on Twitter, Facebook, Instagram and other social networking sites. (See also “Lack of Creativity” no. 4 in the “Don’ts”, below).
2. Accept all payment methods
Invest in a good point of sale (POS) system, preferably one that will integrate with your accounting software. Not only does this add to operational efficiency, it will also give your business a professional feel.
3. Have brilliant Interior design
The store environment must be professional and inviting. Ideas can be generated by referring to design magazines and blogs and copying other stores. Don’t overlook merchandising, which is discussed in more detail in “Don’ts” no. 3 below.
4. Properly train staff
The look and feel of your shop, as well as the execution of your offer, must be of the highest standard. This includes your staff, who should be well dressed and well presented, speak politely to customers and be helpful. Also, your brand should be visible everywhere, including on any packaging or carrier bags you give to your customers. And, by the way, I have met some shop owners who themselves were badly in need of some customer service training! How do you, as the owner, shape up? Do you set a proper example?
5. Make a virtue of being small
Small can be good, so make a virtue of being small. Many people think it is ‘cool’ to buy from smaller, local, boutique-style stores.
6. Have focussed sales, but not too many
It’s fine to have a sale now and then to clear out merchandise or increase customer traffic in a slow period. But constantly using sales looks as if you need to pay customers to come in the door! (See also “Having too many sales” no. 11 the “Don’ts” below.)
7. Negotiate with your suppliers
Don’t be shy: try to negotiate as many deals as possible with your suppliers. These could be on delivery times, custom made goods as well as price. Any legal and ethical ruse to get you ahead of your competition is acceptable.
8. Be different
Oh how difficult it is to be different! However, with thought and imagination and some sleepless nights you can achieve it. Difference will help people remember you, your products and your business.
9. Offer the personal touch
Deal with customers on an individual basis where possible. Reward your employees for thinking creatively about how best to serve customers. Remind yourself what it has cost you to get those customers through the door – cherish them!
10. Use technology
Besides having an ecommerce presence and up to date POS, small retailers should have quality accounting software and inventory management programs to save time and money.
11. Be socially responsible
Many big businesses have tainted reputations when it comes to such things as the environment, payment of taxes, ethical sourcing, etc. This can work in your favour as a small retailer. Ethically minded customers who care about sustainability, fairness and ethical trading will be attracted to you if you genuinely share their views. However, avoid mere virtual signalling if you can.
12. Buy well
“The secret to good selling is good buying.” What this means is that it is easier to sell quality merchandise sourced at a fair wholesale price that generates a reasonable gross margin.
If you do not have this skill you should hire someone who has.
13. Employ well
Generally, staff at small businesses have much more influence over their business’s current operations and its future than in big ones.
It is possible to be more thorough when hiring one person than 100. Also, employee reward schemes can be more carefully tailored for the few rather than the many. This should help you to get good staff who will also be fully involved in the business. Hopefully, they will reward you with hard work, creativity and good ideas.
14. Harness your passion
The big advantage the small business owner could be their passion – their drive for success. If you have it – use it! This could be your edge over your large competitors and, perhaps over many of your your smaller ones as well.
Common mistakes that doom a retail business
I acknowledge that small businesses generally have many disadvantages compared with big ones. These include:
- Lack of capital (particularly to face sustained losses)
- Lack of professional training
- Shortage of experienced management
Shop owners face the extra problems of online competition and susceptibility to consumer confidence.(And, in the UK, high rents and business rates.) These factors are often cited by shop owners as the reasons for their failure. But, the truth is that problems more often arise through professional mistakes or bad choices. Some of these happen even before the shop has opened.
Continuing with the theme of whether you are selling yourself short we can now consider the 14 Don’ts for the small shop owner.
1. Wrong location
We have the mantra “location, location, location”. But what, exactly, does that mean in retailing terms?
To start: What do you know about “egress and ingress” to a shopping centre, traffic patterns and demographics? Are you familiar with the influence of location on footfall? How do these things affect the rent you should be paying? To select the right location for your shop and pay the right rent you should know all this stuff intimately.
Yes, you can save 25% in rent with a location that’s off the main road, but what affect will this have on your sales and the cost of advertising to try to attract customers. Obviously, there is a trade off between traffic and rent costs; but what it is?
Do some research on suitable locations, current rent, traffic flows and your competition before you open that store!
2. Poor Inventory Management
Inventory management is one of the most important factors that retailers need to pay attention to. Negligence in stock management will ruin your business efficiency. You need to have a good strategy for optimizing your inventory, so you can always meet consumer demand and be in control of your finances. Make sure that your stock levels are always adequate, neither too low nor excessive.
3. Don’t understand merchandising
Have you ever seen a fruit stall in an indoor Spanish market? Towers of fruit and vegetables piled high in brilliant and contrasting colours; fresh juicy and inviting. Can one resist? And this is dismantled and re-assembled every day.
How does your shop shape up in this regard? How much work do you put into merchandising?
You should note that large supermarkets are obsessed with merchandising, because they know how it affects sales, not only of those promotional lines they wish to shift, but also sales generally.
You might not wish to go into the complete science of this but you must understand the basics and, if you don’t, I advise you to get advice from an expert.
4. A Lack of Creativity
You won’t take your retail business to another level if you just rely on conventional marketing strategies. If you want your store to be visited by many people, then you should be able to find them and bring them in. Ideas include creating your own online store, advertising on search engines, creating engaging social media content and many more.
5. Wrong target audience
Many small retailers don’t know what their customers really want, so they stock the the wrong products. Or, they market to people who don’t even have any interest in buying their products . This is because they have the wrong wrong target audience. Before starting a retail business, you need to determine your ideal prospect based on several factors. These include demographic traits, psychographic characteristics and behavioural actions.
6. Taking customers for granted
Everyone should know that without customers there are no sales, and without sales there is no business. So, are you totally focussed on your customers and their needs? Have you trained your staff to have the right attitude? Are they good brand ambassadors, especially those who come face-to-face with your customers. In addition, do you have a flexible customer service that can manage various questions and complaints of your customers? Note, to help you deal with your customers more easily, you can install a customer relationship management system designed specifically for the retail industry.
7. Lack of long term strategy
Racing to catch-up with competitors, or reacting to changing trends in the market, can cause retailers to lurch from one short-term strategy to another. Rather than building a coherent business with a clear blueprint for the future, customers see a confusing jumble of messages and never really understand your offer.
8. Too enamoured with your own products
It is important that you love your products, but more important that your customers love them. Your product must fulfil customers’ desires, not yours. In the end you need to sell your merchandise at a price that gives you an acceptable gross margin from which you can make a reasonable net profit – see next item.
9. Not focusing on the fundamentals.
Profit and loss, breakeven and cash flow are the basics of running a business. If you don’t want to learn those basics that’s okay, but you’ll have to pay someone to do them for you. You need to understand the fundamentals, like gross profit margins, or you won’t have enough money to cover expenses, let alone make a net profit.
Allied with this fault is the fault of focusing on reducing costs instead of adding value. If too much focus is put on cutting costs, and too little energy goes into adding value, then customers will see a shrinking in the value you offer to them.
10. Hiring and managing badly
There is a temptation in small business to hire friends and relatives. Unless they have the necessary skills and personality this is a very bad idea!
Also, don’t manage like the boss. Your job is to show and and train your staff so they do as well, or better than you. How you perform at work will be copied and emulated by your staff. Are you managing well by setting a good example?
11. Having too many sales
Competing on price, especially with big competitors is not a sustainable strategy. Economies of scale mean that the larger stores have more purchasing power than you and can drive down their suppliers’ prices. As I said above it’s okay have sales now and then, but constantly using them usually means you feel you almost have to pay customers to come into your store!
Sales attract price-focused customers, loyal to the concept of saving money if you like, but not loyal to you or your core offer. They are loyal to price only.
Finally, low prices are often associated with low perceived quality.
12. Wrong choice of partner.
Being alone in business is lonely. But having the wrong partner is worse than lonely: it can be a disaster! Be careful who you chose. You can read more on partnerships by going to FAQ 3.31 https://www.freeforumofideas.com/faq/31-should-i-take-on-a-partner-in-my-startup/
13. Being too attached to your existing systems
Retail has always been a fast moving industry. This is because large profits and wealth await those who get it right. This is even more so in the ecommerce age. So, accept that keeping up is hard, but don’t make it harder by sticking to old ways and old technology. If your core systems were built ten years ago its time for a change. Inertia is not an option in today’s world.
14. Clinging to the past
Sure, times are tough for small retailers. But, as was pointed out in the first quote in this blog, the death of the high street has been greatly exaggerated. Smart retailers are expanding, bad ones are going out of business. But, it was ever thus in all businesses. Even if you are one of the lucky ones still doing well in the high street, don’t be complacent, there is no guarantee that your formula will last another five years. In most of the developed world scores of well-established high street brands have failed to adapt to the conditions on the street and the digital economy and as a result no longer exist.
Please see my earlier blog: https://www.freeforumofideas.com/blog/people-in-business-but-not-really-businesspeople/