Wall Street is on fire, housing values are in the toilet, credit is a thing of the past, and it'll get worse before it gets better. That in a nutshell is what we are hearing from all sides.
How will retailers survive the fire and brimstone? I have several ideas that have served us well in our successful retail business. As you may know, we have two retail stores in addition to our wholesale operation.
First off, all this gloom and doom doesn't spell the end of consumer spending. If we were in the car business or in real estate, I'd probably be looking for another job right now. But we don't sell high-ticket items that require years to pay off.
We sell moderately prices silver jewelry and gifts. The kind of thing you buy for your girlfriend's birthday. People are still going to have weddings, Christmas has not been canceled, and the American female consumer will still "treat herself" once in a while to something affordably priced.
So as a matter of survival, it's important in times like these to have products that are perceived as a good value. Silver jewelry is traditionally a higher margin product, so there is some room for pricing modification.
Mark select items down to make them more affordable. Consider adding a section of your display that is under a certain price point, like "Rings Under $20" for example. You can buy specifically with this in mind, or mark items down that you are looking to clear out. Use signage to direct customers' attention to the "cheap seats."
Walmart uses this technique all day long to great success. They advertise a microwave for $69. The customer comes in and sees the cheap microwave, but often decides it doesn't have all the features they need, so they opt for a higher priced (and higher margin) choice in the same section.
Having the choice to buy something inexpensive creates a climate of perceived value. Once the customer is looking, they will often bump themselves up to a slightly higher category.
Know the story that goes with your product. This can be as simple as knowing the name of the stone in the pendant the customer is interested in. We keep a book handy called "Healing Crystals" that talks about the metaphysical properties of specific stones. Customers often find a reason to buy a piece if they think it "helps" them in their daily life.
Tighten your belt. When lots of customers are coming through the doors, it's easy to schedule lots of staff. I was shocked when I realized that my $10/hour employees actually cost me $15 when I take into account workers comp and TDI. When my wife and I work the floor more, our sales are higher and we save money on employee costs.
Lots of small things fall into this category. We recently switched insurance agents and saved almost 50% on our workers' comp policy. The new agent is also reevaluating our general liability. We switched our lights to compact fluorescents, and we pay close attention to our air conditioning useage to keep our electric bills down. Taking a hard look at expenses can turn up all sorts of savings that will go directly to your bottom line.
This won't last forever. Even the great depression, with 10% unemployment and big drops in domestic output, was followed by huge increases in economic growth and prosperity. Weathering the storm is no fun, but it can sure make us appreciate the sunshine that comes after.