Send Lynette a Confidential E-Mail
Some of us are mission-focused shoppers, while others are shopping-as-entertainment browsers. Occasionally, those of us who like to rapidly zip in to make a purchase must engage in reconnaissance so we know where a target item is located. Recently, I took 90 minutes to do a merchandise survey in a local mall, and what I observed there underscores that this fall season continues to be a challenging time for retailers.
Early fall is typically an off-period for retailers. During prosperous times, you’d probably see some hang-over warm weather items deeply discounted in a final sale attempt. But it’s unlikely that in a normal year new fall and winter seasonal items — clothes and other merchandise — would be widely discounted by 30 to 50 percent. That’s what struck me on my recent trip — the whole mall seemed to be on sale, and largely empty.
My data collection trip occurred during that after-school period, when teenagers often congregate. There were no giggling girls or roaming boys in sight. And the sparse consumer presence at the mall caused the plethora of oversized, brightly colored sale signs to seem more desperate than they might have among many busy shoppers zipping around in search of fresh finds.
After the mall experience, I watched for “sale” signs and observed them everywhere I drove: outside home furnishing stores, office supply outlets, book stores, building supply centers, and many restaurants. I realized the price threshold to compete with fast food chains must be $5.00 since numerous regional sit-down eateries sport signs offering a selection of meals for less than $5.00. You’re probably witnessing the same super-sale scenario in your area.
The unemployment rate inched up to 9.8 percent in September. When Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee on October 1, despite questioning phrased in an attempt to illicit a more positive response, he expressed doubt that unemployment would decline by more than a miniscule nudge until 2011. And that answer was couched in specific “if” statements regarding possible economic growth.
Market analyst extraordinaire Meredith Whitney, writing in the Wall Street Journal, explains, “. . . Small-business credit . . . has contracted at one of the fastest paces of any lending category. Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.” She goes on to say credit-line cuts are only about half finished for small businesses. Since 82 percent of small businesses rely on credit cards for funding, the strain of dried up credit can be devastating. In the past two years, $1.25 trillion in potential consumer and small business credit card debt has been cut. The lack of available financing limits both consumer and business spending.
Consumers with reduced credit capacity feel concern, which results in additional cash conservation. Your most loyal customers probably need to save money now. When you’ve decreased your margins by cutting costs and lowering prices, how do you compete and manage your credit issues, while the country is on sale as a way for companies to try to remain solvent?
As a small business, your extraordinary advantage can be personalized, caring, and exceptional service to compensate for any pricing differential.
- In a home furnishings store, try partnering with an interior designer to provide services for your clients. Perhaps an initial free consultation comes with any purchase above a specific amount. Be sure to select a responsive designer, whose favorite styles are consistent with your merchandise.
- Do you serve regional favorites in your restaurant – food that people might enjoy cooking at home? Consider offering cooking classes to teach some crowd pleasers.
- Customers in fabric stores want dressmakers, tailors, upholsterers, and makers of exquisite window treatments. Can you partner with a team of the best in your area? Market the services of craftspeople in return for special customer pricing.
- Back in the day, stores in most cities delivered consumer merchandise, free. Customers rode public transportation to shop, making it inconvenient to transport purchases home. In larger cities, motorcycled deliverymen brought smaller, easily transportable items to your door. They were the forerunners of today’s bicycle delivery brigades. Many businesses owned a small enclosed truck that was used daily for customer deliveries. Gradually, delivery became a luxury service offered only by upscale stores. By the 1970s, store deliveries stopped in most areas. Could it win new customers for you?
- Does your business serve other businesses? Businesses short on staffs? Is it difficult for your business customers to get to you to select and pick up merchandise? Consider offering them online and/or phone ordering with credit card payment, along with late afternoon delivery on the order day? Business delivery can be a perfect after school job for responsible teenagers.
- When a valued customer doesn’t show up for a while, call the person. Sometimes an issue has happened that you should fix. Sometimes they’re simply swamped and it’s nothing. Sometimes they need what you’re not offering, and you want to know what that is. Even if you don’t retain your customer with the phone call, you’ll learn important information for your future business success and you’ll leave a positive impression, which he or she is likely to convey to others.
Talk to your customers every day. Listen to their needs. Your business and your clientele are unique. Offer more than merchandise. Find solutions to special requirements to package in tandem with your goods or services.
Credit continues to crunch. We’re on a long, difficult road. Creative care for your customers could be your key to thriving through these tough times.