Retailers, What to do about the Internet?

I’ve been following a conversation on another forum that was started with my recent post, “Are Your Suppliers Letting You Down on the Web?”  You may recall that the original article was about manufacturers who don’t use the web effectively to communicate with their dealers.  Like most on-line conversations, this one has morphed into a discussion on how independent retailers and manufacturers should handle Internet sales to consumers.

We know that there are price-only shoppers who will come into your store, get all the information they need, then go to the web to buy the item at the lowest price they can find.  On the other hand, there are customers who do their research on the web then buy the item locally.  The question is, which group is bigger?  My guess, and it’s only a guess, is that more consumers fall into the second group.

Maybe I’m not a very good shopper, but I’m in the second group mainly because I (1) prefer to support my local merchants and (2) I’ve yet to find anything on line that I couldn’t buy at the same price, or close to it, locally.

Here’s the thing.  If I can buy an item for, say $200.00 on line and I can buy it for $210.00  or $220.00 locally, I’ll buy local every time.  Basically, I’m a mechanical idiot.  It’s worth it to me to spend an extra 5-10% to have somebody close by to hold my hand when I can’t figure out how to make something work.  I’m not alone.  Based on the statistics, a lot of people feel the same way.

Case in point:  I just bought a new cell phone.  The instruction book wasn’t in the box.  Today I’ll go back to the store and get it.  If I had bought the phone on-line, I’d have to send an email and wait for a response.  Assuming they get back to me, I’ll then have to wait for the instruction book to come in the mail.  Meanwhile, I have a $179.00 phone that I can’t use properly.

To me, the key to competing with on-line merchants is to let the customer know how much your service is worth.  Granted, some people just don’t care.  All they’re interested in is getting the lowest price.  Chances are those people aren’t your customers anyway.  If there were no Internet, they’d either buy from the big box store, or they’d be searching the ads in the back of the magazines.  Either way, you don’t get the sale.

There’s a lot of hype about on-line merchants.  The media love them!  Price shoppers think they’re the greatest thing since sliced bread.  (I wonder what the greatest thing was before somebody invented sliced bread?)  Anyway, the facts don’t necessarily support the hype.  Depending on the industry, web sales still represent a small piece of the total pie.  According to the US Department of Commerce, 3rd Quarter 2009 on-line sales represented 3.7% of all retail.  Obviously the percentage varies by industry, but overall, nine out of ten retail dollars are spent at brick and mortar stores.

e commerce stats

Big on-line merchants like Amazon.com are doing very nicely, thank you.  But there’s still a huge market out there for your store.  Rather than chasing sales that you’re never going to get, in 2010 your brick and mortar customer should be your major focus.

Granted, on-line sales are growing, 4.7% in the third quarter of ’09 vs. 4.3% in ‘o8.  Today’s strategy may not work in the future but carpe diem,  seize the day.

Meanwhile manufacturers will continue to wrestle with the question of how best to market their products.  That 4.7% is worth more than $30 billion, hardly chump change.  Like I said in my last post, brick and mortar independent retailers should support suppliers who support them.

Here’s a post that I wrote in 2006 on Your Business Strategy that you might find interesting.

They’re Still Spending Money

Silver Dollar City

Christmas Lights at Silver Dollar City

I spent an extended weekend in Branson, MO, injecting myself with a megadose of Christmas spirit.  For those who don’t know, Branson is one of the few places in the world where belief in God and country isn’t just a good thing, it’s the only thing.

Branson is also a shopper’s paradise.  Three outlet malls, a high-end shopping promenade along the lake front, and hundreds of small retail establishments  mean that you can shop ’til you drop and still not get it all in.  Naturally, you would expect the crowds to be small what with the recession and all.  WRONG!

We stayed in our second-choice motel because our first choice was full.  “No Vacancy” signs were visible all over town.  There was a long traffic backup just to get on the parking lot of the largest of the three outlet malls on Saturday morning.  The stores were full and people were carrying packages.

Maybe people were spending less than usual.  Maybe they were attracted to the outlets for their lower prices.  I can’t say.  But the non-outlet stores were just as busy.

One amazing sight was the Coach outlet store.  For the men in the crowd, Coach sells purses at outrageously high prices.  For most people, buying a Coach purse will mean that you won’t have any money left to put in it.  But, I digress.

Again, maybe it’s the discount prices.  But even at an outlet store, a Coach purse is definitely a luxury purchase.  But there was a line outside waiting to get into the  store!  There was a “bouncer” at the door, only admitting a customer when one left.  It looked more like an upscale nightclub in a big city than an outlet store in the Missouri Ozarks.  Amazing!

Make no mistake, people are spending money.  How much money remains to be seen.  But it’s out there.

“Black” Friday

Saint Charles, MO, "historic main street"It’s unfortunate that the media have chosen this particular name for the day that often makes or breaks an American  retailer’s year.  It is the day when many retailers bottom line changes from red ink to black, but the term still has a negative connotation for many people.  In fact, depending on the outcome of today’s business, it may really be a black Friday for some.

Of course, we hope it’s a great day, especially for small business.  Personally I will avoid the malls like the plague.  But my lovely and talented wife and I will spend the afternoon and evening shopping the independent shops on Main Street in Saint Charles, MO.  It’s a “tradition” that we started last year.  The crowds are smaller, and much friendlier, than the rampaging mobs that started surging through the chains as early as midnight this morning.

There are just as many bargains to be had, and the gifts tend to be much more personal, some even personalized, compared to the “Made in China” stuff found elsewhere.

So, here’s hoping that it’s a good day for all of our independent retail friends and the beginning of a successful Christmas shopping season.  That’s all for now.  I’m off to do my part in boosting the economy.

Retailing-My Top Five Business ‘Killers’

On Tuesday I pointed you to an article by the Retailer Owners’ Institute called “The Top Five ‘Killers’ of Retail Sales”.  As I wrote at the time, the information in the article was very good, but it was from a bean counter’s perspective.  Today I’d like to give you my top five list.  I’m not saying that my list is better.  Any item from either list could be a business killer.   In fact, the two lists combined would make a pretty good top ten.

5.  Unattractive place of business. People want to shop in a place that’s bright and cheerful, clean and neat.  Take a walk outside and view the premises with a critical eye.  Does the outside make a customer want to come inside?  Then walk in the front door imagining that you’re the customer.  Is your store inviting?  Is everything clean?  Do the displays look fresh and interesting?  Is there proper signage?  Would you shop there?

Be brutally honest.  If the answer to even one of these questions is “no”, you have work to do.

4.  Poor marketing. The idea of marketing is to get customers into your store.  No marketing = no customers.  It’s as simple as that.  Here’s the thing.  Good marketing doesn’t have to be expensive.  Many would argue that word-of-mouth is the most effective marketing of all and it’s virtually free.  The Internet, especially social media, makes it possible to reach out to our target audience at little or no cost.

If you don’t know what to do, there’s plenty of information right here on the web and there are a number of books that are excellent resources.  I recommend “Marketing Your Retail Store in the Internet Age” by Bob and Susan Negin and “The Profitable Retailer” by Doug Fleener.

3.  Poor Salesmanship. Even vending machines are designed to present the product in the best possible light.  If your staff isn’t knowledgeable about the merchandise, sales may be hard to come by.  Sales are made to people by people (with the exception of those vending machines).  In good times, products may fly off the shelf but in times like these, your staff must be able to convince the customer that your offering is the best.

2.  Poor Customer Service. This one goes hand in hand with number 3.  There’s no excuse for poor service and today’s customer won’t stand for it.  Follow the Golden Rule.  Treat customers the way you want to be treated, and mean it!  Someone once said, “Sincerity is everything.  If you can’t fake it, you’ll never be successful.”

You and your staff must genuinely want to make the customer’s life easier and better.  If your number one motivation is profit, people will see right through you.  You may make a sale but you won’t make a friend.  And friends are your best source of word-of-marketing.  Isn’t it funny how all these things tie together?

You may be thinking that great customer service should be number one and a lot of people would agree with you.  But, like I said, all these things work together so here’s my number one.

1.  Unhappy Employees. Unhappy employees will almost guarantee numbers two through five.  They won’t care how the place looks.  They won’t care about marketing.  They won’t practice good salesmanship and they won’t care about serving the customer.

While a happy, satisfied customer may be the ultimate goal, the quickest way to make sure that happens is to have a motivated staff.   Make the staff happy and they’ll make the customers happy.

As a small business you may not be able to offer the perks that a big company can.  But you can make your staff feel like part of the family.  You can offer them intangibles that your bigger competitors can’t like flexible hours and more control of their own career.  You can give them a voice in decision-making and make them feel important every single day.

Happy, motivated employees are the key to a successful business.

Hot Stuff in Gatlinburg

fed_beagleOK, I’ll admit it.  I’m a hot sauce addict.  I have two shelves in the fridge and a cabinet under the sink full of the stuff.  Like one of those beagles in the green blazers that sniff out contraband at the airport, I can smell a hot sauce shop a block away.

It’s a good thing, because the Pepper Palace in Gatlinburg, TN isn’t easy to find.  It’s on the third floor of an enclosed “mall” on the town’s main street.  But we did find it and I’m glad we did.  What the store lacks in walk-by traffic it more than makes up for in selection and service.  pepper_palaceThe picture displays just a small percentage of the products the store offers.  There are the familiar national brands like Tobasco, but much of the merchandise is private label, produced locally by Pepper Palace.

To sell a product like hot sauce, you really have to let people sample it.  This store does sampling right.  There are dozens of things for you to try with the appropriate tool for transporting the sauce from the sample container to the mouth.  Mostly tortilla chips.  Not tiny pieces of chips, mind you, but actual chips.

That would be reason enough to check out the store, but the lady behind the counter knows every sauce, how it’s made, what kind of peppers it contains, and how to use it.  She was like a wine steward of salsa.  She greeted us as we came in with the current special, “Buy four and get the fifth one free.”  Naturally I bought five and even went back the next day to buy a sixth item that I had originally passed on.

You might think of condiments, especially exotic ones, to be something that might be off most people’s budgets in a recession.  But pepper-heads must have their fix and this is a company that’s more than ready to provide it.  They’ve grown from one store to three and are looking for franchisees to expand even further.

Rhonda, the lady who waited on us is the company’s “Marketing Manager”, an unusual position in a small retail business.  Obviously she’s doing a good job marketing the company and taking care of customers.  You can see her in action in the video which is one of seventeen Pepper Palace has posted on You Tube.  Of course they have a web site.

Watch the video and ask yourself, “How can I use instructional videos to promote my business?” Don’t say you don’t have the capability to do it.  As you can see from Pepper Palace’s videos, big-buck production isn’t required.  If you have an interesting or entertaining story to tell, you should be sharing it on You Tube.

I Love Capitalism

gatlinburgI don’t want to go off on a political rant but I love capitalism. With the debate about government take-overs of this and that and whether we’re rushing headlong into a socialist state, I can’t help but worry that capitalism is in danger.

My wife and I just came back from a short vacation.  We attended a wedding in Atlanta and visited our son and daughter-in-law in Huntsville, AL.  In between, we spent a few days in the Great Smokey Mountains. If you want to see capitalism and entrepreneurship at their best I recommend a visit to the Smokeys, particularly to the town of Gatlinburg where small, local business reigns supreme.

There are some national chains in this small Tennessee town but the majority of businesses are of the locally-owned variety, including motels, restaurants, gift shops, mini golf, and other tourist-related businesses.  Just a few miles outside town is an arts and crafts community made up exclusively of independent business men and women who enjoy the life style of producing their own products and selling them directly to the consumer.

There is no question that this has been a tough summer for most businesses, particularly in the tourist related industries, but the independent business people in the Gatlinburg area seem to be holding their own and some are doing quite nicely.

The thing is that while I was supposed to be on vacation, I couldn’t help but look at so many small businesses and appreciate the value of capitalism.  It’s what’s made our country great.  People who are willing to invest their own time and money in a business, knowing that they might succeed or fail demonstrate the same  pioneer spirit that brought people to this country in the first place.  It’s what made them move away from the east coast and eventually go all the way to the Pacific ocean.  You and I can’t let that spirit be crushed by self-serving politicians or by the big box chains.

Not only do we have to support organizations like the 3/50 project , our local chambers of commerce, and other local business organizations, we have to get involved in other things as well.  When small-business-damaging laws are being considered at the national and local level, we have to speak out.

Being an entrepreneur is a noble profession.  Profit is not a four letter word. We should be proud of our role as the engine of commerce in this country.  We should offer our customers the best service we possibly can and not be afraid to ask them for a fair price.

In the next few days I’ll be introducing you to a couple of people I met on the trip whose stories I hope you find as interesting as I did.

Another Virus!

Just last month we were all concerned about a virus that might attack our computers. The April 1 date has come and gone but according to the experts we’re not out of the woods yet.

Now we’re being warned about a different type of virus. This time the target isn’t our computer, it’s us. We’re being warned about a potential “pandemic” of swine flu. “Pandemic” is a good example of an obscure term that can suddenly become a buzzword, seemingly overnight.

Obviously this is no laughing matter.  Like the conficker computer virus, swine flu may be an overblown threat. But since this one has killed people, it’s certainly worth our attention. Since it spreads by human contact, and since most of us are in the business of human contact, we should be careful.

There are a number of precautions that you can take and that’s beyond the scope of this blog. Check out the Centers for Disease Control and Prevention web site for more information. But at the very minimum, you should wash your hands frequently and make sure the things you touch often are squeeky clean. Cash registers, phones, counters, door knobs and handles, display merchandise, and any number of other surfaces should be kept clean with a disinfectant cleaner.

Waterless hand cleaner, can literally be a life saver. Make sure you have some at every work station and that you and your staff use it.

When in doubt, it’s always best to err on the side of caution.