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Tips for a challenging time
Experiences of businesses during a rough economy
"It's time for Americans to go back to their shops and get to work", was the quote accredited to President George Bush some two weeks after the terrorist attacks on New York City and Washington, DC.
And how appropriate that in his comments, the first group he mentioned was the retailers. For if your business is like most others, in the first 10 days or so, it was difficult to have a conversation with a customer that was not dominated by the events we were being exposed to by the various media.
Add to the conversations the fact that the media was bombarding the public with quotes from so many individuals, each telling of how they would stop spending until they could feel comfortable. Of course, the press had already been busy for the past 10 months telling us how we were entering a recession.
Combine all of this, and it might make you think twice about being a retailer. What are you supposed to do? One option is that you could resign yourself to riding it out. However, as the old saying goes, "When you resign yourself to fate, you will find that fate will gladly accept your resignation."
Music, Inc. went looking for retailers from around the country who have decided to take matters into their own hands. With most of the progressive retailers we spoke with, they had already put a plan into action earlier this year. And with the events of September 11, and subsequent happenings and rumors, merely tweaked their efforts to make the best of a bad situation.
Ask Eddie Hancock of Alpha Music in Virginia Beach, Va., about business and he will simply say, "Unbelievable!", with a strong and upbeat sound to his voice. Eddie concedes that in the days immediately after the 11th, business was slow. But in keeping with his upbeat business approach, he tells his staff, "If we aren't busy, then let's get ready to get busy."
Eddie is also maximizing the advantage that his store is merchandised complete vertically as compared horizontally. While no store can be all things to all people, Eddie specializes in combo instruments. For example, you can buy anything from the beginner expensive to the best quality guitar from Alpha Music. And when you make a purchase of any instrument, Alpha Music offers free lifetime adjustment to the original owner.
In his guitar room, Eddie has added a shop for his guitar technicians so customers can watch the work being done on instruments, thus exposing repair customers to all of the new instruments.
Elaine Ostrander of Colonial Music in Mount Vernon, Ohio noticed a change in business immediately following September 11. Entire families were attending the parent meetings for beginning band and orchestra. Kids sat with their parents instead of in groups by themselves. And parents were genuinely interested in what was going on with their kids, instead of being distracted by cell phones, beepers or conversations with other parents. Elaine sees people getting back to a family oriented society, and the feeling of patriotism as being a real positive.
Elaine is jumping into the cause and helping to sponsor a free professional band concert to honor fire fighters, police and safety personnel from Central Ohio.
Colonial Music sees an opportunity to spend more attention on the home school market. When the time allows, Colonial plans to create an adult beginning band. Fortunately, the month of September saw a 20%+ increase in sales.
In Memphis, Tennessee, Chip Averwater of Amro Music sees this as an excellent time to make improvements. While business was down for the two weeks after September 11, their sales are up for the calendar year. What other people see as layoffs and lower interest rates appears to Chip as the opportunity to find some great sales help much easier than for the past several years, as well as contractors and tradesmen more competitive and eager to work.
Amro used the lull in business to complete some projects that have been on their to do list for a long time; redesigned their price tags, some literature, and displays. They have also cleaned up their customer contact list and done a better job of following up. Chip is determined to fulfill the old adage of, "Never forget a customer. Never let a customer forget you."
And Malcom McFadyen of the McFadyen Music stores in North Carolina has improved his business as they have stepped up their efforts to educate their staff and work on their customer skills. "We are treating the customers as if they were 24k gold instead of the usual 18k gold."
Their staff is working harder to focus on their core customers and core products while concentrating on closing the sale now instead of waiting for the customer. By getting the customer's personal information, McFadyen stores are also calling back the customers more now to follow up on their sales opportunities.
There are several other ideas that we would like to share with you.
#1. If you utilize an outside sales staff, you have probably noticed that your competition has cut back on their calling on customers. The smart logic is not match them with cutbacks, but instead increase your efforts as customers will continue to respond to those who ask for the business.
#2. Make sure the store looks full of merchandise. If your situation requires you to decrease your inventory, spend time making the place look full. You can do so with several techniques. The first is to "face and front" all of the merchandise. This means to pull all of the merchandise to the front of the shelf or peg hook, and make sure the most saleable side of the product is facing the customer.
The second technique is to change the length of your peg hooks. If your merchandise is hanging on 12" hooks, and a 4" hook will do, change to the 4" hook so your customers do not see the empty hang space. This idea also works with your shelving. While you have fronted your merchandise, by changing to shelves that are not as deep, the inventory you have will require more "fronts", thus making the shelves look fuller.
The third technique is to put the larger items on the higher shelves. If the display racks are 5' tall, and you place tall merchandise on a shelf that is near the top, you have now made your shelves look as though they are 6' or 7' high. This allows you to have a store that looks as full as a mass merchant's store.
#3. Call your old customers. A merchant this writer has known for many years had the habit of calling 10 customers a day. The conversation went something like this, "Hi this is Jack from the music store. I remember selling you a guitar some four or five months ago, but I haven't see you in the store lately. I just wanted to check in to see how you are enjoying your new guitar."
Consistently, his results were this: Of 100 calls made within 10 days, 2 people would express their displeasure with Jack's shop. Jack would apologize and ask if he could correct the situation. Research has shown that when the situation is corrected, the once unhappy customer becomes tremendously loyal and outspends the average customer.
Of the 98 remaining calls, 16 people would walk in the door of Jack's store within 2 weeks and make a purchase. Remember that your advertising probably gets a 2% response; Jack's efforts achieved a 16% response and there was no advertising costs involved!
#4. Tell the media the good that is happening with your business. You have undoubtedly heard some retailer on the radio or television telling the media person how their sales have decreased, and how they hope customers will return.
While this retailer is getting publicity, it is the wrong kind. He is telling the audience that his store is losing. No one wants to shop with a loser. And on top of that, he has helped to fuel a recession because he is telling the public that he is witnessing a recession first hand.
Find something good about your business and don't wait for the media to call you. Tell them you have a story that goes against the grain and that you are doing great! If you can't find something good to say about business, say nothing at all!
The bottom line of this story is our answer to the question, "Are we going to have a recession?" And the true answer is, "Only if you decide to participate."