Spring 2008

Sales Despite Slowdown?

Fight it Out

For Los Angeles area retailer Desiree Galvez, it was a double whammy. First came the writer’s strike. On its heels came news of a slowing economy. As a result, sales in early 2008 were poor. Yet the owner of L.A,’s Ventura Place did not give up. She took to the streets at least twice a week, handing out flyers and gift cards to everyone who passed by her clothing boutique. She also decided to sell her merchandise on eBay and not let geography dictate sales. “You have to get out there and fight for your business,” Galvez says.

Galvez is not the only one with the fighting spirit. When GIFT SHOP recently interviewed retailers across the country, the message was unequivocal: Keep your chin up and fight.

The numbers

While there are no statistics directly related to sales in gift stores, overall economic indicators in recent months have continued to be sobering. The Consumer Confidence Index, which is usually the most direct measure of how much consumers are going to buy, has been dropping. Numbers put out by the Conference Board indicated that the index fell sharply in February, down to 75.0 from 87.3 in January.

A survey conducted by BIG Research in Worthington, OH, a market research firm, showed that only a little more than 25 percent of consumers surveyed in February were confident about the economy; in February 2007, the figure was close to 50 percent. As of press time, the February numbers were the latest reports.

Retailers react

Most gift retailers we interviewed have not let the headlines dictate their retail plans for 2008. Patti Harbin, who serves on GIFT SHOP’s advisory board and is owner of In-Courage, in San Antonio, says she has continued to do what she does best: sell. “Instead of following business headlines, the maybes and the might do’s, I decided to spend more time with my customers, asking questions like, ‘What are you looking for? Who are you buying for?'” Harbin says.

Most retailers have not dramatically changed their merchandise mix, although all retailers interviewed have kept a sharp eye on price points. Susan Parker, owner of Personally Yours, in Austin, TX, says she has watched her price range as always. “I have not bought differently—I’m buying like it was last year,” she reports. On the other hand, Los Angeles retailer Tiffany Newman has changed her merchandise mix and brought in vintage items to mix with newer merchandise. The owner of The Pink Porch has found that she can “make more on things that are used or old than always buying new.”

Change is good, but don’t change everything. “A complete focus on new [merchandise] is too risky, because that means everything is unproven,” says Adam Schrier, board member of the Gift and Home Trade Association and director of sales and marketing at Andrea By Sadek.

Slow traffic

Doug Fleener, president and managing partner of Dynamic Experiences Group, a retail advisory company in Lexington MA, says any anxiety varies depending on which retailer you talk to. “Some retailers are worried, some are very anxious, and others are having their best year ever,” Fleener says.

“Clearly shoppers are consolidating shopping trips, and some are just shopping less often,” Fleener says. So one of the ways to do well during a slowdown is to make more concentrated and frequent efforts to drive traffic to your store.

A slowdown also means there can’t be much wiggle room for error. “When the economy is booming, and sales are very strong and robust then if you pay less attention to detail, it can afford to be overlooked, but now is the time to be on top of the best business practices,” says Schrier of the GHTA.

Fleener reminds retailers that decreased traffic means it is imperative to “maximize every single customer opportunity.” This means training staff to sell well and smart. “I don’t believe that most small retailers need to make a large financial investment in training, but they do need to invest time,” he says.

What are the ways in which retailers are driving traffic to their stores? How are they selling more? Here are a few take-home lessons:

Invest in email marketing. Blair Newberry of Sparks Cards and Gifts in Austin, TX, uses email to remind customers about holidays like Secretary’s Day or Mother’s Day. “A lot of people just don’t have that on their mind. Also, if we do any kind of sale or special event, sometimes I’ll put a coupon out there,” she says.

Strong window displays are even more essential now, says Betsy Stratman Pruitt, of Stratman’s Pharmacy in Evansville, IN. “You have to have exciting window displays that make customers want to come in,” she says. Heather Capps, owner of ScentsAbilities in Los Angeles, also recommends stronger window displays and remerchandising old stock. “We paint and place fun and interesting collages in the windows to draw customers in,”‘ says Capps, who also burns candles to entice customers as they walk by the store.

Emphasize local roots. Stacy Mitchell, senior researcher at the New Rules Project, a program of the Washington D.C.-based Institute for Local Self-Reliance, says surveys have shown that customers respond positively when retailers encourage customers to buy local.

Plan ahead. Eric Dean, president of Whereoware Solutions, in Herndon, VA, a company that helps gift stores with their online presence, advises retailers to plan ahead and buy wisely. He says that if retailers are savvy, they will find many vendors offering fantastic “baiting deals” this year.

Send out more coupons and host more parties, advises Kristy Wegert, owner of LOLA art gallery and gift shop in Roswell, GA. Wegert hosts a variety of parties for different segments of her clientele (little old ladies, couples, etc.). A disc jockey and food are surefire attractions. Susan Noyes, GIFT SHOP advisory board member and manager of the retail shops at South Shore Hospital in Weymouth, MA, says special events, promoted well, are always effective at attracting traffic. She advises retailers to check with vendors and sales reps to see if they will promote a new line of products in store.

Plan your buying. Linda O’Boyle, owner of Metro Home Style, a home accessories gift store in Syracuse, NY, encourages fellow retailers to know what they are buying and why they are buying it. “Know how you will sell it, promote it and merchandise it. Don’t waste your buying dollars purchasing something just because you like it. Make sure it fits your buying plan, your customers and your store,” she says.

O’Boyle also advises retailers against stopping advertising simply because money is tight. “It’s important to be very careful with your ad budget and promote smart. Put your advertising and promotional dollars where they will work hardest for you,” she says.

Don’t spread yourself too thin. Blair Newberry, owner of Sparks Cards and Gifts, in Austin, TX, says her stationery-store niche has worked really well for her. She encourages fellow retailers to find a niche and stick with it. “Strengthen your niche instead of trying to expand in any way,” Newberry says.

Focus on the new. Noyes says she has special sections at the front of the store marked “new arrivals.” Harbin, of In-Courage, uses pictures of her latest arrivals in her email marketing campaigns. Customers are encouraged to come in and see what’s new.

Last but not least, think positive, says Noyes. “The media drives the economic picture, but we, as small business owners, seem to be holding our own, but you don’t hear about us on the nightly news,” Noyes says. “It is vital that we understand and use our own clout and savvy to turn the economic tide in our own communities—by spreading a positive word, not a bleak outlook. Positive thinking goes a very long way. Yes, times are challenging, but they will improve,” she adds. The retailers we interviewed seemed to be following Noyes’ advice. “We have been through several slowdowns,” says Trish Martinez, manager and buyer at Austin’s Over The Rainbow. “We just keep going. Bottom line—keep doing what you’re doing, do things right and you’ll make it.”