Fall 2005 Selling the Season
Happy Holidays! That cheery saying means something specific—and bankable—for specialty retailers. For the year-round specialty retailer, the October-December holiday selling season is the time to reap the fourth-quarter profit you’ve sown during the year. And for the seasonal retailer, this is it—showtime!
In either case, you want to be ready for retailing prime time. Your business has to run smoothly and efficiently so that it’s easy and maybe even fun for busy shoppers to find your products.
And that takes planning. Mistakes are too costly at a time like this. You’ve got one shot at the holiday season, and you want to do it right. How? By focusing on the five key elements that seasoned pros recommend.
1. Plan ahead
Planning ahead is essential: you can’t proceed without a plan. “The smart seasonal retailer runs [a] seasonal business by prepping for nine months and cashing in for three,” says Seth Hudson, director of corporate real estate for Hickory Farms (Maumee, OH).
For retailer Wayne Wells, owner of PW Wells Enterprises (Spartanburg, SC), planning ahead for the holiday season starts the February before. “You need to sign Christmas deals in February to get a good location,” he says. February is when he combs the market for new product ideas. He runs a five-cart wireless accessory business year-round, but when the holidays hit, he expands to 12-15 carts and adds the latest hot toy concepts to his product assortment.
You also have to plan ahead for opening day. Seasonal retailers who wait until the last minute to open may be saving on percentage rent and other operating expenses, but they miss out on some critical benefits. If a center even has seasonal licenses that start as late as November or December, “[the retailer will] get less desirable locations. Plus, you can’t train your people as long, and you head straight into holiday sales,” says Tim Runner, owner of Awesome Specialties International (Mission Viejo, CA).
And coming in early allows you to study your market. By understanding the people coming to your mall, he says, you can buy your products and staff your cart accordingly. For example, if you’re seeing mostly seniors in the mall, a conservative product mix is your best bet. And you may be busiest during the day, so staff accordingly. But if you’re seeing a hip younger crowd toting shopping bags, you need a trendier product mix, and nights and weekends are likely to be your busiest times.
But the granddaddy of all planning is your business plan. Without that, you’re working blind. You need a business plan in place beforehand so that you can negotiate the right financial deal—and the right deal is paramount.
Rick Gardner, president of Stockings to Stuf (Westville, NJ), says, “Unless you’ve done your business plan [in order to] know the rent you can fit within your sales constraints, you won’t make money—even with the right product and the right people.” Making money has to do with multiple factors before you even pocket a dime of profit—vendors, mall management, suppliers, insurance, legal fees, taxes—the whole gamut. Even when sales revenues do start to flow, they may start slowly. You have to have your cash flow projections ready so that you know and can stay on top of expenses throughout the season.
2. Hire smart
“It’s an age-old saying in this industry that your sales are only as good as your employees,” says Heidi L. Cardall, director of specialty retail for CBL & Associates Properties, Inc. (Chattanooga, TN). “I strongly believe this is overlooked far too often, and warm bodies do not make a successful season.”
To avert the danger of hiring “warm bodies,” retailers have to invest their time into the hiring and training process,” says Micheal Brother, national program consultant for Santa’s Pen (Glendale, CA).
The first step to a star-quality staff is in the hiring process—where good interviewing skills are paramount. (You can read up if you’re not sure how good yours are. There’s plenty of information on the subject in print and online.) It’s about more than asking questions. Presenting a professional image, reading non-verbal cues, asking the right questions and interpreting the answers correctly are all elements of the successful interview. By asking the right questions, you can learn in advance if job candidates can cut it. “I give [interested candidates] scenarios that would happen in their day-to-day job, and find out how they would handle them,” says Coleen McNelis, VP of specialty leasing for Macerich (Dallas, TX). “It gives you good insight into how they’ll react instinctively to a situation.”
Offering a competitive hourly pay rate is important, too. There’s stiff competition among retailers for competent, diligent workers, especially at this time of year. “Retailers get what they pay for,” says McNelis. When people know they can find short-term employment during this busy shopping period, she says, “the minimum wage-payers will only receive the leftovers.”
You might also want to consider running background checks before making a job offer. It’s a common practice of big-name retailers—Hickory Farm, for example, has been doing this for the past few years. “For the people who go through it successfully, we know we can rely on them,” says Hudson, “and we have no concerns introducing them to the malls.”
Next step: Training the employees you just hired. “The most missed sales during the holiday season come from a poorly trained staff,” says Brothers. “The numbers don’t always look bad, but what retailers don’t see are how many dollars they could have made” but didn’t.
Retailers know what it takes to sell their products—new sales staffers don’t. You or your managers have to train them on the ins and outs of the product’s features and benefits, and how to present or demonstrate it. In addition, many new hires are newbies to retail, not just to your business. Which means that however pleasant and eager they may be, they may not have specific sales and customer-relations skills. Brothers suggests role-playing as an effective tool for showing employees how to interact with customers to increase sales.
Also be sure to include a session on how to handle a crowd, says Runner. “If you can train them [to do that], they can increase sales dramatically and help multiple customers at one time. Most salespeople ignore new people if they’re already working with [a customer]. They need to say ‘Hi’ and engage them,” he says.
And finally, you need to keep them motivated to keep selling. Retailers have a built-in incentive to make sales, but their staffs don’t. To remedy that, Brother suggests offering incentives in the form of perks for performance. For example, set a weekly sales goal against last year’s sales for the same week. If your staff meets that goal, they get a reward. Some retailers give mall gift cards, or “funny money” to spend on their merchandise.
3. Sell the perfect product
Now there’s just one thing missing: the perfect product. It might sound as if this could be anything, but for specialty retailers, some general rules apply. “New is important,” says Cardall. “Two years, maybe three, seems to be the life cycle of some of our trendy [cart and kiosk] products. After that, everyone already has one” of whatever it is.
But “new” doesn’t equate to “profitable” simply because it’s new. As Pat Yates, owner and president of Happy Feet (Goshen, KY) points out, “Sometimes people get caught up in something new and unproven. The new and greatest widget is risky.” He suggests doing research on products that have been successful in the past, and replicating that success. Yates’ Fun Feet slippers fit that definition, by the way: still going strong after eight years.
One time-tested product category that does especially well during the holiday selling season is personalization. “Personalized products are hot,” says Runner. (And he would know: they account for approximately 60 percent of the products he distributes.) For the customer, “the present is more personal. There’s less chance of the receiver already having the present when it’s personalized, and it looks like the giver has put more effort in selecting the gift.” For the retailer, personalized products “are easier to sell and more likely to be purchased on impulse,” he says. Plus, “they command a higher price and have bigger markups.”
Along with other personalized gifts and ornaments, Gardner sells traditional red plush Santa hats and stockings during the Christmas rush. “Outside of licensed Santa hats, 99 percent get personalized. The red plush stockings also fall into the 99 percent bracket,” he says. Personalization is popular because “it’s not an antiseptic, boilerplate ornament or stocking. It was made [just] for Jeremy the soccer player. It’s a feeling of belonging.”
Another proven category is demonstration products. “Demonstration products are important because they draw a crowd,” says Bruce Singer, co-owner of Hot Headz/Nature’s Way (Philadelphia, PA). His sales associates sell the company’s hot packs through demonstration: they microwave the packs and place them on the shoulders of willing mall customers so they can experience the beneficial effects. Demonstration products require a strong sales staff because “if you’re not demonstrating, you’re not selling,” he says.
“Demonstration products are the big advantage carts have over traditional retailers,” says Runner. “Only cart operators can take the time to demonstrate products. Seeing something in a box is not the same as seeing it in action,” he says. “For example, it’s much more exciting to see a radio-controlled car racing around rather than just seeing it sitting in a box.”
And then there’s price. A good product needs a good price. But how do you find the right price, that ideal combination of what the customer perceives as good value and what the retailer perceives as good markup? “It’s a black art,” says Runner. To be successful, cart products need large markups—around 300-400 percent—because of high overhead from sizable holiday rents and high labor costs from extended mall hours, he says. The good news: “Shoppers tend to spend more—usually significantly more—during the holidays. So if your normal sweet spot is $20-$25, you should include products in the $50 range.”
But remember, impulse-buy price points should be the bulk of the mix, especially in the common area. Says Cardall: “[Retailers] have such a limited time to catch attention with someone walking by. Items that are $9.99, $19.99, $29.99, $39.99 and $49.99 are really going to work on volume… These seem to fall into an impulse-purchase range, where the customer doesn’t have to think too hard in order to justify the gift.”
4. Keep track and stay stocked
“You can’t sell what you don’t have,” says McNelis, invoking a classic retail mantra. “Retailers who haven’t purchased enough of the right products can run out of popular merchandise too early.” This means lost sales, “and could jeopardize profits for the entire season,” he says. In other words, no specialty retailer should be without an inventory tracking system.
“Retailers need to do inventory more often, and re-order more often,” says Runner, who will be sending products to 250-300 carts this holiday season. “If you order once a week in the regular season, you should be ordering two to three times a week during the holiday season.” And he points out something else that’s often overlooked: your suppliers. “A good manufacturer should be calling their clients and helping them [by saying] ‘This [item] has been selling, but I don’t see an order for it [from you] this week.’”
It’s always a fine line between having too much and too little stock. No retailer wants to be stuck with additional (read “unsold”) inventory, yet they don’t want to miss out on making sales, either. Cart retailers have an additional problem with keeping a large amount of inventory on hand: Where to put it.
Storage is a challenge anytime, and far more so during the holiday selling season. If you don’t have room to store extra inventory at home (and your neighbor won’t let you use their basement), consider renting storage space nearby, perhaps a bay in a you-store-it facility. Making sure you actually have all the stock you need, and quick and easy access to it, by planning ahead for storage space is a step you can’t afford to miss.
5. Show and sell
Think “D”—for display. Every product should be displayed to its best advantage so that it draws, appeals to, and sells the customer.
When it comes to display, says Cardall, “zeroing in on product lines will help [retailers] to be successful.” Again, it’s about having great products and then making them dazzle by displaying them well. “Retailers have to have some real eye-catchers there to draw the consumer,” says Alex Babbidge, co-founder of Mascotopia (New Haven, CT). He adds that retailers must have more merchandise available when customers come closer—but not too much more (There’s another fine line). “If there’s too much, customers are overwhelmed.”
“The key to our product, which is true at any time, is properly displaying it,” Babbidge says. For that reason, he gives retailers a free sample of one of his most popular items, so that the retailer can show it outside its package. The item? A crib mobile that features plush figures of a college team’s mascot (many schools are available) instead of nursery-rhyme characters, and plays the school’s fight song as it turns. “In a package, the mobile might seem out of context, and people glaze over it. [But] once it’s out, people immediately understand it,” he says. “It creates a good display. It draws them in. They can see it and touch it.”
The height of the display is also important. When the holiday season is full-on, customers often crowd the common areas, making it difficult to see products on display on carts and kiosks. Consider making make the displays higher, says Runner. You might also add something that moves or flashes (like the neon-message clock ASI distributes) to compete for customers’ attention and catch their eye.
“D” is also for demonstration. Some products have to be demonstrated to sell—sitting pretty won’t move the merchandise. From toys and foods to bath-&-body and feel-good gizmos, some products have to be actively in play—first to attract attention, then to educate and involve the customer. In fact, almost any product will benefit from being demonstrated. And demo always draws a crowd.
And finally, don’t forget about signage. “Effective signage is critical to get shoppers’ attention to promote holiday merchandise,” says McNelis. For Calendar Club (Austin, TX), signs are an important communication tool as well as a sales tool. “We create graphics—not only picture graphics, but messages,” says Marc Winkelman, Calendar Club’s president. In their Go! The Game Store locations, signs might tell customers which games are award-winners; in their Calendar Club locations, signs remind shoppers that calendars make “perfect gifts for everyone.”
Ready for prime time
Every year, retailers put in a tremendous amount of time and energy to be ready for selling to the holiday hordes. The season’s many demands and myriad details can get wild and crazy and overwhelming in a hurry. And that can impact your success. But it doesn’t have to happen that way. The secret is to stay focused and be prepared, and these five keys to “selling the season” will help you do just that. They’re your guide to getting ready for prime time, and helping you make the upcoming holiday selling season your best ever.
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