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Challenges in Your Small World?

Boom times were slow times for many small retailers.

by John J. Lichty

During the past decade, much of the U.S. economy zoomed merrily along. It was the best of times for retailers offering luxury items. Top-line department stores; high-style specialty shops of jewelry, sporting goods and electronics; and custom homebuilders all racked up record sales and profits year after year. It was good times, too, for merchants at the other end of the retail-pricing spectrum. Most "big box" discounters noted large-scale increases monthly and yearly. Wal-Mart, Home Depot and Target stores, in particular, dominated many large and small market areas. They continued to expand with regular and larger mega-store units in suburban and small town markets. As a result, the '90s were not the best of times for many home furnishings retailers, regardless of market area. The continuing inroads of large discounters into new market areas caused mixed reactions. Consumers regardless of income level welcomed the lower prices. City officials appreciated the added jobs and tax income. However, numerous small retailers in numerous product categories were confronted by the discounter's near-wholesale price competition, powerful promotions and extensive media publicity. REPORTS NOT ROSY The Small Business Administration summed up the small retailers' dilemma: "The excellent national economy bypassed some areas of the country. The number of bankruptcies and closures among small business retailers increased much more than normal in many categories, especially home decorating areas. Two major trends—manufacturer's mergers and increased price competition—impacted small community business and lifestyles. "Numerous manufacturing firms and retailers were forced to close their doors or merge with larger national and international corporations. The resulting downsizing and personnel layoffs affected many families and communities. The job loss impact was tempered somewhat by new jobs that became available in service work." CANDID COMMENTS A typical independent home fashions retailer in a small community described candidly how the retailing revolution affected him and his peers. When asked, "How's business?" he replied at length: "What business? Go out to the local Wal-Mart and find out from some of my good customers. They're probably buying paint there now. They usually go to Home Depot for window coverings and wallpaper. Some of them may have been here first to check ideas, patterns or colors. Yet, they can afford the best custom decorating. That bothers me. "People don't seem to care about their décor as much as they used to. They build big homes with the latest in sound and electronics, big TVs and all the gadgets. Then they buy low-priced products for their windows and walls. Maybe they run out of money. "I was able to compete with my small store competitors and various chains like JC Penney and Wards, but it seems to be a different ball game now. "First of all, there's no way to meet discounter's prices and stay in business. They sell at almost wholesale. Their ad promotions and publicity have convinced people that a low price is worth the hassle of walking, parking, less service and basic styles with little choice. "Second, the big supplier companies must cater to big discounters because of the sales volume involved. That's only natural and good business; I can understand that. But in the process, it seems to me that we little guys don't get the price breaks or sales services as in the past. Many of the good salesmen have retired or changed jobs because of mergers. We don't see sales or service people as often. I know things do change. I guess I have to accept the new mergers and make do as always. "I think the conglomerates have cut back on their advertising and information, too. I guess they expect us to handle consumer education for them. It's no wonder people don't care how their home interiors look. They don't see the decorating idea books the companies used to offer and we carried. "I'd better get off my soapbox. I wish you could give me some ideas. Any suggestions?"   Any business loves customer referrals and walk-ins, but few can thrive by just waiting for business.   SHOPPING IS FUN Here's another report about the new reality of discount merchandising; this from a psychology journal. "Thanks to powerful ad campaigns and obliging media publicity, discount shopping has gained respectability and an aura of fun, even among the affluent. Not too long ago, few wealthier shoppers patronized 'bargain' stores. Now, many forsake their favorite department or specialty stores to enjoy the 'thrill' of saving a dollar or so. It's reversed 'snob' appeal. Shopping is related as 'fun,' despite all the rigors of traffic, crowds and noise." Here's a true story illustrating these factors. Recently a good friend of ours, an older, well-to-do widow, went shopping at one of the mega-size Wal-Marts. On the way back to her car, with both arms full of packages, she tripped and fell face down on a cement entryway. Dazed, with her glasses broken, her nose and face bruised, she needed a dozen stitches for a bad cut on her forehead. Fortunately, store personnel were there almost at once to help her. She was taken to emergency care, her cuts and bruises were treated, then she and her car were driven home. We saw her several days later. She looked a mess—black, blue and sore all over. I said, "Here's your chance to sue for some big money." "Heavens, no," she announced. "The people there were so nice and they paid all my medical bills." "Why were you shopping there?" I asked. "Why, with your money, do you go to a crowded parking area, trudge a long way to shop, stand in a checkout line, then walk again with your arms full?" "Oh," she replied. "It was such fun and I did get some bargains." OTHER CONCERNS Each year, more consumers shop direct, not just at individual or company Web sites, but also from catalogs and television channels. One trade magazine reported an estimate that 83 percent of U.S. consumers bought something through such non-store outlets in 2000. That was up from 75 percent in 1998. Of those, 25 percent were online shoppers. A small percentage ordered window coverings or other home fashion products from direct sites or other sources. Finally, sales won't become any easier in the current economic slowdown. In fact, the discount and Internet marketplaces will probably improve in a bear market. For an independent retailer, survival has always meant struggle. Many tire and drop out of the race. Others open new shops and studios. The desire to have one's own business is an ongoing American dream. What motivates both veteran and new window coverings entrepreneurs to continue against big odds? Answer: Three good news realities. 1. The percentage of home and business owners who prefer quality merchandise, greater selection and special service with fair prices remains strong. True, every home decorator wants a bargain. But that desire doesn't always mean the lowest price. Regardless of income, many homeowners consider a real bargain to be the latest in fashion with guaranteed satisfaction and fair prices. 2. The realization that a custom business can make a living off word-of-mouth referrals from satisfied customers. What better sales promotion than a live report from a reliable source with an actual, beautiful window setting as proof? According to several polls conducted in recent years by D&WC magazine and workroom professional and writer Kitty Stein, as many as 40 percent of small workroom shops and decorating studios rely almost entirely on customer referrals for ongoing business. They may make follow-up phone calls, circulate business cards and conduct other inexpensive personal promotion, but basically they wait for business. They don't have enough budget or time to do much more. 3. The realization that an industry's small business owner can increase sales. REFERRALS NEED REPLENISHMENT What can a small retailer do to spark sales? The ideas and possibilities are almost endless. Even a small budget can be stretched to do more. But before you do, try new ways to build sales. Sales books can help, (I have a sales promotion manual that lists over 1,000 ways to build sales.) and trade magazines like D&WC have helpful editorials and firsthand reports in every issue. Try new advertising approaches, special sales offers, newsletters and mailers. The point is to do something. You, too, can find new and inexpensive ways to contact and attract customers. First of all, review your market. Markets change rapidly, even in small communities. It may be time again to evaluate the makeup and area of your target audience. Before you can sell them, you have to find them. Conduct your own customer canvass; hire temps or even a research firm to help you. Use in-store surveys. Check into the possibility of expanding into new market areas, get added business from current customers and find new prospects. You need to put the final demographics (ages, incomes, addresses and other vital personal information) into a computer data bank for follow-up calls and mailings. CUSTOMER'S CHOICES Customers are always changing. Your former target prospects may have different desires now. Successful merchants study their customers, constantly trying to find out what they want and need. They listen to them, show them they care, do what's needed to keep them satisfied. You need customers; they don't need you. You know all this, make sure your employees do, too. I'll talk about more ideas in future issues. Savvy retailers are always coming up with new marketing concepts. Just read some of the retail success stories appearing every month in this magazine. It's amazing how ingenious some individuals can be. Keep up with the other current marketing revolution, the ongoing computer revolution. Every month, too, in D&WC, you'll find technology updates that can help you understand and use new electronic materials and operating shortcuts. Be sure, too, that your business is listed on the Internet in BuyWindowCoverings.com. It's a great source for new prospects and buyers.

John J. Lichty is a consultant and senior editor for Draperies & Window Coverings magazine. He has more than 30 years experience in the planning and administration of various consumer, trade and retail advertising programs.