18-02-2008
Increase your shop’s profits fast
By Rosie Beasley
Winter 2007/2008 recorded bumpy sales figures for the retail industry as a whole. Most recently, reports are showing that sales are up for January 2008 by 2.6 percent, however some experts predict that the upturn won’t last.
Yet independent retailers will not necessarily be influenced by what is happening across the industry – what most concerns the local clothing, book and convenience store owner is how their own sales are performing.
Fortunately there are proven ways to increase profits, which shops can implement quickly and easily. Some convenience stores have reported increases of 10% just from using a combination of these methods.
Planograms
Many manufacturers, suppliers and brands offer detailed marketing documents called planograms to help retailers maximise sales. These are documents containing information designed to encourage you buy and help you sell-on their products, so they can be quite biased. However, if used in conjunction with your own experiences and customer knowledge, they can be a valuable tool for improving the way you order and for presenting your products in-store.
Planograms generally contain useful information such as the most popular variations of a certain product and the best selling brands within that product group. For example, they might give you the market share figures of their instant sauces by type (Chinese, Indian, Italian) and by brand (Sharwoods, Chicken Tonight, Lloyd Grossman).
The planogram will tell you what you should stock and which sizes/weights work best for your shop size; recommend merchandising tactics like how much space you should allocate to each product; offer insights into the type of customers that buy the products and their motivation for buying; and offer ideal store layouts based on this information.
Using the information within the planogram can really help a shop to identify which are the best products to stock from each category and to improve store layouts and merchandising.
Stock fluidity
It is easy to fall into the trap of buying the same brands all the time and offering customers the same choices, but regular performance reviews of your stock can make a big difference to your sales. For example if you know a certain product is selling well, you could introduce a wider choice of brand or type within that category to see how customers respond.
Monitoring performance of stock also enables you to identify when to discontinue a line, and in doing so you can trial other items. You could also find out from your customers whether there is anything they would like to buy from you which you don’t currently stock. The ability to offer more choice is what may ultimately differentiate you from the competition and keep your customers coming back.
Non-food seasonal lines
These days there are many opportunities to sell non-food seasonal lines, and the number seems to be growing each year. Valentines Day has just passed, Mother’s Day is around the corner, quickly followed by Easter, Father’s Day, then summer, back-to-school, Halloween, Guy Fawkes Night, and all too soon it is Christmas again.
Depending on the type of shop you own and its location, you can also benefit from ethnic holidays such as Eid, Divali & Chinese New Year.
Due to the fact that margins are bigger on non-food lines compared with other products, these opportunities are too good to be passed over. Items such as cards, teddy bears, picnic sets and Halloween accessories are all good sellers and any excess can be used again the next year.
Customer Service
The importance of customer service for an independent store cannot be emphasised enough. Welcoming a customer as they enter the shop – by name where possible – and offering service beyond the normal call of duty will keep customers returning for years to come. Cheerful and polite staff will make a customer’s experience in your store better and therefore they may come more often and spend more money when they do.
People use local shops for two reasons: convenience and community. As natural creatures of habit, we like to go to the same shops and will mostly buy the same things. Therefore it’s common sense to want to shop in places where we are recognised by staff and feel valued.
Community participation
Increasing your customer base can be a big challenge, which is why for independent shops it is important to get involved with the local community in order to be recognised and to stand out from the competition.
Sponsoring a local event, a kid’s sports team or helping out your local school are all ways to promote your business positively within the community. If you are a convenience store you could try to promote healthy eating in the schools or perhaps hold a BBQ in cahoots with your local pub.
Doing these sorts of activities is also good PR and local papers are usually happy to cover stories about businesspeople who are actively contributing to the community.
Increase basket spend
Finally, the simplest way you can increase your overall profit is to aim for a higher basket spend – effectively encouraging your customers to buy more items or more expensive items than they would do normally. An effective way to do this (which you’ll notice does not happen in most small independent shops) is to train your staff to actively sell rather than waiting behind the counter for the customer to check out.
Even if you just ask staff to point out price promotions or new products to customers, you’ll see a difference. Without this extra encouragement your customers will simply buy what they always come in to buy.
Another way to get customers to buy more is to place related stock items together. For example, alongside instant sauces you should display pasta, rice and any other relevant accompaniments. This sounds obvious, but so many shops don’t do it because it would involve a re-arrangement of the store layout.
Your aim for each customer should be to get them to buy at least one item in addition to their standard basket.
Shop around for your business rates and insurance
Business rates are continually rising and eating away at the profits of independent shops, but just by shopping around you’ll see that there are cheaper rates available. The same goes for shop insurance – as well as trusted providers there are also a number of other insurance companies who can offer savings on comprehensive policies. The key is to find a good way to compare actual quotes from all providers.
Price comparison sites are springing up all over the internet at the moment, but the best ones are those that offer real policies for you to compare and then buy instantly. Using them means that the price you are quoted is the price you actually pay. Companies such as Simply Business can often even beat their own online quotes after speaking with a customer reveals some extra piece of information about their business that was not given on the form.
Running a successful independent shop is all about focusing on the customer. By paying attention to what they spend their money on, and doing as much as possible to make their experience with your business a fruitful and pleasant one, you are laying solid groundwork for increasing your profits.
