5 Key Product Groups
The internet is a dominant sales platform. For a brick-and-mortar retailer, that means one needs to be as knowledgeable as possible about what you’re selling and why customers visit your store. If all you’re doing is selling merchandise, your business will not survive; what you have to sell is your expertise, providing credible advice that will help customers succeed.
Pricing your products according to market value and being a professional in your field will tip the balance in your favor when dealing one-on-one with a customer. No matter how easy a website is to navigate, its customer service is limited to remote contact. Even in this high-tech retail environment, personal interaction will give you an edge.
When deciding on the products to stock and prices to charge, be aware that there are five important categories of products that you should consider. If you divide your inventory into these categories and order accordingly, you’re bound to increase your sales and keep your customers satisfied at the same time.
“Demand items” are products that customers ask for regularly. These products include consumables like pet food or supplements. Demand items are often price-sensitive and may not yield full margins, but they do draw customers into your store where you can offer other more profitable products or services. Secure a main and secondary supplier for demand items to ensure they’re always in stock. Running out of a demand item can cost you customers if they feel they need a necessity item and are forced to go elsewhere to find it.
“Unique items” are products that are not substitutable. You can realize better margins on unique products because they are not as price-sensitive. These products include replacement parts, pet clothing, specialized animal training items and such custom-made products as specialty aquariums, cat furniture and dog houses.
“Completer items” are products that are required to complete a project or make other products work. Without these items, other items may not sell. These products could include accessories for bird or dog cages, replacement parts for equipment, cartridges for aquarium filters, etc. Completer items are what set you apart from big-box stores that only stock high-volume items. Completer items may not move as fast as other merchandise but can be the difference between customer satisfaction and disappointment.
“Profit items” are products that have an established price. They can be minimum advertised pricing (MAP)-protected by the manufacturer or have an established price that the consumer expects to pay. MAP protected items are a growing category that some manufacturers enforce because they want to continue to see a healthy retail showroom for their products. Retailers should consider gravitating toward manufacturers who support MAP protection whenever possible.
“Seasonal items” are products that sell at certain times of the year. Examples of these are flea-and-tick items, holiday products and winter clothing. If you don’t have them in stock at the right time, you can’t sell them. It’s true that seasonal items have a time sensitive value—once the season or event has passed, the product value is greatly reduced. Some suppliers will guarantee the sale for customers with good track records and will take back unsold seasonal inventories, which allows the retailer to reinvest in new inventory rather than sit on seasonal products until the next year.
Not all products and brands can be priced the same—not if you want to survive in the ever-changing pet industry marketplace. Try categorizing your pricing formulas and see how it works for you. Consumers only want to spend a portion of their ready cash and will go elsewhere if they can’t find it in your store. Profit is relative—you can mark it up, but can you sell it?
It’s What You Know
Most consumers only visit your store if they have a need or a problem to solve. The reason could be as simple as stocking up on pet food or as complicated as having concern for an older pet’s health. What you do when a customer asks for advice could either lock them into your business as a loyal customer or drive them away, never to be seen again.
Want proof? Look at Yelp. It amazes me when I look at a retailer’s Yelp review page where one review is one star and the next is five stars. You can read between the lines and know that some sales people deal well with normal business situations while others don’t, letting customers leave their store with a displeasure that they share with the world on Yelp.
Have the Answers
Ask yourself these questions: What makes a loyal customer who will give you repeat business? How would you like to be approached if you were visiting a store for a solution to a problem? What is the consumers’ perception of the service or products that you offer?
Engage your customers by taking the time to understand their issues—don’t just point them to a product. Be sure they understand the product, and be ready to suggest alternative solutions to their problem if necessary. The differences between you and the big-box store is knowledge and personalized service, so be prepared to supply both.
Retailers who think their only job is to inventory and sell products will probably not thrive in current market conditions. If that was all customers needed, they could just click a mouse and order online. The successful retailers must know how their products work and be able to communicate that to their customers.
Most new customers value a hassle-free first visit and, if needed, a little TLC from the retailer. If they have questions and have them answered competently, they will not forget the experience. “Do you have something that will work for (fill in the blank)?” is one of the most asked questions by customers. There’s nothing worse than being given inaccurate information or being fobbed off with a cookie-cutter answer. Any customer treated like that will probably not give your business a second chance.
What They Need
Hobbyists know what they want before they step into a store. The majority of consumers aren’t hobbyists, and they won’t buy if they don’t understand what they need. Product knowledge easily equates to sales and profits. Signage and displays show the products and should suggest projects that will enhance the customer’s lifestyle. Displays are a key to selling anything if you’re looking to increase volume, but taking the time to confirm that you have what it takes to solve their problem will close the sale.
Keep in mind that most customers never make a purchasing decision based solely upon price alone. Example: Say you’re at a baseball game and you’re thirsty. There are two vendors selling soda. One has his soda priced at $1 and the other has his at $2. So, naturally, you go to the vendor that is cheaper. What if once you get up to the counter you find that the guy behind the counter was dipping the cups into a big bucket of soda and flies were buzzing all over the place? Would you buy it? The other vendor has a clean and inviting counter with a dispensing tab. I would pay more because the value is obvious; the same thing applies to pet services and supplies. The only difference is that pet retailers have to make an effort to explain as well as show why the customer should pay the asking price.
Remember, and never forget, that people don’t like to be sold. What they want is someone who will listen to them and solve their problem or provide them with reassurance that their purchase is the right one to fit their needs.
Negative Grades 2.0
You might wonder why the designator “2.0” appears in this article’s title. That’s because I wrote on this subject in July 2014, and I wanted to do an update. Much has changed since that 2014 article.
As part of our vendor service, my colleagues and I visit a variety of aquatic and reptile retailers. When I wrote the original article, quoting figures from personal experience, we estimated barely 50 percent of our retailer base used social media, and around 30 percent had no online presence other than through the Online Yellow Pages or Yelp, both of which are driven by consumer reviews.
Fast forward to January 2017 and we find that 95 percent of our retailer base today has some sort of online presence. Even stores with no store website still have at least a Facebook page, and they actively use it to communicate with their customers.
I think this change in statistics comes down to the fact that retailers know internet sales are the engine driving sales these days. They know they must be more online savvy than in years past to grow their business. I predict there will come a time when having an online store will be a natural extension of every brick and mortar establishment, and this type of service will become part of their distributor’s services or from some sort of third-party providers. They will make the participation process easy to navigate—as simple as a signature on a cable TV or a leased car contract.
Having said that, what hasn’t changed is the fact that consumers generally are only motivated to “review” a business if their ire is up, and that type of “review” can put off potential customers.
According to a survey by RetailNext, 71 percent of savvy shoppers research online before purchasing in a store. Another survey by ReviewBiz states 58 percent of consumers say the star rating of a business is important to them and 84 percent trust online reviews as much as a personal recommendation.
Consumers come with all kinds of expectations, and one wrong word can set them off. Negative ratings are more prevalent than positive ones because a bad experience, whether perceived or real, will motivate the consumer to take the time to warn fellow shoppers or to just “get it off their chest.”
There are simple ways to make negative reviews work for you—rather than against you. First and foremost, always respond to reviews, positive and negative. On a positive review a quick “thank you” lets them know you are aware of their post and appreciate it. On negative reviews, reassure the customers that their concerns are important to you, and offer a resolution and apology—even if you feel the review was unfair.
Whether that customer responds to your follow up isn’t important because all the other potential customers researching online will see it and feel you are trying your best. They might even be reassured by your efforts, thus turning a bad review into a positive advertisement for your store.
Consumers generally think reviews older than three months are no longer relevant, so the best policy is to always ask satisfied customers to review your services. With Facebook’s star-based rating app, it’s easier than ever. You can put the URL on your business card and in-store promo stuffers.
Seven out of 10 consumers will leave a review for a business if asked to do so, according to ReviewBiz, and almost 90 percent of consumers read fewer than 10 reviews before forming an opinion about a business. So even if you have had bad reviews in the past, getting positive ones going forward would correct that problem.
Yelp, as well as Facebook’s review app, can hurt or help your business. It doesn’t take a lot of time to keep your reviews and searchable online information current and up to date. When you hear a customer say, “I saw your good reviews on the internet and decided to give you a try,” you will understand the power of positive reviews.
Four Essential Buying Questions
What motivates customers to purchase the products you are selling? The answer to this question is simple: they will buy anything if they perceive the product to have personal value.
Consider in-store signage and even social media to explain why people or their pets need a particular product. Successful merchandising is nothing more than telling the right story about the product so the consumer sees the value and is encouraged to buy.
Why Should Customers Buy It?
How will this product make your customer’s life or the life of their pet happier, healthier or more secure? Even if only one applies, address it with in-store signage and post the information on your social media platform. It has long been known that customers spend less of their expendable cash than they would otherwise simply because they can’t find what they’re looking for or don’t see the products’ value. By merchandising properly, the retailer can pick up extra dollars that have always been available.
What is the Product?
The average person comes into your store to buy because they have an issue to resolve or a project to complete.
A good way to speak to a common problem is to create a merchandising center—a Flea & Tick Control Center or a Water Quality Center—where every problem in that particular category can be addressed using signage and can make it easy for the customer to buy. Another option to boost sales could be a bulk endcap display, which can show store confidence and encourage consumer buying.
How Much is it?
Information is what sells the average hobbyist. They will seek out the price, so it’s not important to be able to read the price from across the room. An example of a good sign would be: “20-Gallon Aquarium Setup with Everything Including Fish: $79.99,” with a list of the contents. The actual price font can be as small as you want, because if the customer doesn’t know that the kit is complete, they will just pass it by anyway.
You may ask yourself, “How do I sell against the big box superstore’s 20-gallon aquarium starter kit that sells for $10 less?” Buy one of their kits, take it out of the box and set it beside your kit. Then place a sign in each kit comparing them, making sure to point out the quality and completeness that you are offering.
Is it Worth it?
Think about all of the aspects of a product before setting the retail price. Can the product be explained to the consumer as a necessary item? Is the product competitively priced? It is important to know what the retail value of a product is in the marketplace. The retailer’s cost isn’t the important issue here. It’s what the retailer can sell it for that matters most.
Take something like bulk millet spray at two for $0.99. If you told a story with a sign saying something like, “Fresh Millet Spray Keeps Your Caged Bird Healthier and Happier, Good for Song Birds: 59 Cents Each,” your sales would probably increase simply because you are telling the consumer the value of the product. Because the consumer has no preconceived idea about what bulk millet should sell for, they will pay more to have a healthier pet bird. I’ve known cases where millet costing the retailer 35 cents has been sold for as much as 99 cents each. It can be done if the retailer is willing to key into products that will withstand market-bearing prices.
Take advantage of the silent sales tool: signage. Telling the story in the store and online will enhance your sales potential with little added expense or effort. Keep in mind that many consumers don’t like asking questions, so if you answer a question with signage and social media, you’re making it easier for your customer to buy what you have to sell.
Customer Service that Matters
No matter your competitive prices and product selection, you will be no better than hundreds of other retailers competing for the same customers if you lack customer service skills. According to a 2014 study by NewVoiceMedia, an estimated $41 billion is lost by U.S. companies each year due to poor customer service.
Have you ever tried to contact an online seller about a problem or to ask a question? If so, you’ll often find yourself searching the company’s website for contact information and, if you send them an email, you might never get a reply.
According to a 2015 consumer experience survey by Aspect Software, 76 percent of consumers say they view customer service as the true test of how much a company values them.
A great example of customer service done right is Aquarium Depot in Citrus Heights, California. The family-owned retailer puts customer service front and center in its business, which specializes in aquatics and reptiles. When you walk into the store, the first thing you will see to your left is a checkout counter. On your right, you’ll find a customer service counter.
I have visited literally hundreds of pet stores over the years, and have caught store owners, managers and sales people in a wide range of moods. People obviously can’t be at their best all of the time, but even if they’re not, they need to keep in mind that the customer pays their salary.
As a small business, problems with those big, uncaring businesses or inattentive online sellers can give you a big advantage if you’re willing to make customer service an important part of your store’s identity. Here are the top seven aspects that make up good customer service (in order of importance):
Patience: Retailers who know the value of customer relationships will develop a policy that can be followed by everyone, from the top down. Good customer service requires a lot of patience, even when you are really busy or not feeling your best. Being patient is probably the hardest skill to master, but it is also the most appreciated by customers.
Sociability: This skill is a close second when it comes to customer relationships. Being friendly will get you return patronage. Believe it or not, customers “like being liked” and will go out of their way to give you their business if they value that relationship.
A willingness to listen and learn: When it comes to knowing what your customers want, the ability to listen to their problems and solve them will earn you their loyalty. A problem shared or a problem solved creates a special bond that no big business will be able to emulate.
Product knowledge: It has been said many times that a small business fares better than a large business in the product knowledge category. Most consumers believe that small business owners know more about the products they sell than an employee in a big, impersonal chain store.
Good communication skills: Being able to communicate with customers is an obvious necessity when dealing with the public.
A positive attitude: Maintaining a positive attitude, when coupled with communication skills, is critical. Don’t dismiss a customer’s question with the easy answer, but also never tell your customer you will do something and then fail to do so.
A willingness to adapt to market dynamics: An ability to adapt is a skill we must possess in order to stay relevant in an ever-changing marketplace. The retail business was once as simple as coming up with a need and filling that need. Today, filling a need is just one small part of the equation.
Your ability to define your business as one whose reputation and likeability sets you apart from online and big chain competition will enable you to become a mainstay in your community just as Aquarium Depot has been doing for years.
The Many Paths to the Customer
Even if you don’t embrace the concept of multi-channel branding, it’s coming whether we like it or not. Successful businesses will adapt to a changing marketplace.
If you haven’t heard of multi-channel branding, it’s a business model that uses a variety of channels to enhance the end consumer’s shopping experience, including those who research before a purchase. Multi-channel branding includes selling to retailers through traditional distribution as well as direct to retailers where there is no distribution and even includes sales direct to the end consumer. The latter is for products that haven’t successfully broken into the distribution network.
Although my day job is in the pet industry, I also do consulting for brands that sell in the health and grocery categories, where I’m seeing multi-channel branding beginning to take hold. I am also see some manufacturers in our industry who are using this practice, and I expect this trend to continue.
The manufacturer’s multi-channel branding concept relies on current technological advances, mostly in social media and Internet resources. The concept is, in a nut shell, to offer a manufacturer’s full line of products through multiple channels, allowing them to reach the broadest customer base possible. This may sound sinister to any brick and mortar retailer reading this, but in fact, if done right, it will increase the store’s sales over time—or at least that is the theory.
The aim of a multi-channel branding strategy is to maximize revenue and consumer loyalty by offering choice and convenience all the way through to the end consumer. A successful multi-channel strategy offers a consistent quality of experience, whichever channel the consumer uses. The theory is that a customer’s experience in buying a product influences their perception of the brand, and the easier it is to find what they are looking for, the better the brand fares.
This type of mindset isn’t new. A perfect example of this business model is Hewlett-Packard (HP), who has been doing this for more than a decade. HP offers complete support in the way of software updates for their products and trouble shooting forums. You can even buy their products right from their site.
What HP is doing is making their website a destination for everything HP. But if you look a little closer, what you will notice is that, although they make their products available for sale to the consumer, you will be able to buy elsewhere for the same price or less. HP’s goal is to first establish a value for their products. Second, they aim to inform the consumer about their products, making them aware of their range and product functionality. Finally, if a product is not available from other sources, the consumer can click on the buy button.
In today’s cluttered advertising market, most messages become lost in the mix. But the more channels on which a brand is displayed, the better chance consumers will respond. The better known a brand becomes, the better it will sell. If careful pricing policies are developed, the theory is that all channels will be able to compete, enhancing the end consumer’s shopping experience, including those consumers who research before a purchase. Even if a manufacturer doesn’t sell direct, if they maintain a strong MAP policy, their best option is being present on as many selling platforms as possible.
Since there isn’t any way of turning back the clock, planning ahead is a better option than ignoring what is happening. Look for ways to use the manufacturer’s concern for their brand presence. Pick brands that matter to your business and let those manufactures know that you support their products and ask for support in return.
Now might be the time to develop a policy that will help grow your business over the long run instead of flipping around to who has the best price this month on products you purchase. Letting your suppliers know that you have a long term business strategy will allow them to better meet your needs.
Building Customer Loyalty
How we treat our customers directly relates to our business’s success. If we listen to our customers, respond to their needs and live up to their expectations, we have created an environment where customer loyalty will thrive.
What do I mean by “listening” to a customer? There is the obvious: a customer walks into your store and asks a question or has a problem and you listen to them. What about other avenues of input? Do you take the time to check on your Facebook Page or Twitter feed and do you respond to customer questions or complaints on these platforms? When was the last time you googled your business name for reviews? Could you have bad reviews out there for the public to see? If you don’t check, you won’t know.
Responding quickly to a customer’s needs or concerns is one of the most important things you can do to build loyalty. We have all heard about the customer review where an employee was rude or a need wasn’t met. There is a brief window of opportunity following a service failure where your customer can actually transition from a state of disappointment to a state of loyalty. Showcase your ability to listen to your customers, responding politely and positively so that other potential customers will respond positively to you and your business.
We’ve all heard the old adage, “Under Promise, Over Deliver.” How many times have you been disappointed by a business who assured you they would do something by a certain time or to a certain quality level and then failed to do so? I know I’ve had that experience many times and I will caution anyone who might be considering using those companies. On the other hand, the companies that did what they said they would do and left me feeling unstressed and happy with their work—I’m more than happy to recommend them to my friends.
Take the time to speak with your customer and to understand their needs. When I visit a store and can’t find what I need but the store personnel is able to assure me that they can get the item I’m looking for and will call me when it comes in on Thursday and then does call, I appreciate their effort and they have salvaged a sale—a win/win for both of us.
A great business personality and service is only half the effort required in building customer loyalty. The other half of the effort is promotion and price. No matter how great you are at pleasing your customers, if they feel you’re not competitively priced, they will gravitate to a business that is. One way to build customer loyalty even against a cheaper competitor is to offer a discount card for specific items that are important to your regular customer. You can write in the item(s) on the card so the customer is assured of receiving the discount even if you aren’t personally there at the time of their next visit.
Sales funded by your distributor or product manufacturers take time and effort to coordinate but allow you to run specials in-store and on your Facebook page that have the potential to bring in new customers as well as keep old ones and give them the impression that you are aggressively promoting.
I know I’ve said this before, but building an email list will enhance any customer loyalty program, so long as you don’t abuse their patience by over-using it. If you have special deals for your loyal customers, they will probably appreciate receiving your email notices. Just make sure that your emails offer smoking hot promotions on things that have general appeal. Although you’re trying to make a sale, you’re also trying to build a loyal following.
Consider trying to interact with your customers in new ways with new ideas, providing regular promotions, and you should see your sales grow. I’ve always found that mixing things up keeps the day to day business fresh. If you can do that and make more profit, too, it’s worth the effort.
Brick and Mortar Retailing in the Internet Age
Brick and mortar stores have advantages that the virtual world can’t match: opportunities for shoppers to touch, see and size up the goods and to walk away with a purchase. I know that many store owners think that customers come in to see products and pick their brains for information and then go home and buy on the internet. This may be true, but what are you going to do about it?
Maybe it’s time for all of us to think outside the box—retailers and wholesalers alike. With the Internet moving from its infancy into its adolescence, opportunities are opening up every day. I can see a time not too far down the road when retail stores will become show rooms and service centers. Customers will be able to walk into a pet store show room and service center and get expert advice, have a package of products tailored to their needs by that expert, who will do a quick internet search to provide them with the best price and most reliable fulfillment agent, and by the time the customer gets home, the product will be there waiting for them.
That’s not science fiction; it’s beginning to happen even now as I write this—just look at Amazon Prime’s two-hour home delivery service. So, rather than rail at the injustice of the Internet, maybe now is the time to become proactive and plan a new path for the retail customer’s buying experience.
I suggest doing a search of vendor websites to see who has shopping carts. If they are selling directly to consumers, is it generally at a decent retail price? Would you be able to partner with them as a fulfillment source for your store? How about your distributors, do they do fulfillment? Some do, and they might do it for you, too—if you ask.
Although outside our industry, an example of this approach is Best Buy stores. The last time I went into one was in response to an Internet ad for a desktop computer. I went in and walked to the back of the store where the computers are. I was approached by a sales rep who was knowledgeable and who actually showed me something even better than what I’d come in to buy. What amazed me was that the computer they ended up selling me was from a company other than Best Buy.
What Best Buy has done is partner with manufacturers that pay them commission. A brick and mortar store is limited by its square footage, but not if you can go outside the walls of the store and sell products from other companies. This scenario might be the wave of the future—to harness the Internet rather than fight it. Manufacturers produce more variety than a distributor can stock, and the average distributor stocks 20,000 SKUs—much more than your store can. Do you see where I’m going with this?
Also, there are still more customers that come into your store who want to take their purchase home that day. On the other hand, there are those who are just using you for product knowledge. I talked to a retailer who told me that when a customer comes into her store and plays the Internet card, she offers to match the price plus 15 percent to cover her cost of stocking it so they can have it right now. She always points out that her products are guaranteed against defects for a full year and she checks for hidden damage before the customer leaves her store. She said that most of the time, that customer will take the deal.
Manufacturers are beginning to beef up their MAP Protection, especially on high end products. Even if MAP isn’t a perfect system and can’t totally control Internet discounting, it will usually stop the deep discounting, making a negotiated price a very reasonable proposition for both the retailer and their customer.
I see the Internet becoming a tool more than a threat to brick and mortar stores. In the long run, we’re better off adapting to the new retail reality than trying to fight it. A great example of this is the printing industry. They used to have to typeset by hand; today it’s all digital and so much more sophisticated. Eventually, the same sort of transition will overtake the retail experience. Don’t look at it as a problem; think outside the box and create an opportunity instead.
Make a Splash with Ponds
How has your pond business been so far this year? If you are unhappy with your pond product sales and think that Home Depot or the Internet have destroyed your backyard pond business, consider the following: Home Depot stocks a limited number of pond products, generally not well displayed. Although the Internet is a true competitor to pet stores, for the first-time garden pond hobbyist, their local pet store is a real option.
Why is that you ask? Because they drive by your store and know where you are. They may be buying their dog food or other products from you already, so why not pond products, too?
If you don’t advertise your seasonal offerings, only customers who already visit your store will know what is available. I was talking to a retailer the other day that sets up a pond in her store every season and displays the support products on an endcap nearby. She was lamenting about how poorly the category was doing for her this year and wasn’t sure if she would continue to go through all the trouble of setting up a special pond display next season.
I was disappointed to hear that, so I asked her how she advertised the pond category during the season. She replied that they set up a nice display every April through the end of August. I suggested that she might consider advertising and was told that she couldn’t afford the expense, especially since her pond business was failing.
After that conversation, I’ve given the garden fish pond category a lot of thought and would like to put forward some ideas for those stores that are experiencing lackluster sales in ponds and pond accessories. The following are some inexpensive advertising concepts that might help build sales and bring new customers in at the same time.
It is never too late to talk with your distributor to see what they have to offer in the way of discounts to help you compete. The best practice is to assume that there are promotional programs available. Also consider contacting the manufacturer, especially if you are supporting a specific line of products.
Look for manufacturers who offer MAP protection and, if necessary with those that don’t, negotiate better pricing to help you compete with internet stores.
If you have an online store yourself, put your seasonal categories on the opening page advertising a promotion that you have arranged with your suppliers.
Advertise your pond program on your store’s Facebook page and if you don’t have one, have an employee, family member or friend set up an account so they can add content, especially your store specials including your seasonal items.
If you have limited display space and can’t dedicate an area to set up a pond (or even if you can) consider adding pond videos to your website and Facebook page. There are hundreds of videos available online. Also check with your pond product suppliers for what they have available.
If you can’t find pond posters from your suppliers, go to the Internet and google ‘garden ponds’ and choose large images to create signs or posters that will give your customers inspiration, posting them in your store near your pond display. Also offer links to the images if you have an online presence.
Most importantly, use your storefront as an advertising vehicle. For very little money, you can go to a local printer and have a vinyl banner made using images available from your pond suppliers promoting the advantages of a garden fish pond, saying something like, “A Beautiful Garden Pond Will Enhance Your Life! Available Here.”
Rather than assuming you can’t compete against the big box retailers or online vendors, consider working with your distributor and manufacturers on pricing, making the effort to advertise the category beyond what you have done in the past.
Remember, even if you can’t set up a live pond display in your store, that doesn’t mean you can’t sell pond products. It’s not too late to go after pond sales. There are still several months left in the season, so create a pond product endcap today and try some of the simple advertising ideas above. You never know; you might energize your pond sales!
Following the MAP
The one thing I can say about minimum advertised price (MAP) protection with total assurance is that there are a wide range of opinions on its effectiveness and even whether or not it is legally enforceable. In general, MAP Protection only relates to the advertised price and is presumed to be legal under U.S. antitrust statutes. According to the American Bar Association, “MAP policies are generally analyzed under the antitrust rule of reason. As long as a retailer remains free to sell a product at any price, the restriction on advertising is deemed to be a non-price restraint.”
I could go on about the legal challenges to MAP Protection and the several states that don’t recognize advertising restrictions, but I don’t have the space here to do that. If you want to look deeper into what’s happening with MAP policies, a good article that covers the topic is ABA’s Roadmap to Minimum Advertised Price Policies.
Having established that MAP Protection has its issues, what I really want to concentrate on is how MAP Protection is beginning to impact the aquatic segment of the pet industry. As I’ve mentioned in previous columns, our company represents only aquatic and reptile product manufacturers. What we’re seeing in our specialized area of the industry is more aquatic vendors discussing the need for MAP and implementing MAP programs.
The aquatic segment offers a lot of high end products, especially in lighting, filtration and water movement systems. These require that retailers have some knowledge and expertise with the products. These manufacturers know that selling through the internet has many advantages they don’t want to ignore, but they feel that, without brick and mortar retailers sharing product knowledge with the consumer, their brands will suffer.
I have been involved in implementing MAP programs for some of our manufacturers in the past and one of the biggest problems that come up when developing a program are a lack of an established manufacturer’s suggested retail price (MSRP). For more established companies, it is the fact that their involvement with online retailers goes back before the internet had such a big footprint in the marketplace. They find themselves in a quagmire of online discounting that, if left unaddressed, could drive brick and mortar retailers away from their brand.
We call on retail stores, detailing our manufacturer’s products to the owners and managers. In most stores, especially the larger ones with a big investment in inventory, we continually hear about how online discounting is forcing them into off-brand or MAP protected lines. We see how, in years past, major brands that are being liberally discounted on the internet and that used to dominate the aquatic retailer’s shelf are being deemphasized or, in some cases, have disappeared from the stores completely.
Those manufacturers who do implement MAP policies have several hurdles to jump—one of which is MAP enforcement. It costs money to hire a service or to have someone in-house who is dedicated to tracking the internet for MAP violations. Also, after finding noncompliance from an online store, tracking down the distributor that sold them the products can be a challenge that eats up man hours.
Ultimately, manufacturers may in the future be forced into implementing distributor exclusivity agreements, as dog food companies currently do, in order to enforce MAP pricing.
In this day and age, most manufacturers sell directly to online retailers, including Amazon. It’s hard to turn down the exposure, but with properly controlled pricing and an enforced MAP program those manufacturers can support both internet and brick and mortar retailers. I know many retailers reading this will disagree with that statement—but if you take a moment to think about it, it all revolves around pricing channels and MAP enforcement. If a manufacturer works diligently to build a firm MSRP, creates proper pricing channels and enforces MAP to the best of their ability, brick and mortar retailers will be better off and internet sales will still survive.
I think this issue is important enough to the aquatic segment’s brand health that manufacturers will figure out how to make MAP protection work. I predict that, at least as it applies to the aquatic segment, retailers will begin to see more robust MAP policies being implemented in the near future.
Stealth Marketing via Social Media
There are hundreds of social media providers available to every business owner. Most of them offer a free version of their service as well as inexpensive apps to promote a business, offer contests or enhance advertising.
According to Social Media Today, there are 21 top tier providers in the U.S. social media arena, but the obvious standouts are Facebook and Twitter. If your business is taking full advantage of these two providers, you are reaching the greatest number of potential customers.
If you are one of the millions that personally use Facebook and Twitter, you probably log in every day or even multiple times a day. The constant interaction with these providers is what makes them so valuable. Once a page or account is “liked” or “followed” on Facebook or Twitter by a user, your business has direct access to that person going forward and has the ability to speak directly to them.
Although these providers have great potential for your business, there is a fly in the ointment. Those of you who use social media have probably noticed the uptick in commercial posts. Even though social media has proven to be a wonderfully inexpensive and effective advertising vehicle for retailers, there will probably come a time when consumers will stop clicking on blatant ads and even block those posts. These social media providers are, after all, positioned as “social communities” and people don’t log on every day to watch advertisements.
That’s where stealth marketing comes in. Anyone who has been in the marketing field for a while will remember the 1990s, when advertorials were first being introduced. There were several versions of this, including ads disguised as articles, TV infomercials and various forms of guerilla marketing. These forms of advertising have fallen by the wayside due to the steady decline in print media, especially newspaper outlets, and the huge amount of TV channels now available that require multiple placements to reach the general public.
The good news is that print advertising hasn’t stopped working. Print venues have added revenue channels such like digital news and social media that are more likely to appeal to the 18-44 year-old demographics, which are the gold standard when it comes to consumers. According to the Pew Research Center Newspaper Facts Sheet, old school advertising still works with online news outlets, since that revenue stream seems to be growing, but it doesn’t really resonate with people logging onto their choice social media provider.
Building a strategy that will allow you to maximize social media advertising is one of the best options going forward. Such a strategy reaches potentially interested people who may engage with your business, rather than the traditional advertising that online news providers offer. These post an ad whether or not the consumer is a match for it—though for an added price you may be able to target a few demographics.
Creating a stealth advertisement is simply creating a post that you think will attract your followers and has the potential to be shared by them with their friends or fellow enthusiasts. As an example, if you are a marine aquatic store, you could write an article about the newest skimmer or lighting system that everyone is talking about and post it to your Facebook page as a review. This is likely to get interested consumers to “like” your post and potentially your page so they can see future content from your business.
There are many ways to use the stealth marketing approach. Try a post about Lyme disease prevention during tick season. Maybe post dog food recall notices as a public service. And now with the Facebook button choices, you can add a “Learn More” button that steers customers to a deal or discount at your store or online shopping cart.
You may be saying to yourself, “I don’t have enough followers to my Facebook page or Twitter account to make any of this work for me.” That may be true—but at least for Facebook, if you budget $10 to $15 a day to boost your “article” or most interesting posts, you can build a following. Once someone has “liked” your page, you’ll have ready access to them multiple times a day.
From my experience with my manufacturers, the ideal follower number to begin to produce real revenue is about 11,000 followers. With Facebook’s advertising tools, you can restrict your “paid” posts to specific zip codes. If you have an online store, you can target states close enough to your store to control freight costs.
Any way you look at it, the market and the ways of advertising to customers are changing. Don’t be left out because you didn’t change along with them.
We’re hearing more and more these days about millennials, also called generation Y. These folks number some 78.6 million, surpassing baby boomers as the largest demographic in U.S. history. This generation is defined by having been born within 20 years of the new century (1980-2000) and they make up a trillion-dollar demographic, driving retail trends for everyone.
Millennials are the first generation that are absolutely sure they won’t be working the same job for their entire adult life. Many of them believe that the only way to move forward in a career is to move to different companies where they are offered more money or a better position.
Due to the general worldwide economic uncertainty, millennials are more aware of their personal finances than previous generations and, because of this, they tend to share information among themselves more than ever before about quality and pricing for products and services. As an example, you can see queries on Facebook, generally from that age group, asking for friends’ opinions about a product they are thinking about buying or a suggestion on where to look for a service and even information about that service’s dependability. Millennials actively use social media to research purchases through their friends’ experiences.
It’s probably no surprise that millennials are the generation driving social media. According to Entrepreneur magazine, 71 percent of millennials use Facebook, making it the most popular networking platform. Instagram comes in second at 52 percent, followed by Snapchat, Twitter and Google+.
However, merely having a presence on social media sites isn’t enough. To take full advantage of these powerful marketing tools, a retailer must offer a seamless experience allowing the millennial shopper to discover their product or service through the research stage and become a part of the social conversation by offering tips and tricks as to how your product or service will make their lives easier or more enjoyable.
An interesting point that was made during my research for this article was that, although many millennials use the Internet and social media to find and research a product, most say they would rather actually complete the purchase in a brick and mortar store. However, millennials want that purchase to be integrated with the digital experience.
According to Technology Trends 2016, a report published by Accenture LLP, millennials want “an integrated, seamless shopping experience. They expect to find the same merchandise, same pricing and same discounts whether in-store, online or on their mobile device.”
With more than $600 billion spent by millennials last year and even more forecast for this year and next, it is only logical to expect them to be savvy shoppers. When they come into your store and say, “I can buy that cheaper online,” you should have a positive response rather than a negative one. If you can, offer a discount. Make it plain that there are associated costs to you because of paying in advance of sale and holding inventory costs. If they still decide to go online to order, wish them well and point out that you are always willing to work with them as much as possible.
Keep in mind that your service (for most of your customers) is that you have it when they want it and there are a lot of products in your store, especially consumables, that are not that easy to order online unless they want to order bucket loads.
You can also counteract the online drain by reaching out to your customers in the millennial age group. Reports show that 95 percent of this generation say they want their brands or services to actively court them. Coupons sent via email or mailed to their homes and even advertised on your store’s Facebook page currently have the most influence with them.
Millennials are not only the largest segment of shoppers in today’s marketplace, but they are also influencing their parent’s preferences. Changes in brick and mortar retail are coming whether or not you are prepared for it, and millennials are leading the charge.
Increase Your Sales with Signs
Recently, I was talking to Rick Ludes, sales manager at Central Pet in Southern California. He was telling me about a store that had bought a bulk supply of bird millet that wasn’t selling, even at 39 cents per unit.
Then they tried an experiment.
They placed a sign on the basket that read, “Fresh Bird Millet, 59¢ each or 2 for $1.” Shortly after, the millet started to sell. They were eventually even able to raise their price and sell more—all because of a sign.
In the course of business, I call on a lot of retail stores throughout the western states and, curiously enough, I don’t see as many signs as I used to in the stores. I truly believe that there is an advantage to using signs because they give information to your customer who otherwise might not ask and increase the chance for impulse sales, all at very little cost or effort to you.
In-store signage can be a powerful selling aid. According to a study by the Point of Purchase Advertising Institute, in-store advertising, such as point of purchase signage, influences 53 to 60 percent of the consumer purchases to some extent. Another research study revealed that, during the same sales period, if 100 products were sold with no signage, then 170 were sold when handwritten signs were used and 265 products were sold when signs were professionally produced to sell the products.
Those are pretty powerful numbers and should convince any pet retailer to increase their in-store signage. From end cap signage to window displays, in-store signage guides customers through the retail location and can provide valuable information to assist the customer in their purchase decisions.
How about your store’s identifying sign on its exterior? When was the last time you looked at it closely? A faded or peeling sign might turn business away. Since most commercial locations have glass entry doors as well as windows, what are your doors and windows saying to the public about your business?
As an example, many aquatic stores paint over their windows. Some do a great job by hiring a professional to indicate what the store specializes in, but many more just shove fixtures up against the windows to block the algae-causing sunlight. Unfortunately, I’ve seen this type of thing in my travels, from aquatic to general merchandise pet stores, and it’s not a pretty sight and does nothing to draw customers in.
According to one national study of independent retailers, over 35 percent of their customers learned of their businesses through just seeing the store sign as they passed by, while another 29 percent already knew they were there but a newly installed sign finally brought them into the store. Comparing those numbers to 14 percent brought in by word of mouth, 10 percent by advertising and 12 percent by other, it is clear just how important an outside sign can be in building your business.
Keep in mind that 85 percent of your customers live or work within a five-mile radius of your business and a good outside presence is essential to your store’s sales growth. Don’t be afraid to change out your window advertising signage monthly and only keep in-store signage if it shows sales progress. Try something different in place of the signs that are not bringing in sales.
Every endcap in your stores would benefit by providing a theme, such as a dog food of the month endcap, boxed aquarium setups or anything else you know you can sell and want to bump those sales up even more. Make signage detailing why the product is being showcased and why the customer is encouraged to buy it now.
Statements like “We Recommend” or “We Use This at Home” or “This is Our Favorite” are powerful sentiments that will encourage customers to try what you’re selling. Signs can be as small as an index card or as large as a 10-foot banner; just make sure your sign tells the story, keeping it simple and to the point.
If you haven’t used in-store signs in a while, or even if you have never used them, try them out. Signage is an inexpensive way to increase your sales. Over time, you will see what works and what doesn’t and make the whole process more effective and informative.
Creating an Events Calendar
Have you ever wondered if the other guy gets a better deal than you do? Why do you suppose some stores grow so quickly while you struggle to keep the bills paid?
There are many factors that cause some businesses to grow faster than others, such as a well-negotiated lease, a great location or having been well-financed from the beginning. Some of these factors may or may not affect your business. Even if you have none of these advantages, you can still beat the odds by creating a business plan and then following it.
Since we are into a new year, now would be an excellent time to develop a yearlong event and promotional calendar. The best way to maximize your profits is to plan ahead. If the distributors or vendors that you buy from know what your promotional plans are for the coming months, they will all be more likely to participate with discounts or in other ways that you define.
As I have mentioned in other articles, I and my colleagues call on hundreds of retail pet stores every year to ask owners and managers what they do to promote their business in their marketplace. Often, we ask them what they think are the most important components to growing their business. The top three answers they give are:
1. Professionally designed street signage
2. Competitive pricing
3. Customer service
While I think all three of these components are obviously important, competitive pricing is the hardest to deal with because it is the biggest factor between profit and loss, and success and failure. With the growth of online shopping and the proliferation of discount stores, it becomes more of a struggle every year to be competitive. With that in mind, it should be your mission to work with your suppliers to plan events and promotions well in advance.
Creating a calendar for the whole year will do two things:
First, it will allow you to allocate resources to manage events, such as adoption days or flea and tick dip days—all of which take advance planning. You could even try inviting the local media outlet to attend and write a piece on your Santa Photo Day or other special event. Believe it or not, they are always looking for human interest events to offset all that bad news they are always reporting.
The second advantage to planning ahead is that you are more likely to get what you want. For example, when approaching your distributors about supplies you need for your event, they may be able to order what you need during their normal order cycle if they know what you want in advance. This allows them to take advantage of vendor discounts and pass extra savings on to you. Also, if you have a calendar developed with your implementation plan, you can contact manufacturers directly to explain your plans and get their help maximizing distributor discounts.
Having been a manufacturer’s rep for 25 years, and a distributor buyer before that, I think I can safely say that most manufacturers will be happy to work through their distributors to help any retailer interested in promoting their products. They would probably go out of their way to sweeten the deal by offering a discount through their distributor, and door prizes or added value incentives are also possibilities.
And then there are the vendors that retailers buy from directly. Just because you are buying direct, does not mean you cannot negotiate an extra discount. Direct seller vendors want you to keep buying from them and will be sensitive about promotional requests from established retailers.
When you are developing the calendar, pick out the vendors that you already do volume with or those that you would like to be doing better with and contact them. Also let your distributor salesperson know what your plans are, as they will be your greatest asset and will look out for you as well as for their sales numbers.
Remember: if you do not ask, the answer will invariably be “no.” Stop wondering if the other guy is getting a better deal than you are—be the other guy.
When Is a Sale More than Just a Sale?
December and January are traditionally the bestselling months of the year for pet retailers. It always amazes me that so many retailers approach the holiday selling season so casually, without a detailed plan to take advantage of this important profit boosting period.
In my travels detailing stores, I’ve heard some smart ideas from those retailers who do gear up for holiday sales. I’m going to share their insights in the hope that this year will provide independent pet retailers a chance to make some significant profits by offering their customers more than just a discount.
No one runs a sale to make their customers upset, so why would anyone just tag an item as on sale when they are actually charging the usual price? Well, apparently some do. There have been news reports on television of major retailers doing just that—and getting caught doing it by customers. To assume that your customers won’t catch a sharp practice like that is to underestimate them and it is also a business ethics no-no. Even if the savings is no more than 10 percent, always be sure that a sale is a really a sale, or you’ll alienate a portion of your customers who will in turn spread bad vibes to people they know about your business.
If you can’t discount a lot due to cash flow, it is ethical to not compare the regular price with the sale price and say ”On sale at $27.95”, even though the everyday price might be $29.95. It isn’t compulsory to point out that the savings is only $2. It is enough that there is a savings and it allows you to highlight a product or service during a peak selling season.
Everyone knows that the bigger the display the more confidence the consumer has in the products and therefore you’ll sell more of the sale items. That having been said, the best sale offers the consumer variety, such as offering all of a particular fish food line at 15 percent off. This type of sale allows the customer some choice and builds your brand—one that you want them to come back to and buy from again. That example could be used for dog food, apparel or just about any category.
A better idea to make your sale sizzle is by taking advantage of your distributor’s holiday promotions. This idea may at first glance seem counterintuitive, but if there is a hot deal on your favorite aquarium water pump, don’t just buy what you need for the week. Invest and make a real display on the shelf and pass along the savings. If you offer a great sale price on items that are popular, customers will remember and be less critical of future offerings and more likely to come back to your store for future promotions.
There are always a few retailers willing to go out of their way to talk to their distributor about out-of-the-box ideas. An example of this is finding a distributor who has overstock or discontinued items that might fit your needs, such as building out a puppy starter kit or a 15 gallon aquarium gift set. Many times items don’t sell for distributors for reasons other than quality. Even though it is policy to only include consumables that you stock in a kit, (because you’ll want customers to come back and buy more) a food dish or aquarium heater (a one-time sale) doesn’t have to be your normal stock to fill out a package. You might be able to get a huge discount to clear out a distributor’s stock on slow or discontinued items.
Finally, don’t just run a sale that only customers who cross your threshold will see. Take advantage of social media. Facebook is becoming a powerful tool for any retailer. For as little as $5 a day you can advertise your sale to new potential customers. Check out Power Editor and build your Facebook following. If you use Facebook’s paid advertising program—even if your Facebook page following isn’t large—you can target all the zip codes around your business and reach thousands of Facebook users in your neighborhood, making your holiday sale more successful than in past years and adding more followers to your Facebook page at the same time.
Using some of these ideas will hopefully make the demanding holiday season even busier for your store.