Last week, I spoke to a father and son team who run a home furnishing store. Business is tough. There’s plenty of competition. Retail is suffering globally. Yet, in the last two years, turnover is up; so are profits.
What are they doing right?
A walk through the mall throws up some answers. Virtually everyone has the “Sale” sign out. Prices have been slashed. Inevitably, some shops are closing. Staff are disinterested. Showrooms lack feel.
Their store is different. It doesn’t look like a closing down sale. Staff are courteous and engaging. They actually like what they sell. The look and feel is excellent.
They have the added benefit of diversity. The son has a great sense of presentation. Dad is an old style retailer who understands price, product and margin. Between them, they run a sustainable business.
Margin is critical in tough times.
If you are open for business, you are still paying rent, wages and other overheads. Sacrifice margin and room for maneuver is drastically reduced.
Price is only one part of the decision to purchase.
I recently bought a farm truck. I wanted a rugged vehicle, which was well maintained, had a sound service record and would do the job. That’s what the dealer sold me. Price was only one factor. I bought it at a straightforward car yard. There was no cappuccino machine in the lobby.
My personal vehicle is a foreign car. I bought it at well-appointed dealership. Their strength is after-sales service. I sipped coffee while various models were outlined. I chose one with features I wanted. We still negotiated on price, but I suspect it was within a ballpark that made margin sense for the dealer.
Customers want total solutions.
In the successful furniture store, the focus is on comfort, durability, versatility, color and fabric. The layout makes clear what fits together to make a room look great. They actively engage with the customer’s desires. They are not the cheapest option in the mall, but when they sell something, they make money. And they have room to maneuver to make it happen.
Of all the survival strategies for tough times, two will always make sense. They apply to any product or service.
- Right product: don’t confine product range to what you know you can sell at the lowest price. Focus on what you know you can sell at a decent margin. Look for features other than price that customer’s will value.
- Engagement: generate an authentic conversation with customers. Get a feel for what they want and work with them on a solution. I often find myself wanting to buy simply because people are helpful. It doesn’t necessarily mean a sale, but it moves me closer to the purchase decision.
These two are mutually reinforcing. Authentic engagement hones product selection. You know what the customer will pay for. Get both right and you stand a good chance not only of making a sale, but also of making a profit.