From 2005 to 2010, I worked as the Children’s Ministry Director for our church. Other than a love for kids and teaching, I had no other experience. During that time, one of our pastors humorously asked us to take the “Famous World Leader” test. Your answers determined what world leader most closely represented you. I took the test 4 times and each time my answer was the same. Yes, the personality of the children’s ministry leader was most closely associated with… Saddam Hussein. Needless to say, my reputation was altered immediately. Your consignment store’s reputation is on the line every day. Dealing with customers and consignors can be exhausting. Everybody has an opinion. Plus, social media offers the ability to share those opinions loudly. Take these actions to guarantee your store’s reputation stays strong.
Is your store a respected business in your community? Similarly, are you personally respected by your consignors and customers? Now’s the time to take a long, objective view of your store. In 3 steps to avoid consignment tunnel vision, I urge you to view your physical store as a shopper. Read and respond to all of your online reviews. Listen closely to the interactions between salespeople and customers. In addition, look at consignor activity. Do the same consignors regularly bring you items or is it often “one-and-done?” Your consignment store’s reputation is much easier to maintain rather than rebuild. Moreover, few stores recover from continuous bad publicity.
Big box stores like Macy’s, Home Depot or Kohl’s weather the storm of bad publicity or a lousy employee because shoppers trust the corporation. Unfortunately, smaller independent stores don’t fare as well. Review every policy in your store. Put them all in writing. Every consignor should know your split, discount schedule, payout schedule and donation policy upfront. Similarly, contracts should be clear and concise. Read How to write Consignor Contracts (aka don’t get bats in your bathroom). If you’re completely transparent up front, there will be no room for arguing later.
Consignment store ownership requires humility. It’s never easy to swallow our pride and say, “I’m sorry.” Your store is your baby. You started it, nurtured it and watched it grow. Often, the mama bear comes out when someone says something negative. However, by winning one battle, you’re likely to lose the social media war. Studies show shoppers like to see negative reviews about a store. The store becomes real, relatable. On the other hand, they like it even more when a store responds graciously, offering an apology and a solution. It isn’t easy. It never will be.
One Yelp reviewer wrote, “It’s ‘buyer beware’ when it comes to pre-owned, no matter how reputable the store is. I bought a pair of Christian Louboutins and it turns out they are replicas. At $250, that’s way too much for a fake.” Building trust takes time. Honesty is an earned quality. If you sell high-end merchandise, have everything authenticated. SimpleConsign has partnered with Entrupy, a technology-based authentication service. Deanna Thompson of Entrupy shares her knowledge in Protecting yourself from counterfeit handbags. Authentication protects everyone. As one store owner put it, “Our customers love us, but our consignors hate us.”
In all of the above examples, being pro-active is the best way to maintain your consignment store’s reputation. Resale competition is building. There’s no room for a poor attitude. Think like your customer. In 6 simple strategies to snag a savvy shopper, I take the shopper’s viewpoint. We were planning our daughter’s wedding and certain services made a huge impression on me. Find what your customers are looking for and implement it. Train your staff to offer top-notch service. Don’t allow yourself to become complacent. If you need a break from your business, find time right after the first of the year. Rejuvenate. Refresh. Remember why you got into the consignment business in the first place.
P.S. I took the test again recently and got Adolf Hitler.
Like all of us, I love to trek through antique malls, thrift shops and consignment stores. It’s all about the hunt for hidden treasure, right? But when I enter a store numerous times and see the same merchandise at the door, I question whether there’s any treasure left. After all, if the same items sit week after week or even month after month in the same spot, no one must be shopping there anymore. Slow-moving consignment inventory hurts more than your sales numbers. If you want your shop to look fresh, busy and popular, you have to keep your merchandise moving. Here are 4 ways to clear it out.
Inventory can become stale if it sits in one place too long. Sometimes, all it takes is moving merchandise to another location for it to even be noticed. If you must keep it in the same place due to size, weight, etc., create new signage, lighting or redesign a backdrop. Anything that brings new attention to old inventory is a must. If possible, shift slow-moving consignment inventory closer to the door for maximum exposure.
No store wants to purposely give product away. However, if you have merchandise that simply isn’t moving, it’s time to pair it with other items. By offering a “Buy 1, Get 1 Free” deal, your sales margins will be lower, but you’ll be moving inventory. Shoppers love the idea of getting something “free” too. Bundle an older item with new merchandise to give it a fresh look. Plus, reduce the price for the package and customers will love you for the deal you gave.
Traditionally, most consignment stores work on a 30, 60 or 90-day pricing period. By the end of a designated time, merchandise is automatically reduced. Sometimes, particularly slow-moving consignment inventory needs special sales incentives. Be sure to randomly schedule special sales so your customers aren’t waiting to make a purchase. Read 17 brilliant ideas for inventory reduction for some fun quick sale ideas. A pop-up or flash sale is exciting, but if you don’t have a strong social media following, it will flop. Be sure you’re prepared with outdoor signage (read Consignment marketing on a tight budget for some guerrilla marketing tactics), social media posts and an email blast when the need for a special sale arises.
When all else fails, it may be necessary to donate slow-moving consignment inventory. If you’ve already marked items down through your existing discount schedule and they still haven’t sold, it’s time to hand it over to a charity. By donating, you’ll not only clear your sales floor, but you’ll receive a tax deduction as well. Be sure you choose an IRS-qualified charity. The amount you can deduct can change according to how you’ve set up your business, so check with your accountant to find out what is available to you. Make sure your rules for donating are clearly stated in your consignment contract.
Although no obstacle is insurmountable, there are common mistakes consignment shops make that may cause your business to fail. Here are 5 of them.
It is all about location, location, location. Knowing the demographics, like age and income of possible shoppers in your area, is key to choosing the right location. Statistics show that nearly 75% of your business will come from the residents in your store’s immediate neighborhood. Don’t choose your location based on price alone. Consider the parking and traffic patterns. Take a close look at other businesses nearby. Is there a well-known restaurant, store or gym around the corner? Look for businesses that will draw foot traffic. Read 5 steps to a successful consignment business to learn more about choosing the right location. If you find yourself in the wrong location, now is the time to make the change. Don’t wait. Go where your shoppers are.
You’ve chosen your location, but now you have to fill it with merchandise. Incorrectly managing your merchandise is one of the common mistakes consignment shops make. Too little merchandise and you look like you’re going out of business. Adding too many items to your sales floor will also hurt you. Shoppers don’t want to fight racks and hangers to view your merchandise. Poorly constructed or flawed items that make it onto the sales floor will damage your reputation. At least twice a month, review your inventory for expired products. Move items that aren’t selling to a sale area in the back. Start having a critical eye for what you will and won’t sell in your shop. Read How to manage your consignment inventory. Review your sales data and see who and what are your top sellers.
You know the struggle, if you price the merchandise too high, you risk losing sales. If it is too low, the business will struggle to make a profit. Generally, clothing is tagged 30 percent off the original retail value regardless if the item was worn or not. Follow basic pricing rules like ending with the number 9 (as in $9.99). Don’t make your discount schedule too difficult to understand. Shoppers tend to follow the path of least resistance when it comes to figuring out price, so make your prices as understandable as possible. Offer merchandise in a wide variety of price ranges. Then, there is something for everyone. If your merchandise is priced right, customers will have a sense of urgency to buy because they know it won’t last long. Read 4 tips for setting correct price points.
It’s critical that you develop concise, yet detailed written policies for consignors and employees. Not sticking to those policies is another one of the common mistakes that consignment shops make. Determine how long an item will be on the sales floor before a price reduction. Tell your consignors when they will get paid (typically at the end of the month) and how (cash, check, store credit). Let them know what will happen if their items don’t sell. Offer an intake sheet that outlines the contract and requires a signature. Have your consignors fill it out and list every item accepted into the inventory. Every employee and consignor must clearly understand how the intake system works. Read How to tweak your consignment acceptance policy. You’ll also want to develop brochures and a FAQs section on your website listing your policies. For your employees, make sure you have a clear employee manual. State your policies on vacation and sick days, social media use and such things as shoplifting, etc.
Decide immediately if your shop is a fun, enjoyable hobby or you intend to truly build a business. That decision will make a difference in how you plan. Just because you like to shop, know a good bargain when you see one and have a basement filled with stuff, doesn’t mean you’re equipped to open and run a consignment shop. It’s been suggested that a new business owner have at least 6 months of living expenses set aside ahead of time. Problems can arise, but having a safety net not only keeps you sane, it also relieves a lot of pressure. A solid business plan is essential no matter where you are in the process. Maybe it’s time to pull it out again and take another look. Read How to improve a mediocre resale business plan.
It all seems like common sense, doesn’t it? However, in the midst of making exciting decisions for a new business venture, we often lose sight of the practical aspects. It’s never too late to re-evaluate your choices though. Do a little homework and put yourself back on the right track.
For more on running a successful Consignment Store check these blogs out:
Updated on 4/12/2021
A successful consignment business begins with a solid business plan. It outlines your overall vision. The time you invest in creating this document saves you money and keeps you on track for the long haul. According to Entrepreneur.com, a consignment clothing store requires $3,000 – $10,000 to launch. Then, it takes at least two years to work out all the kinks. Carefully consider your business structure, consignment policies and your goals for the future. To learn more about financing, read Build a Strong Consignment Business – Step 1.
Remember, it truly is all about location. That’s why it’s so important to become very familiar with the neighborhood you’re considering. By visiting the local city hall and gathering as much information as you can regarding income, age, marital status, etc. You can make sure there’s a market for your type of store in the area. If you aren’t comfortable talking to a competitor, at least browse their store and marketing materials. Then, contact similar businesses in other cities or states. When your market has a lot of second-hand shops or a large, well-known shop will be in direct competition, think about ways to make your store unique. Find your niche, by reading Build a Strong Consignment Business – Step 2.
To become a successful consignment business, you need to attract consignors with quality merchandise. Don’t open the doors before the shelves are full. Shoppers will hesitate to come back. However, if you fill your shelves with inventory shoppers aren’t interested in, they won’t return either. By knowing your neighborhood and its demographics, you’ll know what merchandise to offer. Advertise for consignors in your local newspaper. Do website searches. Plus, scour yard sales, auctions, estate sales, business liquidations and thrift shops for good deals. Learn to bargain and negotiate. These skills will be needed when interacting with consignors. Read Tweaking Your Consignment Acceptance Policy and Inventory Management: Because You’re Running a Business, Not a Museum to learn more about your inventory.
Often times shoppers form lasting impressions of your consignment shop based on the layout of your store. No matter how well-stocked the store is, if it isn’t clean, bright, organized and attractive, customers will find another place to shop.Visit your favorite retailers and see how their merchandise is laid out. Place must-have seasonal items in the front of the store. Sale items and everyday products are in the back. Display smaller items that cost less than $10 next to the register. These impulse purchases can add up to significant sales each month. It’s also important to vary how you display your items. Changing up the same merchandise makes it feel new and different. For more merchandising tips, read 6 Tips to Improve Store Design.
Reach out to your community for support. Team up with other businesses in your neighborhood to offer cross-promotional services and discounts. Dry cleaners or tailors offer excellent cross-promotional opportunities for a clothing store. An aspiring jeweler could sell original accessories that complement a formal wear shop. Or, you could cross promote with a hair and nail salon. A children’s consignment store should partner with a local photographer for a customer appreciation sale. A furniture shop always benefits by having a solid relationship with a moving company. To learn more about partnering with other shops in your community, read Pros and Cons of Teaming Up with Other Resale Shops.
To become a truly successful consignment business, look for every available opportunity to build your vision. Join organizations such as the National Association of Resale Professionals (NARTS). Get involved with your local Chamber of Commerce. Find ways such as Shop Small Saturday to encourage your community to shop local. Do your homework and you will be successful.
Opening a new business? Be sure to read our Getting Started Success Kit. Sign up and start building a better business today.
I only had one job in my lifetime where I used a time clock. Every employee was handed a yellow card that looked very similar to a library card. (Of course, no one remembers those either.) I was forever punching the time on the wrong date or punching the time over a time already recorded. I was time clock challenged. Thank heavens, the days of time cards and punch clocks are over. Did you know that mechanized time recording started in 1888? That’s over 129 years of keeping tabs on employees. Technology has come a long way from mechanized time clocks and printed time sheets. Now, everything is done in the cloud. (All good things happen in the cloud, don’t you think? Like cloud-based consignment software.) A “virtual time clock” system is the way to go today.
With Clockspot, employees clock in from any cell phone, store phone or desktop. Bonnie Kallenberg, owner of Finders Keepers stores in Atlanta and a SimpleConsign customer says, “I like it because I can access it anywhere to figure payroll. It’s web based, like Traxia which is convenient. There is also a message center which is a great communication tool.” Neil Abramson, president of NARTS and owner of Cutie Patutie’s also uses Clockspot. He added, “It allows us to keep track of our team across locations. We can lock down the clock-in/clock-out feature to our different store IP addresses. They can view information at home or on their phone, but they can’t clock in or out from there.” Clockspot has 2 plans, but The Standard Plan is recommended for most small to medium-sized companies. The base price is $10 plus $5 per user each month.
Neil Abramson is in touch with a number of shops across the nation. He mentioned a few other online systems that are being used too. Whentowork offers a free 30-day trial. After your free trial, the monthly subscription price is based on the number of employees. With Whentowork, your sales team sets their “prefer,” “dislike” and even “cannot work” times. It’s an excellent way to schedule younger part-time employees. The minute the schedule is created and published, everyone is notified. They even offer a “Tradeboard” letting employees share shifts.
Humanity also offers a free trial. Their “Schedule Wizard” automatically creates schedules. I love the drag and drop feature as well. Humanity provides an online time clock, staff payroll processing and even a human resources tool that manages vacation and HR documents. However, their Starter and Classic Plan require a $40 a month minimum. In addition, to meet the minimum of $2 or $3 per user, you need to have at least 14 – 20 employees.
The beauty about homebase is it’s priced per location rather than per employee. Plus, their Basic Plan is completely free. As they state, they’re perfect for a seasonal shop or one with a lot of part-time employees. Every plan includes scheduling, time tracking, team communication, reporting and mobile apps. Obviously, the more you pay, the more additional features you receive though.
TimeStation states, “turn any smartphone or tablet into a cloud-based time & attendance system.” (There they go with the cloud-based again) With TimeStation, employees use employee cards with special QR codes or assigned PIN numbers. Their free plan includes up to 10 employees and 2 administrators.
Although printed time sheets seem easy enough, the accuracy and convenience of a system outweighs the cost. As Neil Abramson says, “While employees are not out to intentionally cheat their company, they do it all the time. To the employee, 9:05 am feels like 9 am. It not only cheats the company, it makes the employee that’s always on time, feel cheated too.”
Furthermore, if you’re still searching for the right time clock system, Capterra (the company we use to refer SimpleConsign) features Top 20 Time Clock Software Product reviews.
This article originally appeared in our SimpleConsign newsletter from 2013. I’ve updated it for you today.
I was reading a blog post about a woman’s experience with two of her local consignment shops. The title of the blog post was “Consignment Shop: Fail!” She used words like “demoralized,” “woes” and “failure.” Even the comments said, “I feel your pain” and “…it was so stinkin’ demoralizing.” The post ended with, “From now on, I’m donating everything to charity.” How do consignment shop owners let potential consignors down gently? Is it even possible? Confrontation is never easy, but there are better ways to tell consignors no thank you.
You have to be secure in your consignment shop policies. When the rules are clear and written down from the start, it’s much easier to say “no thank you.” Before you ever begin accepting items for consignment, make a thorough list of what you will and will not accept. Not only does this help you turn items down, but it also establishes up front what type of merchandise you will be offering in your consignment store. Always give clear and concise reasons why you can’t accept their items based on your policy. Do not waiver!
Even though you may disagree with my choice of the pink elephant peanut bowl, it speaks volumes about who I am. Everyone wants to be affirmed and when it comes to personal possessions, a consignor feels especially vulnerable. Begin your answer, whenever possible, with a solid compliment. Then, follow up with “I” never “you.” An example given in “13 More Things Your Consignment or Thrift Shop Won’t Tell You” from the Reader’s Digest is, “That’s adorable, but I don’t have a market for it.”
Do not waiver in this next step. Get to the point immediately. Handle a consignor’s items with appreciation, but speak with firm resolve. Don’t beat around the bush. You need to have the strength of your policies behind you. Don’t lecture, but use a conversational voice when you tell consignors no. It’s easier to receive. If possible, stand on their side of the counter when chatting with them.
If the first 2 tips don’t help you win their acceptance of your courteous rejection, remember respectful communication should always rule. Thanking them for taking the time to bring in items is essential to building relationships. If there is push back from the consignor, always maintain your cool. Avoid any escalation of emotions. Return kindness for kindness, but never return rudeness.
Your policies are set in writing. You’ve given a straight answer and spoken with confidence and respect. When you tell consignors no, there’s no need to apologize. You didn’t do anything wrong. Don’t feel guilty for not taking items that neither fit your policies or your store brand. In the end, if you do, you’ll be the one to suffer.
Maralee McKee, the Manners Mentor, suggests ending the conversation with an encouraging word. Perhaps the items don’t qualify today, but you never know what they’ve left behind. By leaving with a good experience, a potential consignor isn’t likely to write a nasty review or blog post. Plus, they may return with friends and family ready to do business with just the right merchandise you are looking for.
For suggestions on how to deal with customers who surprisingly aren’t always right, read “In resale, the customer is always right, right?”
A good consignment shop spring cleaning is more than just picking up a bucket and a mop. There are many ways you can revitalize your shop for the season.
Not only is spring cleaning something you hope your consignors will do, but consignment shop spring cleaning is essential too. When the air warms and the flowers bloom, no one wants to look at drab colors and heavy woolens. Now’s the time to have that much-needed consignment inventory reduction sale. Or, consider making a wonderful donation of seasonal and outdated items.
Now that the holiday crunch is behind you, focus on staff clean up. Your shop may have grown to the point that you need to add full-time rather than part-time only employees. Are each of your employees dedicated to your vision? Are they excited to move forward with your business? Do they see themselves having a future with you? If not, some fresh faces may be just what your shop needs to add excitement, new ideas and energy. Make sure all employee records are up to date. Get correct addresses, cell numbers and emergency phone numbers on file. This is also the time to offer some new incentive programs for the coming year.
Bob Negen from WhizBang Training suggests that spring cleaning your shop includes sweeping the cobwebs from your brain too. The best medicine may be to take a day off and pamper yourself. Get some fresh ideas for shop design, marketing or employee training by reading the latest books or attending workshops. Our “Raising the Resale Bar” blog has a wealth of great articles and information. Choose a topic you’re most interested in. We also recommend attending the annual National Association of Resale Professionals (NARTS) conference. This year, it will be held in Columbus, OH in late June. It’s a great way to learn about changes in the industry and make important connections with others.
Consignment shop spring cleaning also involves reviewing a variety of policies. When was the last time you looked at your original business plan? Reviewing and tweaking your business plan might give you a renewed excitement for the future of your shop. This is also a perfect time to update your procedures. For some ideas on your intake procedure, read Tweaking your Acceptance Policy. Take a closer look at your POS system too. Is it meeting your needs? If not, we encourage you to sign up for your 15-day free trial of SimpleConsign. Do you have an employee training manual? If not, consider creating one and be sure to add a thorough disaster recovery plan too.
Spring is the perfect time to change the look, feel and smell of your shop from the inside out. Think outside of the box by making better use of your ceiling space. Rearrange rounders, shelving and racks to give a whole new feel to your environment. Consider painting at least one wall a new, bold color. Look at your shop the way your customers see it. Is the carpet old and frayed? Now’s the time to replace it. What about your store’s lighting? This is a great time to change fixtures. Consider adding a fragrance using plug ins from Bath & Body Works. They have an endless array of scents like Fresh Linen or Pure White Cotton that can add a touch of Spring freshness to the air.
Okay, let’s face it, spring cleaning your shop does involve picking up a mop and filling a bucket. Things just look and smell better with a good wipe down. Host a cleaning party with your staff. For your “Consignment Shop Spring Cleaning” party, give everyone crazy work gloves and colorful buckets. Make funny name tags such as “Scrubby Susan” or “Dusting Donna.” Play loud, fun music that everyone can sing and dance to. Include snacks or dinner. If possible, wash your shop’s walls especially in your dressing rooms and bathrooms. Remove any cobwebs and wipe off light fixtures. Check the door frames for fingerprints. Take a close look at your front door and windows. Does your main display window shine? Sweep in the corners and freshen up your cash wrap. Move clutter to your back office and make sure your entire staff knows the rules about keeping areas clean.
As you begin the new year, now is the perfect time to assess the overall health of your business. Where do you begin? How do you measure the health of a company? Like a doctor, your check-up for a healthy consignment shop needs to cover what’s working and what isn’t. Taking a closer look at last year will definitely give you a better view of the road ahead.
The best way to take an overall snapshot of your business success is with a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Don’t be the only one taking it though. You need to know what your key employees think as well. It’s a tremendous way to brainstorm about where you are in business and where you want to be.
This truly is one of the simplest ways to analyze your business as well as your ability to lead your staff. Not only does it look at what you have been doing, but it opens your eyes to opportunities that you may not have thought about before.
Start with your current strengths (because you need to look at the positives first, right?). This can include your current practices, the type of inventory you offer, particular employees, etc. What has been successful for you? Do you offer incredible customer service? Is your location and parking convenient? Are you meeting a need in your community that no one else does? List at least 3 – 5 strengths in the “S” box as S1, S2, S3 and so forth.
I hate to be the one to break it to you, but there are things you are not doing well. Be honest with yourself and encourage your employees to be completely honest too. Is your shop less than attractive with merchandise piled around? Lack of organization could be a serious weakness. Do your employees have a bad attitude? Are your hours so limited that you’re making people work hard to get into your business? List at least 3 – 5 weaknesses in the “W” box as W1, W2, W3, etc.
This one may require you to think outside the box. Get it? Outside the box? That little orange box? Okay, never mind. As you look ahead, consider all of the possibilities that are available around you. Is there a better location that just opened up? Can you partner with other consignment shops in your area to create an association or plan a bus tour? Perhaps, you need to create a buy outright or retail plan to add new store merchandise. This is where you let your imagination run wild. Fashion shows, DIY classes, a community sponsorship, etc. List as many as you can think of in the “O’ square.
Unfortunately, there are risks that threaten every business. Has a new resale shop moved into your area as direct competition? Are you running out of consignors who have new and interesting merchandise? At the end of the day, do you find sales are not outweighing the cost of overhead? List these in the “T” box as T1, T2, T3, and so on.
Once you’ve finished your SWOT Analysis, you’ll want to begin to map out your strategy. This will be where the outer gray blocks come into play. Investopedia suggests, “use it as a guide and not a prescription.” Keep it short and simple and don’t over analyze.
Your business has internal strengths and weaknesses, but also external opportunities and threats. A healthy consignment shop should be able to match its strengths with a corresponding opportunity. Assess each weakness to see if it poses a threat. Sometimes you’ll find your strengths outweigh the threats that currently exist. It really goes without saying, strengths and opportunities are always helpful and weaknesses and threats are always harmful. However, a healthy consignment shop can use their strengths to turn threats into opportunities.
It is true that the overall success of a business starts at the top. How healthy is the shop owner or manager? Here’s a great way to find out. Get your copy of Traxia’s Consignment Business Check Up.
Better health begins with less stress. Less stress comes from everything running smoothly and that includes your shop’s POS system. Wanna make life simpler? Choose SimpleConsign web based consignment software. Sign up for your free trial today!
You know the feeling. It’s that nervous hesitation. Should I open that email? Is it really safe to “Click here?” Did I give too much personal information? Today, staying cyber safe is always in the back of our minds. Protect your shop online. Follow these 5 practical steps.
Did you know the most common password is the word “Password?” It’s followed by the 2nd most popular password, “123456.” According to a 2015 report by ThreatMetrix, the point of login is especially vulnerable for cyber threats. Women, because they tend to use common words like their pet’s or children’s names, appear to be more vulnerable to hacking. When creating a strong password, make sure you add all of the following.
Change your passwords regularly no matter how clever you think you are.
There are several basic systems you can put into place to protect the information on your desktop immediately. “Ask Leo!” gives you the bottom line.
Wrongfully, Mac users assume their computers are safer. If you’re using a Mac for your business, regularly check for updates and make sure your firewall is running as well.
As part of your Employee Manual (which every shop should have), include a social media policy as another way to protect your shop online. Upfront, your Manual must state any discussion of their employment must be handled in person rather than online. Although disgruntled employees have the legal right to complain online about their working situations, make it understood that you are willing and eager to discuss it with them first. Add these other ideas to your Social Media Policy.
Choose a trusted email provider to send business emails. A provider has stronger filtering capabilities. Educate your employees about what to look for when opening an email that looks like Spam or a scam. Receive emails without images being displayed first. Once you know the email is from a reputable sender, click on “Display images below.” Often, images and logos are tied to Spam accounts.
If you have done these basics to protect your shop online, it’s time to move your data to the cloud. Hardware failure, theft of your computer, fire or flood damage, or a virus are just a few of the risks in keeping your data only on your computer. By converting that data to a web based system, you are automatically assured that your shop’s point-of-sale (POS) data is kept safe somewhere else. In a shameless plug for SimpleConsign, these are just a few of the safety features we provide:
Do you remember the emotions you experienced when you decided to open a store and the planning that happened afterwards? Remember the adrenaline rush just days before the grand opening? And the first week of store operations? Euphoria.
Thud! The honeymoon is over.
Store counts are low and continuing to decline. Your best employee just left for greener pastures (who happened to be one of your best friends). You are late on one rent payment. Your last holiday season was so-so, but 12% lower than the previous year. Is it time to close?
All is not well in paradise. You thought you had a sure thing. When a few family members said, “You’d be a great store owner. You just need to do it,” you believed them. But, as it turns out, you’ve learned there’s a lot to running a business. Marketing, merchandising, finances, people, administration. This was supposed to be easy. Instead, you’re ready to write 10 Reasons to Never Open a Resale Shop.
Is it time to close or continue the madness? That is the question. Perhaps there is a better question. Can I turn this ship around? And if so, how?
I’ve been an outsourced CFO since 2001. I was once a controller for a large regional retail operation. I serve multiple e-commerce clients. So I understand the business of retail, and I can understand the frustrations a store owner goes through in such a competitive environment. While my focus is biased toward operations and finance, the first thing I study when working with a struggling retailer is their marketing plan and how they are executing it. Solid marketing equals sales amplified.
Build it and they will come? Sure, that works in the beginning. Now, you have to start earning the customer visits if you not only want your store to survive, but thrive.
Let’s start with a simple income statement for a struggling resale shop. (All numbers are fabricated)
The income statement is for a recent 12-month time period, and note that the total store transactions (or customer purchases) are 3,848. That’s roughly 75 customer transactions per week or about 12 per day.
So my first question is, is it time to close or can we do better? We need to answer that by noting the simple equation for calculating total sales for a given time period (let’s stick to 12 months)
As the store owner and entrepreneur, are there more potential customers you are not attracting? If so, who are they? Where are they? And what’s the strategy to pull them in?
There is no holy grail to a perfect marketing system, but you have to start with a plan. It has to be simple, clear, easy to execute, and measurable. Rinse and repeat often. That’s the only way you’ll build up your customer base over time.
Average Purchases (Transactions)
Obviously, if you are selling furniture, the average number of customer purchases per year will be a small number (for example, about one customer purchase per year). If you sell clothing, you’re probably looking at 6-7 customer purchases per year. Accordingly, our store merchandising strategy plays a major impact on your repeat customer counts. If you don’t want to overhaul your inventory mix, you can enhance customer purchases through more special promotions throughout the year. You’ll just need to get creative.
Like total transactions, the average ticket is driven by your merchandising plan. Take note of specific items where there’s not as much price sensitivity to some of your best sellers. For a store that generates 5,000 customer purchases per year, every dollar added to the average ticket falls directly to the bottom line and into your pocket. This is where the math gets really interesting. While this may seem like major surgery, perhaps your merchandising plan needs an overhaul. That could dramatically impact your average ticket. Maybe you need a new product category or two. Your customers will be your best advisory board if you are thinking about this.
We could spend hours talking about the cost side of your financial business model which includes your average cost for your resale merchandise, labor costs, occupancy expenses, and so on. However, the cost structure is not a contributing factor that’s causing large retail chains to shut their doors. They are biting the bullet because customers have quit buying from those stores. When many store costs are fixed, a declining store count only spells disaster. Still, you need to keep an eye on the costs you can easily manage (like store labor) and you need to get good at the way you spend your smart money (e.g., advertising and promotions).
In short, you need to be able to clearly state what every cost is in your store operations. You need to know why those cost exists and what drives them. I’ve worked with many executives over the years who cannot answer those fundamental questions.
I think the answer is simple. It’s time to close when you have exhausted every possible method to increase one or more parts of the top line sales equation. Generally, that means you’ve done everything to figure out how to get more customers in the store and how to get them buying more often. If you cannot figure that out, then the answer is simple. Yes, it’s time to close.
But don’t throw in the towel without thinking about your sales issues thoughtfully and carefully. By the way, I’m pulling for you. I want your decision to be based on logic more so than emotion.