Big Opportunity For Savvy Fashion Retailers

Owning any retail business (including fashion, clothing, footwear, jewellery) in the current economic climate is a challenge. However it’s also a ‘golden’ opportunity.

What would you rather do? Purchase a fashion business at the peak of the market (last peak was 2007) and pay the ‘peak’ price. Or obtain a bargain at the bottom of the market which can only move up?

Although I’ve included yet another article from "Gerry Harvey" – love him or hate him, he certainly knows the retailing trends in Australia (see article below).

Underperforming retailers are closing – often business owners have seen a decline in sales from 2008 to now – and they’re worn out, frustrated and tired.

A perfect time to make them a ‘fair’, yet realistic offer.

The challenge for you – if you decide to purchase a fashion business right now- it to be able to maintain a positive profit figure in the current consumer market. Certainly paying too much for the business and stock won’t help.

However, if you have bought well, kept a very close eye on your stock levels and marketed your store using some of our low cost marketing strategies – then you’ve really got a lean and profitable store with good sales growth potential when consumers return to spending (which they will). Not only will you take advantage of the increase in cash-flow, but also capital growth too!

Loss Of Store Traffic – Don’t Let This Happen To Your Fashion Business!

I’ve been saying it for years… when it comes to fashion business marketing (and any other retail store for that matter) – you can’t simply rely on local walk-by or drive-by traffic. You are putting yourself at the mercy of the local conditions – car park changes, local council works, nearby building works, etc.

Here’s proof… have a read of this article in The West Australian newspaper this week…. One retailer has lost his franchise business, others are running at a loss and all had to lay off staff and reduce hours. We certainly feel for these business owners… not a nice thing to happen… but it does unfortuntely.

Retailing requires smarter thinking – that’s why you have to look at other ways (strategies) to market and deliver your products to consumers.

Fashion Retailing Meets The Titanic

I get correspondence from a surprising number of fashion retailers who own smaller stores where the annual sales revenue is ‘stuck’ at $200k, $300k or even $500k per annum. I’m told that not only have ‘sales growth’ have been stagnant this year, but for many years.

When I write back to ask them what fashion marketing, advertising or customer relationship activities they are working on – I usually get this response…

"Oh, we need to buy some new stock and move our displays around. We should have this all done soon. Maybe we can look at marketing next year."

Talk about "Shuffling deck chairs on the Titanic!"

If 100% of fashion marketing ‘activity’ is stock ordering and moving it around the store… Beware!!! It’s like shuffling deck chairs on the Titanic.

Albert Einstein once said "The definition of insanity is doing the same thing over and over and expecting a difference result".

Yes, buying new stock and making the store displays attractive is important. Good visual merchandising does lead to increased sales. However, it can’t occupy 100% of the fashion business owner’s time.

At least 1-3 hours a week should be devoted to fashion promotion and working on the marketing calendar. You can’t expect store sales growth without this activity. It just won’t happen.

So when I get the ‘deck chair replies’ – I say to myself … "Insanity"!

If you are a fashion retail store owner and do spend 1-3 hours a week on ‘non-titanic’ activities – well done.

If not, or if you don’t know how to break-through to higher sales revenue, contact us about our fashion marketing programs. Not only will you save time and money ‘experimenting’, you will get actual proven and tested promotions ‘ready to roll-out’ for instant sales and more cash in your bank account.

Click here to contact us, or click here to join our entry level Fashion Retail Insiders program for only $47 per month.

Why Oh Why Are We Not Meeting Our Fashion Sales Targets?

I had a call this week from a fashion store owner who doesn’t work in the store himself (it’s under management). He was frustrated with the low numbers of paying customers even after placing "Up to 75% off" signs on the store windows. This business owner was convinced that the shopping centre was doing a lousy job of attracting people.

But you see, there are two aspects to obtaining paying customers… 1) Store traffic and, 2) Sales conversion.

I had a feeling that the staff weren’t doing such a good job of selling. The only way to find out is to measure TRAFFIC AND SALES. From that the sales conversion can be worked out.

For most fashion retailers the sales conversion rate will be between 10% to 40%. That is, out of 10 people that walk-in, one to four will buy.

Whoa, I bet you’re telling me your sales conversion is much higher. Okay, prove it!

Below is a sample store browsers chart. Rule a single page with 6 columns and mark one line for each person that walks into the store every day over one week (count a couple and families as one person).

Then check your sales numbers at the end of the week (from your POS or till). Divide # sales / # browsers and multiply by 100. That’s your conversion as a percentage.

Then you’ll know if your staff are doing a good job or not. If your conversion is below 10% you’ve got a BIG problem!

P.S. The more accurate way of obtaining your store traffic numbers is to install an automatic people counter – I have discussed this on a previous post on this website.

5 Main Ways To Make More Money In Your Fashion Business!

So many fashion store owners get caught up in a lot of staff and stock management "activities" and forget this one simple principle. There are only five ways to grow your fashion business:

Get more store traffic (get more). Have more browsers become paying customers (convert more). Get customers to buy more items or purchase higher priced ticket items on each visit (spend more). Get your regular or existing customers come back more often (visit more). Make more money out of each product line, improve your margins and minimise unnecessary expenses. (make more) We call these the 5 Profit Centres in a retail store!

Yes, absolutely ‘Stock Management’ is very important to fashion retail store success, but it cannot be the only focus. Here’s how you can MAKE MORE MONEY using the 5 Profit Centres…

Profit Centre #1) Get more people into your store (thats store browsers) – preferably at a lower cost. Even if your conversion to a paying customer remained exactly the same, more store traffic equals more sales. The ‘challenge’ is to find low cost methods to increase store traffic.

Good strategies include advertising, mailbox flyers, fashion shows, referral programs, special events, signage and so on. Look in the ‘new customer marketing’ section in this member’s area for more information and examples.

Profit Centre #2) Get more people to buy. Again, if you improved nothing else but had more store browsers convert to paying customers, you’ll increase the total sales. Good strategies include improvements to store layout, staff training, product placement, signage, pricing and so on.

Profit Centre #3) Get customers to spend more on each visit (this is called the average sale or average cheque). There are literally dozens of strategies to get customers to spend more… up-sells, cross-sells, point-of-sale displays and so on.

Profit Centre #4) Get customers back more often. Utilise our customer marketing services at Kinetic Media & Marketing – we use post, SMS and email to communicate to your customers.

Profit Centre #5) Improve your margins. What’s your gross margin? Your mark-up? Your cost of goods? What’s the relationship between your turnover to staff wages? What are you best selling items? What items have the largest profit margin? How can you sell more of them? What’s the break-down of expenses? Is there a blow-out in one area? How much old stock are you carrying? How well does your store perform again the Australian statistics for retailing?

These are some of the many sub-areas you can look at to improve your margins.

By taking time to improve those 5 Profit Centres, you’ll see an almost INSTANT improvement to your bottom-line store profit!

Improving Retail Store Traffic : How Many Browsers & Customers?

When it comes to finding out how effective your fashion advertising is (and even the advertising of the shopping centre management – if this applies to you) in bringing people into your store, you’ll need to have a system to measure STORE TRAFFIC.

Even if you don’t advertise – you’ll need to understand which days of the week and which months are your quiet times and which are your busy times.

Simply looking at your retail store sales figures only tells you half the story – how many people made purchases, not how many people came in.

The best way to find out how many people came in is to install a store traffic counter across the entry (or entries to your store). Armed with this information, you can create a more effective marketing calendar and fashion business strategy.

Here’s a small list of some of the benefits of having an automated store traffic counter…

• Be able to monitor how effective your advertising and marketing promotions are.
• To be able determine your sales conversion.
• Know whether you are generating enough store traffic to ensure target sales revenue.
• Ensure you have enough staff during peak times and be able to reduce staff at quiet times.

Closely monitoring your store traffic will allow you to refine your marketing and even reduce money wasted on ineffective marketing campaigns! IMPLEMENTATION : You can get electronic store counters from ‘Total Count’ in Melbourne. This is their web site address : www.totalcount.com.au

They have inexpensive counters and all the way up to advanced models. And before you ask. No, I don’t get a commission by recommending them. Our clients have been using the counters from Total Count and they have been reliable.

THE KEY POINT : You can’t improve what you don’t measure. Automated systems work best because they don’t rely on humans – if you don’t have a store traffic counter – now is a great time to get one!

Fashion Industry Contacts – Associations

I recently received an email request for assistance with finding fashion industry contacts. My advice was to visit a number of Australian association web sites. After sending the reply email, I thought other people may benefit from a list of Australian associations involved with fashion. So here they are. P.S. If you come across any others or have updated information please make a comment on this page and we’ll update our list.

Fashion Industry Association List. Dated (23rd April 2010).

Australian Fashion Council (AFC)
www.australianfashioncouncil.com

Council of Textile and Fashion Industries of Australia Limited (TFIA)
www.tfia.com.au

National Retail Association (NRA)
www.nra.net.au
NRA has a lot of fashion retailers

The Retailers Association (TRA) – now called United Retail Federation

United Retail Federation
www.unitedretailfederation.com.au
Membership Australia-wide.

Australian Retailers Association (ARA)
www.retail.org.au

Fashion Technicians Association of Australia (FTAA)
www.ftaa.com.au

Hmmm, a Very Untidy Clearance Shoe Store

Yes, I understand the need to move last seasons shoe stock, but an unattended (and very untidy) clearance store didn’t leave a very good impression with me. See the photos… Selling shoes for $10 a pair doesn’t leave much in the kitty for staff. I didn’t even see the cash register!

Should You Let Your Accountant Run Your Fashion Store?

I usually have several conversations a day with fashion retailers… existing clients and people enquiring about our marketing services. One such conversation with a prospect business (not a client) last week (early March 2010) was with an owner of a small fashion store who also managed an accounting firm with his wife. One of first things he said (I won’t mention his real name – but let’s call him Peter) … was "The store isn’t doing well". Peter’s comments weren’t anything new… I’ve been hearing about slow retail sales from mid-January this year (2010).

When Peter said "The store isn’t doing well", to be honest, I was a little annoyed. Peter and his wife had contacted me in January I had given them one particular strategy to increase sales. Guess what? That’s right, Peter didn’t implement it at all. Two months later he calls to tell me how lousy sales are. Now this particular strategy had zero cost – yep … zero cost! Peter’s reason for not implementing the strategy was…. drum roll … "…we were too busy...". Yes, too busy losing money.

Don’t get me wrong, I have good friends who are accountants, but an accountant’s mindset about running a business … is 1) Financial management, and 2) Cost cutting.

Accountants don’t know much about marketing and sales – they foolishly see it as an expense rather than an investment. That’s why big businesses have an accounting department separate to the marketing and sales department. You and I, as entrepreneurs, value accountants for 1) Minimising tax, 2) Preparing accounting statements and keeping the ATO happy, 3) Giving advice about gearing and balance sheets – that’s it – don’t ask an accountant if you should spend more money on marketing!

If you, or anyone else in fashion retailing, is hurting (financially) make fashion marketing and sales your top priority.

Closures In Retail Expected

A friend of mine sent me a link to a recent 2010 article by the Dominion Post about the typical trend of retail closures just after the Christmas period. i.e. January and February every year. Here is an excerpt from the article…

CLAIRE MCENTEE – The Dominion Post. Original article

"More retail closures could be in store following the rash of holiday receiverships. Several retailers were declared insolvent in January, including 10 Stax fashion stores, electronics store Eastern Hi Fi and Christchurch cycle shop Bike HQ. Three Wellington Mitre 10 stores were put into receivership shortly before Christmas."

"PricewaterhouseCoopers partner John Fisk said businesses that had struggled all year often capitulated in the face of holiday wage costs and a slowdown in turnover. Some retailers were thriving but many had been forced to swallow large rent increases, and there were likely to be some smaller ones hanging on and waiting for their leases to expire so they could close."

"Each insolvency was different – in the case of the Mitre 10 stores poor property investments by the owner were blamed – but a common cause was purchasing the wrong stock and being forced to discount it. ‘That puts pressure on the margins and it can be a slippery slope.’  KPMG head of restructuring and insolvency Shaun Adams said the holiday season was traditionally crunch time for struggling retailers."

So let’s review the main causes from this article and others that I’ve picked up in my business experience over the years:

• Increases in rent in the New Year.
• Staff wages costs over the holiday period : Overtime, annual leave pay, etc
• Purchasing stock that didn’t sell well over the holiday period. Or overstock.
• Having to discount heavily to compete with other retailers.
• The sales slump that occurs from mid-January onwards after the Christmas and post-Christmas sales (The exception may be shoe stores that do well with Back-to-School promotions until the first or second week of February).
• Having to commit to purchase $50k, $100k, $200k or more in stock for the upcoming winter season which puts a strain on balance sheets and bank accounts.

Sound familiar? In my next post I’ll show you some ways to counter these challenges for a typical fashion business. Stay tuned.