Retailing Winners: Deep Discounters and Used Re-Sellers January 23, 2009Posted by David Dirks in Building Foot Traffic, business strategy, Increasing Your Profitability, Recession: How to Beat It!, Retailer Store Strategies, Sales Strategy/Tactics, Sales Tactics.
Tags: beating a recession, business strategy, buzz marketing, differentiation, fighting a recession, increasing profits, increasing revenues, market differentiation, recession strategies, retail sales, revenues, sales, sales strategy, Sales Tactics, small business sales
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We should have seen this one coming. While most of retailing struggles, there are those who are doing just fine, thank you. I noted a recent cnbc.com report that told the story of Family Dollar Stores with quarterly profits jumping 14% in the 4th quarter of 2008. Deep discount stores have for a long time been the butt end of business jokes but no more. If every dog has its day, then this dog is having a good one. Mind you, stores like Family Dollar and 99cent Power have always done well and only just increase their sales and profit tempo by several fold in tough times like this.
Gamestop is another interesting retailing story. They sell both gaming hardware and software but with a twist: they also re-sell used gaming equipment and gaming software. Just think of it. When some people move up to the next system or change systems, they are often stuck with a substantial inventory of gaming hardware and game cartridges. However, they realized that there is a very vibrant and growing secondary market for this stuff. So they buy it outright and re-sell it at good profit. So far, the kids can’t get enough of this stuff and keep buying and selling. Gamestop also offers a discount off of new games if you bring one in for trade. Either way, they make a good profit.
You might be familiar with a franchise called “Play It Again Sports” that buys and then re-sells used sporting good equipment of all kinds. What an idea! Take the stuff that we who have kids seem to accumulate in droves, buy it on cheap (we just want to get rid of it not realize an ROI!), and re-sell it to folks who are smarter than we are (because they can buy sports equipment in excellent condition for a fraction of the cost we paid for it). It’s a great play but especially in times like these where every dollar spent is measured carefully.
What can we learn from these retailers? Here are a few questions I’d be asking myself:
- What part of my business could take advantage of this concept of offering deeply discounted or re-selling high quality, slightly used products? For example, if I owned a retail shop that sold hi-tech equipment (think like a Best Buy but on a smaller scale), I might seriously consider buying slightly used, ‘late-model’, high-quality equipment from folks who are looking to unload it for cash.
I’m not suggesting here that you sell junk. Leave that to the yard sales to move. Instead, you are creating another source of incremental sales revenue and profits by way of offering a less expensive alternative to ‘new’. Don’t worry about selling the new product as there will always be those who will only buy new…however, in these times there are a lot less of them.
- Don’t get hung up on the concept of selling slightly used products. Don’t let your pride get in the way of your ability to DRIVE TRAFFIC TO YOUR STORE. This is about creating another level of differentiation that customers will value.
- Set up a distinct area of your store or website that offers the re-sale product and promote the heck out of it. Nine times out of ten if it doesn’t work, it’s because it wasn’t promoted every way possible. You can build it but if they don’t know about it, they won’t come.
- You have to let folks know you are a buyer of product. You have to market to the people who own the product you want to resell. If you promote to sell product, you also have to do the same to buy it.
- Buy low, sell high. Establish an idea of what the used product goes for on the market given different levels or grades of quality. Ebay is a great place to start. Look there to see what used items in that category are going for.
- Set high quality standards for the used products you buy. The good news is that you don’t have to buy anything that you deem junk. Set standards for quality (and safety) that anyone could use to measure whether a used product is worthy of you buying.
This concept of re-selling slightly used product or deeply discounted new product doesn’t fit every business model. Remember, this is about giving customers and potential customers a reason to come to your store (or retail website).
Beating a Recession – 8 December 10, 2008Posted by David Dirks in Innovation: Not Just for the Big Dogz, Recession: How to Beat It!, Retailer Store Strategies, Sales Strategy/Tactics.
Tags: beating a recession, differentiation, discounting, disruptor, fighting a recession, market disruptor, marketing, recession, sales
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I’m always on the prowl for ideas that can help combat the economic slowdown. Here are two that I think are more than worth considering:
- Become a disruptor in your industry or business. Creating products, services, or processes that disrupt your competition and put them on the defensive is a sure way to create market differentiation. As I always say, the key to any Big Dogz performance is how effectively they differentiate themselves, in a positive manner, from their competitors. Apple’s iPhone is a great example of a disruptive product. Who would have thought that a computer company would introduce a product platform that not only is superior to its competition, but has the ability to disrupt the entire cell phone industry?
Another excellent example is a firm called Axiom. Axiom is a disrupter in the rather tradition-bound law field. What makes Axiom a disrupter? It’s how they have harnessed the internet to create a web-based law firm. Their attorney’s do not work from dark, hardwood-paneled offices. Rather, they work from their homes. The Axiom model hires the best attorneys from some of the top law firms in the country and gives them the freedom to work with clients in a web-based environment. What value do their clients get? Well, because they have dramatically lower operating costs compared to a traditional highpowered law firm, they can offer their services at rates that can be 50% lower than those charged by traditional, office-bound law firms.
How can you create products, services, or business processes that can create disruption in your field?
- Empower your sales team to offer discounts on products and/or services, ON THE SPOT. For most retailers and service firms, this would give you heartburn. Just the thought of empowering your peeps to give an on the spot discount probably gives you the jeebies. However, there is a method to this seeming madness. Note: I’m NOT suggesting that your sales teams ask a customer if they want a discount. That doesn’t work. Rather, this is about helping a client who asks about a discount (“yes, I can give you 10% if you order this today”) or is on the fence teetering in the direction of a buy and needs just a little prompting.
Empowering your sales teams to offer a specified discount (I was only using 10% as an example…you can make it whatever you can afford) cuts through the red tape and can possibly save a sale that might otherwise walk out the door. Customers today want a ‘deal’. Empower your people to give it to them. When the good times were here not long ago, you might not have worried about losing those kinds of sales. The good times are gone. But you already knew that.
Beating a Recession – 6 November 17, 2008Posted by David Dirks in business strategy, Recession: How to Beat It!, Retailer Store Strategies, Sales Strategy/Tactics.
Tags: analyzing products, creating services, depression, fighting a recession, recession, services
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The title of this blog entry gives away a powerful (and seemingly obvious) way to battle your way to success in a time of great economic uncertainty. But what is obvious is sometimes the most difficult to do. If you are finding your business slowly falling into lower sales, revenues, and profits, it’s time to take inventory of your current line up of products and/or services.
When money gets tight and your customers measure every purchase carefully, you need to make sure you have the right mix of products and services they will still be eager to consider and purchase. Here are a few things you can do to insure you have a recession-proof product & service mix:
• Get rid of slow selling inventory or service packages now. I’d swear that some business owners have an emotional attachment to products or services they personally. They keep them because THEY like them, in spite of how well t hey sell. If they aren’t selling and taking up space, it might be time to get rid of them. Make sure you’re not getting rid of products or services that just need to be positioned more effectively so that your customers see the value of spending recessionary money on them.
• Good financial metrics and reporting are the keys to understanding what product and service lines are produce the best return in a time when people are highly critical of any and all purchases.
• Ask yourself: In my business, what products and services will customers still NEED to buy regardless of the economic times? Am I offering those products/services now?
• Have you asked your customers what products or services they would find most valuable in hard economic times? If you haven’t, you should. Obvious but not usually done.
• Bundled products and services together whenever possible. When customers get tight with their purchases, nothing speaks VALUE FOR THE BUCK than a bundle of products and services together.
• Make sure you check out your competition on a regular basis to monitor how they are (or aren’t) changing up their products and services. What are they doing well that you might not be doing?
Creating products and services that customers NEED and VALUE during tight times is one way to make sure your business survives through all business cycles. Yes, I know, sounds like a no-brainer but find a business that conducts a rigorous review of their products and services on a 24/7 basis. Your customer will pay for products that they feel are essential and hold the most value for the money they have to allocate to those purchases.