What happens when you learn from other businesses
When retailers from various trades visit they often find they have more in common than there are differences. The logic behind this comes from the fact that it is the customer that remains the same. The customer shops in one store the same way they shop in another. The retailer that wants their business to stand out from other businesses selling similar products would do well to look at retailers selling different products to observe how these other retailers appeal to customers.
The pharmacy is located at the rear of a drug store for the same reason the screen repair and glass cutting are located at the back of the hardware store or the repair center is at the back of the power equipment store. All are placed that way so that the customer has to see more of the merchandise that is being offered by the store.
Reading an article from the banking industry, the report stated that banks have a 90% chance that a customer will move an account to a different bank if that customer has only that account with the bank.
The same customer, if they use at least five of the products/services of the first bank are 90% unlikely to move their business to a second bank. This can be taken as the business that does a better job of taking care of the needs of the customer is more likely to keep that customer and their business.
The experience of the banking industry, a form of retailing, gives a lesson that could be applied to other retailers. Selling additional products, including consumables, can cause a customer to increase their dependence on the retailer.
In previous columns we have discussed getting your money out of any inventory is sitting stagnant on your showroom floor or in your warehouse. Moving that money to your checking account makes sense only if you are in arrears with your payables. If this is not the case, that money should be put into action in the form of additional products that you could be offering.
How would you select the items that you would add to your offering? Of course, there does have to be enough room on the showroom floor, but that is a discussion for another day.
There are two ways we can answer the question about selecting these new additions for your product selection. We could first look at related items.
Ask your sales team what have been the items that your customers have asked for that your store does not stock. When a customer asks for an item and your salesperson says your person states you do not offer the item, often leads to a follow up question. ‘Do you know where I could buy one?’
That is the customer’s way of saying, ‘If you offered this item, I would buy it from you. Since you do not offer it, I would like your recommendation as to where to buy it.’
Hearing particular items or a category of items would be the first place to consider for investing that money you have gotten from that slow moving inventory.
When you look at this initial list of items, you may not see the relationship of these items to the products you are currently selling. However, they are the items that your customers see as relevant to your business.
For the retailer that gives serious consideration to adding these items to their product offering, we would say this retailer is focusing on ‘who’ their customer is instead of ‘what’ their products are. This is the evolution of retailing.
Look at retailers that have ceased to exist in the past decade. With many of them, they failed to adjust their product offering to the current desires of their customers. The additions you would be considering adding could be a part of your evolution.
The second addition could be that of consumables. Adding these products mean your customers will have a need to return to your store more frequently. While selling these consumables are not high dollar items, they do cause the customer to return more frequently and like the example of the pharmacy, see the rest of your offerings.
Selling vacuum cleaners is a natural for offering bags and belts; not only for the models you sell but for many other brands. Selling lamps and light fixtures would be a natural for offering light bulbs. Not the bulbs that are commonly found at hardware stores and home centers, but unique bulbs that make the light fixtures and lamps you sell have a more unique appearance.
With many of the pieces of furniture you sell, there are many accessories that you could offer. Cleaners and polishes for furniture and appliances are one example. If you added sheets for the beds you sell, you would not be the first retailer to do so.
When you next go to market, it could be the good time for you to break from the traditional routine of the lines you look at. This could be the time to consider some additional product lines that could give your customers additional reasons and needs for visiting your store more frequently.