Negotiating With Product Suppliers: What You Should Know

One of the hurdles that comes with operating a retail store or business is negotiating with product suppliers. Unless you plan on manufacturing the product yourself (which typically doesn't happen), you'll need a supplier or distributor to sell your store product. Unfortunately, many new retail store owners fail to realize the importance of negotiation, resulting in high markups with minimal profit margins.

Why Negotiations Are Important

Negotiating with product suppliers is important because it keeps your prices down. When you're able to buy product for a lower price, you'll reap the benefits of a higher profit margin once a customer buys it. Here's a scenario to consider: let's say a pair of jeans costs you $10 wholesale from a distributor. Selling these jeans in your store for $25 would yield a $15 profit margin, which is an excellent return on your investment. If you paid $20 for those jeans, though, you would only see a $5 profit margin.

Communication Is Key

When it comes to negotiating with product suppliers, communication is key. Just because a supplier or distributor has a “buy” button on their website with a certain price listed doesn't necessarily mean you have to pay that amount. Contacting them – whether it's over the phone, in person or through email – could result in a lower price.

Open the lines of communication by introducing yourself to product suppliers as a prospective buyer. Let them know a little bit about you and your business, along with your interest in their product. Don't make any offers to buy their product just yet, as price negotiations should come later.

More Product = Lower Price

Typically, the price of a particular product varies depending on the quantity purchased. The more units a client purchases, the lower price-per-unit they'll receive. Product suppliers and distributors do this to encourage clients such as yourself to purchase in bulk.

Talk with product suppliers to see what kind of discounts they offer for bulk units. Assuming it's a safe product that's easy to move in your store, opting for wholesale units could significantly improve your profit margins.

Simple Ways To Boost Sales In Retail Jewelry Stores

Retail jewelry is an exciting and rewarding industry that allows business owners to develop lasting relationships with their customers. If you have a natural eye for precious jewelry and enjoy meeting new people on a regular basis, then you'll fall right into place here. But like all businesses, starting a new retail jewelry store doesn't necessarily guarantee your success. If you fail to produce enough sales, your business will drop into the red zone, making it increasingly more difficult as time progresses. The good news is that jewelry store owners can boost their sales by following some simple steps.

Offer Holiday Sales

If you aren't offering special sales and promotions on your store's jewelry for the holidays, you're missing out on one of the easiest ways to generate more sales. Whether it's Valentine's Day, Mother's Day, Christmas, etc., people love to buy jewelry on holidays; it's just that simple. You can maximize your holiday sales by offering steep discounts and promotions around this time.

Don't just mark your prices down, but also consider releasing exclusive, limited-time products designed especially for a particular holiday. For instance, you could release a special white gold heart-shaped pendant necklace for Valentine's Day. As long as you have a strong marketing campaign focusing on this item, you can expect to see some serious sales before the holiday is over.

Create an Online Presence

I know what you're probably thinking: why do I need a web presence if my jewelry store relies strictly on local sales? Well, there are several benefits to having an online web presence, one of which is the transparency it creates. The old days where consumers used a phone book to locate a store's physical address or phone number are long gone. Now, most people use the internet to find this information. Operating a retail jewelry store without an online presence could result in potential customers not being able to find your address, phone number or other contact information.

Even if you don't intend to sell your jewelry online, you should still invest some of your resources into creating an official website for your brand. The time, money and energy it takes to launch a website is a small price to pay for the benefits it provides.

Offer Services

In addition to products, jewelry stores can also earn revenue through services such as ring sizing, cleaning and engraving. If you own a retail jewelry store, make sure you encourage customers to try out your services. This is great way to earn additional revenue on your product sales.

Note: you can encourage customers to purchase your store's products by offering free sizing and engraving services.

What Is a Mystery Shopper?

If you’ve worked in the retail industry long enough, you’ll eventually hear about mystery shoppers. Hundreds of the nation’s leading retailers use them to conduct quality assurance (QA) tests. However, even some of the smaller retailers are now taking advantage of mystery shoppers. Unfortunately, there’s still a lot of misinformation floating around out there regarding mystery shoppers are how they work. This bad information has led to confusion among certain retailers. In an effort to separate the facts from the fiction, we’re going to talk about mystery shoppers and their purpose in the retail industry.

Mystery Shoppers: The Basics

A mystery shopper is exactly what the name suggests: a person working on behalf of a market research company or internal division of the company whom pretends to shop as a normal customer with the purpose of gaining information about the store’s products and/or services. Employees working at the store are typically unaware of the mystery shopper’s presence. They assume the shopper is just another ordinary customer browsing through the store.

Benefits of Using Mystery Shoppers In The Retail Industry:

• Identify problem areas related to customer service
• Identify employees whom perform poorly at work
• Ensure the store is clean, organized and follows all of the proper safety guidelines
• See how employees interact with customers. Are they greeting customers who enter the store?

The entire purpose of a mystery shopper is to be a fly on the wall while the business performs their normal operations. When the owner or executive of a national retailer shows up the store, employees will instantly know who they are, and as such they will be on their best behavior. But when a mystery shopper shows up to the store, they will continue to operate normally without knowing that someone in the store is watching their every move.

History of Mystery Shoppers

Some people assume that mystery shoppers are a relatively new phenomenon which has appeared in the past few years; however, this isn’t the case. According to reports, retailers began to use mystery shoppers to gauge the performance of their employees dating all the way back to the 1940s. Over the years, mystery shoppers became commonplace in retail stores, health clubs, motels, movie theaters, restaurants, hospitals and more.

Hopefully, this will give you a better understanding of mystery shoppers and their purpose in the retail industry.

The Do’s and Don’ts of Niche Retailing

Thinking about owning a retail store? While you can always go broad by offering a wide range of products, a smarter solution is to target a particular niche. This process, known as niche retailing, allows business owners to laser-target a specific demographic based on their product. However, there are some important do’s and don’ts niche retailers should follow to ensure their business is a success.

Do: Choose a Niche With High Margins

Let’s face it, you aren’t going to experience any serious level of success selling products with low profit margins. When you’re choosing a niche for your retail store, pay close attention to its profit margins. The electronics niche, for instance, typically has a low profit margin, which is why big-name retailers dominate it. Jewelry, apparel and fashion accessories, however, tend to experience higher profit margins.

Do: Focus on Your Niche

If you’re going to take the route of niche retailing with your business, you should stick with your niche until you’ve completely dominated the market. One of the biggest mistakes niche retailers make is trying to expand prematurely. Let’s say you own a bathing suit store; wait until you’ve built up a sizable following of loyal customers and clients before you venture into things like apparel and beach accessories.  There’s certainly nothing wrong with selling these items, but it should only be done once you’ve established yourself as THE leading bathing suit store.

Don’t: Attempt To Enter a Competitive Niche

Research and planning is critical to the success of a niche retail store. Before you even think of signing a lease and opening a store, check to see what the competition is like. If there are half a dozen similar retailers selling products in the same niche nearby, you’ll either want to move to a different location or choose a new niche. This doesn’t necessarily mean your business will fail in a crowded niche, but it will certainly make things harder.

Don’t: Overlook Customer Service

Regardless of your store’s particular niche, you shouldn’t overlook the importance of offering exceptional customer service. As a niche retailer, you want to encourage customers to keep coming back for future purchases. If they make a single purchase and are never seen or heard of again, they’ll likely take their business to one of your competitors. Maintaining a friendly attitude and helping customers find what they need encourages them to return for future purchases.

Benefits of Going Green In The Retail Industry

"Going green" is a term that's becoming more and more common in the retail industry. With the impact of civilization being seen and felt throughout the world, both consumers and companies are looking for ways to reduce their footprint. Going green refers to the process of taking a conscious approach to your actions and how the affect the environment. For a list of some of the top benefits of going green in the retail industry, keep reading.

Benefit #1) Reduces Overhead

One of the most notable benefits of going green in the retail industry is the reduced overhead costs it provides. If your store currently uses incandescent bulbs as its primary source of lighting, perhaps you could switch them out for compact fluorescent lighting (CFL) or light-emitting diode (LED) bulbs. Both of these alternatives are more energy efficient and will ultimately reduce your monthly electric bill.

Benefit #2) Attract New Customers

Of course, going green with your retail business will also attract new customers. The fact is that many consumers today are taking a proactive approach towards their shopping. If a store doesn't follow and practice environmentally friendly operations, the consumer may avoid them. Don't let your retail business suffer from this problem; use environmentally friendly practices to attract this demographic.

Benefit #3) Tax Breaks

You might be surprised to learn that going green with a retail business can yield some lucrative tax benefits. With the federal government making strides to encourage environmentally friendly practices, business owners can earn some valuable tax credits for making environmentally friendly changes to their operations.

Check out the official energy.gov for more information on green tax credits for businesses. It outlines exactly which modifications and changes provide tax credits and which ones don't.

How To Go Green With Your Retail Business

• Install energy-efficient lighting (LED or CFL bulbs)
• Install weatherstripping around doors and windows
• Use recycled materials
• Reduce water usage
• Change air filter at least once a month
• Install high R-value insulation
• Use natural light whenever possible
• Hire an HVAC technician to inspect your store for thermal leaks

The Bottom Line...

Going green with a retail business is a smart decision that offers several different benefits. While many business owners do it for the sole purpose of saving money, it ultimately brings in more customers. Follow the tips listed above to create a more green, energy-efficient environment at your business.

5 Reasons Why Retail Stores Fail

Running a successful retail store isn't always an easy task. According to StatisticsBrain.com, 47% of all retail businesses fail within four years of opening. This is staggering amount that should serve as a real eye opener to anyone who's thinking of launching a retail store or business. Of course, this statistic begs the question: why do so many retail businesses fail?

Reason #1) Inadequate Funding

To say that launching and running a retail store is expensive would be an understatement. In addition to the obvious costs of leasing a store and overhead, you'll also have to pay for employees, inventory, insurance, business license and more. If you aren't fully prepared for these costs, you could find yourself struggling to keep your doors open. The good news is that you don't need to front 100% of the costs, as banks and other financial institutions offer loans specifically for new businesses.

Reason #2) Poor Location

I've said it before and I'll say it again: location can either make or break a retail store. If your store is set up in a highly populated area that's visible from a major highway or street, you'll naturally have more customers coming through the doors. Stores set up in some obscure part of town that's difficult to find will only hurt your business in the long run. This is why you should spend the extra money to choose a premium location for your retail store.

Reason #3) Too Much Shrink

Shrink is defined as the loss of product between the manufacturer and point-of-sale (POS). Certain retail niches are more susceptible to shrink than others, but the fact remains that shrink plays a role in the success, or failure, of all retail stores. For instance, grocery store owners who constantly misplace or allow product to sit on the shelves past its expiration date tend to experience high shrink levels.

Reason #4) Lack of Leadership

You can't expect to run a successful retail store without a strong leadership presence at the helm, guiding and instruction employees on their professional responsibilities. Send a positive message to your employees by encouraging them to excel on the job.

Reason #5) Poor Inventory Management

A fifth reason why retail stores fail is because of poor inventory management. Without a system in place to track your current inventory, you could find yourself out of certain products. And when your'e forced to turn away customers for this reason, they'll likely end up at one of your competitors.

How To Encourage Teamwork In The Workplace

Teamwork is arguably one of the most influential character attributes in the success of a retail business. If employees keep to themselves and perform only their individual responsibilities, the entire business will suffer as a result. 

If were a fly on the wall at some of the nation's most successful retail stores, you would likely notice that nearly all of the exhibit exceptional teamwork skills. Rather than employees working with a narrow objective, they work together to create a well-oiled machine, which ultimately increases sales, performance and productivity.

Hire The 'Right' Employees

Now you're probably wondering how exactly do you encourage teamwork in the workplace. After all, it's hard enough to get employees to perform their normal professional responsibilities. However, teamwork begins with hiring the right employees for the job. Far too many retail store owners hire the first candidates who apply for the job, paying little-to-no attention to their resume or background. You might get lucky and find a well-qualified employee whom exhibits positive team skills, but this typically requires weeding through applications and performing interviews and follow-ups.

Tips For Hiring Team-Conscious Employees:

• Choose candidates with previous work experience in team-based businesses (retail counts as a team-based business).
• Create mock scenarios for candidates where teamwork would come into play and ask how they would handle it.
• Use your best judgement regarding a candidate's attitude and overall demeanor. Standoffish candidates probably aren't the best choice for your retail team.
• Ask the candidate several questions during the interview about his or her work ethics.

Teamwork Starts With Leadership

As a retail store owner, it's your job to lead employees to work as a team. Unfortunately, many store owners completely overlook this step, allowing their employees to do what they please. Set a good example through positive reinforcement and encouragement. Constantly talking down or being negative in general will only discourage employees from working as a team.

Another helpful tip towards creating a more team-structured workplace is to set up an employee appreciation program. Perhaps you could reward the top employee of each month with a gift card, free dinner or some other gift. It's a small price to pay for the drive and determination it gives employees to succeed.

Of course, store owners can also set up team-building exercises in the workplaces as well. When sales are slow, perhaps you can play some games with your employees to help build stronger team skills.

Do Layaway Programs Still Work?

A layaway program is a program where customers are allowed to make several payments for a product over time rather than paying the full price. The store reserves the product until the customer has finished making their payments, at which point they are allowed to pick it up.

Back in the 1930s-40s, layaway programs were widely used in the retail industry. This was a time when families were struggling to get by, so this offered an effective way for people to buy goods without jeopardizing the store's financial security. Although they aren't used as much as they once were, layaway programs seem to be gaining momentum in the retail industry. But are they really still an effective way to boost sales? And how should retailers go about implementing a layaway program? To learn the answers to these questions and more, keep reading.

Yes, Layaway Programs Do Work

When used correctly, layaway programs offer an effective way for retailers to generate more sales. They essentially open up an entirely new market for retailers to target. Budget-conscious shoppers who are unable to pay full price for a product upfront are allowed to make small payments over time for that same product. It's a win-win scenario for both the shopper and retailer, as the shopper benefits from making small payments and the retailer benefits from more sales.

Kmart has one of the longest running and most successful layaway programs in the county. Originally, they launched a layaway program over forty years ago, and it's since grown into a highly successful business strategy that other retailers attempt to mimic. 

Other national retailers with layaway programs include Wal-Mart, Toys R Us, Marshalls, T.J. Maxx and Burlington Coat Factory.

Tips For Launching a Layaway Program:

• Set up a special caged store room or area specifically for layaway purchases.
• Talk with a retail lawyer to help you draft clear terms and conditions.
• Define a percentage down for the initial deposit.
• Consider offering zero percent interest on layaway purchase (this is the same technique used by Kmart).
• Offer multiple ways for customers to make layaway payments, such as in store, mail, online and phone.
• Decide whether or not refunds will be allowed on unpaid layaway purchases.
• If the customer decides to cancel, and you allow refunds, perhaps you can charge a small cancellation fee to recoup some of the housing and maintenance costs.

5 Tips For Promoting Your Business Through Social Media

If you aren't using social media to promote your business, you're missing out on one of the easiest and most effective drive more sales. According to a recent report published by Pew Internet, a whopping 73% of all online adults use social media. With over a billion people reading, posting and accessing social media sites, it's a powerful advertising medium for business owners.

Tip #1) Cover The Basics

There are literally dozens of different social media networking sites out there. Trying to engage yourself on all of these sites is nearly impossible, so it's best to stick with the basics. If you haven't done so already, create an account on the following top social media networking sites: Facebook, Twitter, Google+, Twitter, LinkedIn, Pinterest and Instagram. You should focus your time and energy on these sites until you build up a decent list of followers.

Tip #2) Offer Discounts and Coupons

If you browse around some of the social media networking pages of top retailers, you'll probably notice that a lot of them offer discounts and coupons. Posting coupon codes, printable coupons, specials promotions, etc. is an excellent way to gain more traffic to your social accounts while encouraging more sales. Check to see what other successful retailers are doing on their social pages and mimic it on your own.

Tip #3) Post Often

One of the biggest mistakes business owners make with social media is failing to update their accounts on a regular basis. Allowing your account to grow stagnant will send your followers packing in the other direction. So, just how often should you update your social accounts? There's really no specific answer to this question, but a good rule of thumb is to post at least a few times a week (if not more).

Tip #4) Use #Hashtags

Ever notice how Tweets, Google+ updates or other social media updates have the pound sign followed by a word or phrase (ie: #hashtag). These are known as hashtags, and they're a great way to draw more attention to your posts. When a user searches for a specific hashtag, the social media site will pull up a list of all recent posts including it. Therefore, using them in your posts will bring more attention to your social media sites, which is the secret to creating a strong following.

Tip #5) Respond To Questions and Comments

If you're going to use social media in your business marketing campaigns, make sure you take the time to respond to each and every visitor comment. Whether it's a positive or negative comment, responding to visitor comments is an important step in creating an effective and engaging social media presence.

How To Accept Credit Cards at Your Retail Store

In today's fast-paced digital age, it's nearly impossible for a retail business to survive without accepting credit card payments. Sure, some of your customers will likely pay with cash, but credit cards are becoming the 'norm' for transactions in the retail world. Restricting your business operations to cash-only transactions leaves tons of untapped sales on the table, most of which will likely end up going to your competitors. The good news is that it's relatively easy to set up a credit card processor in your store; here's how you do it:

Note: each credit card transaction typically costs a flat percent. Yep, there's no other way to get around it; if you want to accept credit cards as a form of payment at your retail store or business, you'll have to shell out a certain percentage for the transaction fee. The obvious benefit in receiving cash is that you don't have to pay the transaction fee associated with credit cards, which is why so many small businesses encourage customers to purchase using cash.

So, how much does a typical credit card transaction fee cost? It really depends on the particular merchant account. For instance, Intuit offers several different credit card processing options, one of which being the Point of Sale Merchant Service for rates as low as 1.69%. This means a customer you'll end up shelling out just $1.69 for $100 processed via credit card transaction. Of course, rates may go higher depending on method, type of card (Discover is higher), etc.

Authorize.net offers one of the world's most popular and widely used credit card services for retail stores and businesses. Their Virtual Point of Sale (VPOS) is designed to make credit card transactions a breeze. Store owners set up one of their card readers via USB cable to any internet-connected computer. It's completely encrypted for maximum protection, offering payment from a variety of cards, some of which includes Visa®, MasterCard®, American Express®, Discover®, Diner's Club, JCB and Signature Debit Cards.

Of course, there are fees associated with the Authorize.net VPOS solution, so take the time to educate yourself on their pricing before ordering it.

Some retail store owners may turn their heads at the thought of purchasing a credit card reader and merchant account service, but it's a smart investment that will pay off in the long run. By accepting credit card as a form of payment in your retail store, you'll attract a broader customer base, which in turn increases your sales and profits.

Is Lean Inventory Management Right For Your Business?

Lean inventory management is a term that's becoming more and more popular in today's retail industry. With retail markets more competitive than ever, businesses are looking for ways to increase their profits. There are dozens of techniques used by retail businesses to 'up' their profits, one of which is by implementing lean inventory management. This is a simple yet highly effective principle that works in practically any retail market or industry. To learn more about lean inventory and management and whether or not it's right for your business, keep reading.

What Is Lead Inventory Management?

If this is your first time hearing about lean inventory management, let me give you a brief explanation of this concept: in short, it's the process of constantly analyzing and fixing unnecessary inventory expenses. Some businesses may perform a single expense audit and never follow up with a second one in the future. Lean inventory management works because it's focused on the principle of perfection; retail business owners utilizing this philosophy are constantly working to improve their profits by eliminating unnecessary inventory expenses.

You might be surprised to learn that automobile pioneer Henry Ford is responsible for inventing the concept of lean inventory management. Ford's goal was to create a fluid-like assembly line where workers moved in-sync with one another; thus, reducing wasted time, resources and money. Ford's methodology was such a success that it carried into numerous other industries. After nearly a century, lean inventory management remains a highly effective way for businesses of all shapes and sizes to conduct their daily professional operations.

Lean Inventory Management In Retail

So, how can you implement lean inventory management in your retail store? The answer is simple: take a proactive approach towards identifying and fixing unnecessary expenses. See the list below for more tips on how to perform lean inventory management in a retail store:

• Negotiate lower prices with product manufacturers and/or distributors.
• Analyze shrink on a monthly basis to determine exactly where product is lost.
• Reward employees whom take the initiative to reduce product loss.
• Follow the principle of "there's always room for improvement."

Now for the question that's likely on your mind: is lean inventory management right for your business? Since there's really only benefits and no disadvantages with this approach, the answer is YES; lean inventory management is a highly effective way for businesses to boost their profits.

Top 5 Budget-Burning Mistakes By Retail Store Owners

According to the statistics website StatisticsBrain.com, less than half of all retail businesses are still in operation after four years (47% to be exact). This is a depressing figure that should serve as a real eye-opener to anyone who's thinking of launching a retail business. The fact is that far too many hopeful entrepreneurs assume retail is a profitable industry with minimal risk, but unfortunately this isn't the case. It takes lots of hard work, dedication, and a keen eye for business to succeed. To help you get started on the right track, we've compiled a list of the top 5 budget-burning mistakes by retail store owners and why you should avoid them.

Mistake #1) Too Much Overhead

You can't expect to run a profitable retail business if you're paying an outrageous amount in overhead expenses. Unfortunately, this is an all-too-common mistake made by thousands of store owners. Spending some of your time and resources into shopping around for lower rates with your utility bills, security monitoring system, and even store lease can drastically reduce your overhead expenses while putting more money in your company's pockets.

Mistake #2) Too Much Shrink

Another common budget-burning mistake in retail is allowing shrink to spiral out of control. By definition, shrink is defined as the loss of product between manufacturing and point of sale. This means the product is manufactured properly, but becomes damaged at some point in time before it's sold. Grocery stores and supermarkets tend to experience high levels of shrink; however, all retail stores are vulnerable to the costly effects of shrink.

Mistake #3) No Business Plan

As the name suggests, a business plan is an outline of your company's goals and objectives, along with a roadmap on how you intend to achieve them. Trying to run a retail store without a clear business plan is like driving at night without your headlights; you're essentially hoping that everything turns out your way.

Mistake #4) Not Enough Funding

Launching a retail store isn't cheap by any means. You'll need finances to cover everything from the lease and utilities to products and employee payroll. If you aren't able to financially cover these expenses, you could find your business struggling long before its grand opening. Thankfully, store owners can acquire loans from banks and other financial institutions to help cover these expenses.

Mistake #5) Not Analyzing Consumer Demand

A fifth and final budget-burning mistake made by retail stores and businesses is failing to analyze consumer demand. Keeping a close eye on your inventory, and how fast customers are purchasing it, is critical to running a successful retail store. This will allow you to purchase less of product that's in low demand and more of product that's in high demand.

Questions To Ask Before Renovating a Retail Store

Planning a renovation project for your retail store in the near future? Doing so is a great way to improve both the function and aesthetics of your business. Rather than moving into a different location, you can modify your current building to fit your professional needs. Whether it's a small or large renovation, though, there are some questions you should ask before starting.

Will I Have To Close My Business?

One of the first questions you should ask before renovating your store is whether or not it will force you to close. Even if it's just for a couple of days, the lost sales and profits during this time can quickly cut into your margins. You can expect smaller renovation projects like painting, installing new fixtures, lighting, etc. to take less time; therefore, your business may continue to operate throughout the project. However large-scale renovations like flooring, tearing down or installing new walls, structural modifications, etc. will typically force a business to close temporarily.

Is The Renovation Cost-Effective?

It's a good idea to perform some research beforehand to determine how the renovation will affect the future of your business. Replacing all of the incandescent lighting in your store for compact fluorescent lighting (CFL) may drastically lower your monthly power bill, making it a cost-effective renovation. Sit down with the contractor and discuss the estimated cost of the project. Next, ask yourself what benefits come from doing this renovation. If the benefits outweigh the cost, proceed with the renovation.

Do I Have The Finances For a Renovation?

You might be surprised to learn just how costly a major retail store renovation can be. The good news is that you don't have to front 100% of the finances. There are dozens of banks and financial institutions that specialize in business renovation loans. Acquiring just one of these loans can yield more than enough finances to perform the renovation. Just remember to shop around and choose a loan with attractive interest rates and financing terms.

Are Renovations Allowed?

I'm sure this is common sense to most store owners, but you should check with the landlord to see what types of renovations are allowed and which types are prohibited. Tearing down a wall or performing other 'prohibited' renovations could end up costing you in the long run. It's a always a good idea to get your landlord's approval before doing any renovation (small or large) to your store.