“If I run a sale in my store, can you tell me how well it will do?” It’s an inevitable question I get when I’m talking with a store owner thinking about running a sale event. And after decades of experience, I’m able to give a store owner some pretty good advice with regard to predicting the relative success of a sale. The starting point is to look at the last two to three years’ sales history trends, margins, inventory levels, etc. to benchmark the kind of business the store has been doing. But beyond that, we’ve identified five key elements that strongly impact the success or failure of in-store promotions.
#1 Theme of the Sale
Open up the Sunday paper or drive down a busy commercial street and chances are you’ll see advertisements for all sorts of retail sales of one kind or another. Now more than ever, the public is being bombarded and enticed with all sorts of sale advertisements offering huge discounts on a variety of merchandise - including jewelry. So just putting up a few signs in your store window announcing a “sale” most likely isn’t going to get you much attention or traffic. Having a believable, legitimate reason to run a sale is probably the single most important component to the success of a sale.
Going out of business and store closing sales are by far the most effective sale events that we run. The public understands the necessity for offering deep discounts and liquidating inventory prior to closing a store or going out of business - again, it’s a legitimate and believable reason for running a sale.
Next to GOB and store closing sales, retirement sales are also very effective. In the case of a family owned shop where say the father is passing the business on to the son or daughter, people understand the reason for this event - to increase sales and generate cash so the owner can retire. Again this is an authentic reason for a sale and people understand this. Moving sales are another viable sale theme. People understand the need to liquidate current inventory in anticipation of moving to a new location.
So called “promotional sales” do far less but can still be effective if there is a creative platform for the sale that makes sense. For example, we’ve had good success with anniversary sales. The success of such promotional type events depend largely upon the reputation of the store, how long they’ve been in business and whether or not they’ve run prior promotional sale events.
Generally speaking, a sale that is conducted during the traditional Christmas holiday season will do better than an event run in the summer, although GOB and store closing sales are always a draw and do well regardless of the time of year. Promotional sales are impacted more by seasonality than GOB or store closing sales. Spring months (April, May and June) are a strong runner-up to the holiday shopping season and offer the opportunity for the store owner to take advantage of Mother’s Day, the spring wedding season and graduations.
Stores that are located in tourist destinations may have their own unique buying seasons. For example, we’ve done some sales in Alaska where summer months are peak with tourists arriving off cruise ships, shopping and looking for bargains. Conversely, stores in Florida do very well during the winter months when snow birds seek shelter and happen to be in town on vacation. So the location of the store may affect the seasonality of the sale as well.
#3 Store Reputation
A store that has been in business ten years or more is a known entity and hopefully has built up a good reputation and customer good will. Running an anniversary sale for a store that’s only been in business a few years makes no sense. Even a GOB sale is impacted by the time the store has been in business. Some of our most successful sales have been for stores that are closing their doors after twenty, fifty, even a hundred years.
Independent store owners have a huge advantage over the big box stores when it comes to customer sentiment, goodwill and loyalty. A well run sale event is the time to convert all that customer goodwill into traffic, sales and profit!
There’s nothing worse than walking into a store during an advertised sale event and seeing empty or sparse display cases. Having an abundance of new and attractive merchandise at significantly discounted prices will help create an exciting atmosphere to shop. A sale event is also an opportunity to significantly discount and move older inventory.
Before we conduct any sale event, we always start with a thorough inventory analysis. We determine the best-selling categories and the average price points. Having a handle on what sells the best at what price and having a good representation of that merchandise in-stock for the sale is critical. It’s the fundamental rule of supply and demand.
Running a sale event with a strong theme, during a strong time of the year when people are buying, is great if people know about it. Running a sale event without an effective marketing plan is a little like an orchestra playing in an empty auditorium. We’ve obviously got to generate traffic to get sales.
In our experience, every store and every sale event is unique - so the marketing plan varies from store-to-store. We always look for the most economical way to generate as much traffic as possible. Store owners are experts at run ning their stores on a daily basis, but sales consultants, like Silverman, are adept at creating and managing these very intensive, one time custom sale events. After decades, we obviously have some marketing tricks to our trade that are beyond what the store owner might do in the normal course of business.
With thorough planning and attention to the five key ingredients we’ve just discussed, you can maximize the potential success of any sale event. Often, especially in the case of a GOB or retirement sale, a store owner gets only one shot at running the sale - it’s essential to make the most of the market opportunity.
Bob Epstein is CEO of Silverman Consultants, LLC. Offering a legacy in sales strategies for jewelers since 1945, Silverman Consultants provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, SC; New York, NY; and Saskatoon, Canada; the company helps jewelry store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information, visit www.silvermanconsultants.com or call Bob direct at 800-347-1500.