I am privileged to join Jay Jacobowitz, one of the natural products industry’s leading consultants, Dec. 6 at the SOHO Expo in Orlando for a discussion about strategic ways natural products retailers can grow profits. The SOHO show is an annual trade show put on by the Southeast Region of the Natural Products Association.
In advance of that discussion, the content of which will be mostly determined by questions from retailers in attendance, Jay and I have been conversing and I have been giving thought to growing profit at retail. Here are some of my suggestions:
Use your POS system.
Your POS (point of sale) system is so much more than just a computer that works as a cash register. It can be a valuable aid to manage your inventory, get data on bestsellers, help you determine how much inventory to keep on hand and much, much more. It has the potential to lower the dollars you have in inventory while also reducing your out of stocks. Are you using this tool to your full advantage? If you’d like to read some more along these lines, here is a link to a post that I wrote about POS systems last fall and here is one to a recent post about lowering your out of stocks.
Being first has its advantages.
I am not sure Ricky Bobby was correct when he said, “If you’re first, you’re last.” But he may have had a point. A way to keep your shoppers interested in your merchandise is to become known for being first in your market to bring in new items. Such selections create incremental sales. And if a product is truly new, there is no reason for you to discount it—you can probably buy it at a reduced price. Often manufacturers will offer special demo programs to get potential buyers to try new products while in the store. Make a determined effort to find out what is new when at trade shows and when talking to brokers and reps. Be sure to call out the new items to shoppers with shelf tags, special placement, staff awareness, etc.
A word of caution: Don’t let the drive for new products cause you to lower your ingredient standards. Those standards are what set you apart in the natural foods marketplace. Don’t lose your identity in the quest to have what is new and different.
One more caution: Buy carefully. Until you know that your customers will respond favorably to new items, don’t overstock them. If a new item doesn’t catch on, you don’t need cases of it sitting in your back room.
Staff can help increase profits.
Here is another advantage of hiring right. First of all, good hires lower your costs because you aren’t putting time and effort into hiring and training new staff. (Effort for a store manager or owner means time away from running other aspects of the business.) Having a good staff with low turnover means you have people in your natural products store that know what you want and how your system operates. They know how to check in orders, stock merchandise, keep the store clean, etc. They also know how to interact with your customers. Consider what a stable staff does for shoppers. They are able to find a familiar, friendly face when they are in your natural retail store. They get to interact with someone that can provide consistent, caring and knowledgeable service.
How far does this go to set your business apart from others in your market? While you can and should be sure that your staff has some sales training and knowledge of sales techniques, be sure that they don’t get so focused on making sales and driving up purchases that you lose customers. It is far better that a customer spend $10 a week every week than get pushed into spending $25 once and have such a high-pressure experience that they never come back.
I hope to see you at the SOHO show—and at the seminar Jay and I will be doing. In the meantime, please feel free to share tips that you have used to drive increased profits in the comments section—or—ask questions about areas where you are having challenges.