CategoryJeweller software

I want to share with you a true story of what happened recently in my own retail business. It is a story of how a small everyday purchase led to something bigger and how this happened as a result of fundamental changes in how the business is run.

This story could happen in any retail business – city, country, large, small, shopping mall, high street. We make that point so you do not dismiss the story and think it could not happen in your business. The elements of the story work together in any size business. In writing about it here I’m not getting you to do anything other than to consider that you could achieve the same in your business.

At its core, this is a story about shopper loyalty, especially shopper loyalty in a retail situation where between 25% and 30% of shoppers visiting the business are not local and therefore not likely to engage with the old-school points-based loyalty program.

A customer passing the shop noticed our greeting card range and stepped into make a purchase because of a specific need. They purchased two birthday cards. On their receipt was a voucher for almost $2.00. As they are not usually in the shopping centre they looked around for something in which to spend the $2.00.

This is the key: the customer came in to make a quick destination purchase. The type of purchase where we did not matter. They were on the way to the car park and happened to pass buy our shop. Point 1: location is in our favour. The stepped in because they saw our greeting cards. Point 2: the floor placement of cards was key in getting them in the shop.

Having made the purchase, the customer then noticed, for the first time, what else we sold – because of the $2.00 discount voucher on their receipt. Point 3: we got them to look around and see what else we sold.

The customer did a 180 degree turn and saw a locked glass cabinet of beautiful collectible bears. This was in the right place at the right time as they had been looking for a gift for a child. Money was not an issue. They wanted something to last a lifetime. They purchased a $500.00 bear.

This purchase would not have been made had they not been given the $2.00 voucher on their receipt. The voucher is what got them to notice what else we sold.

Fast forward several weeks and this customer who said they don’t usually come to the shopping centre was back for another $500.00 purchase. Now, several more weeks later, the customer has another $500.00 order placed.

We can directly trace more than $1,500.00 in sales back to the $2.00 voucher.

The software produced the voucher based on rules we established. The initial staff member serving the customer made a brief professional pitch highlighting the voucher. These are both important factors as they are at the core of a structured consistent approach to what has become the most lucrative loyalty program we have seen in my 30+ years involved in retail as a retailer myself and working with retailers in many different channels.

While most times vouchers are handed out they are not redeemed, they are redeemed enough to make them worthwhile. They are redeemed for good margin product as they get people looking at the shop for the first time and discovering items to purchase they were not in our four walls to consider.

The discount vouchers are disruptive. People respond in unpredictable ways.

Best of all, the discount vouchers are profitable.

For this story to work in a newsagency you need to have the right products, placed strategically in-store. Your staff need to make the right pitch. Plus, you need to be attracting people who don’t know and probably don’t care what shop they are in.

If you have read this post and thought it does not relate to you, that you could not do this in your business we say you are wrong. We are certain the approach I have shared with you could work in any newsagency in any situation. We urge you to not hold your business back.

Here is practical advice for local small business retailers based on our years of service of such businesses:

Big businesses – Big W, Woolworths, Coles, K-Mart, Target, Officeworks, Staples – all need volume for any move they make, any promotion, any catalogue, any front of store offer.

The operate on seven and fourteen day cycles. Rarely, they will run something for a month.

It is almost unheard of for them to run an offer, promotion or deal longer that two weeks.

It is important to know this as it can help you deal with them competing with you on price, which they will do.

These majors set their own price. Most times they do not tell their supplier. They get the product shipped to their distribution centre and from there they ship to stores for when the catalogue hits or TVC starts. It is rare for a supplier to know any of the details – unless it is tied to a movie release or so other national promotion.

It is important to know these points as we often see retailers complain that the supplier has been complicit in a discount offer. Usually they are not. But even if they are we do not blame them as theirs (the supplier) is a volume business and small business cannot deliver the volume they need to maintain their status with the brand owner.

Here are tips for dealing with a competitor challenging you on price:

1. Rest your products while they discount. This is not recommended but we acknowledge it is an option.
2. Stick to your guns. Don’t change a thing. But educate your staff with a story about price, big vs. small and the importance of local small businesses.
3. Renew the pitch of your loyalty program. For example if you run discount vouchers that could be more valuable than a short term discount.
4. Promote your exclusive product.
5. Keep your display full.
6. Offer amazing shop-floor customer service.
7. Show off your product knowledge through Facebook posts.
8. Add value where possible.
9. Run a competition for people purchasing the target product through you. This helps to differentiate your offer.
10. Package to make price comparison harder.

Try and not get hijacked by stress about a competitor. Being stressed will not alter the situation. It is what you do that matters. Exercise control. Be a competitor.