HOW AND WHY TO HAVE A SALE
By Christopher Lynch
Daniel Lynch Sales Company
Retail and sales go hand in hand. You can't read the newspaper, watch TV, or listen to the radio without hearing about a sale somewhere. There are President's Day sales, seasonal sales, liquidation sales and promotional sales, just to name a few. While most people assume you have a sale to make money, there are several other reasons retailers have sales.
A major accounting firm specializing in family business discovered that many family-owned businesses founded in the 1940's are still controlled by their founders.
Many furniture retailers have been consulted about the importance of the transition of management from one generation to another. It appears that many don't understand the benefit of a retirement sale and therefore not only fail to accomplish the transfer successfully, but end up losing a considerable amount of money trying to consummate the succession.
A properly run retirement sale is crucial. Beside the obvious advantage of increased cash flow, the sale becomes a vehicle to finance the transition of management, and underscores the store's renewed commitment to the community. From a merchandising standpoint, a properly run sale provides the resource necessary for the new generation to start with an updated inventory, a larger and younger customer base, and in many cases a renovated store. As an added benefit, the large influx of cash created by selling the existing inventory allows for the older generation to retire with dignity and financial security.
When is the last time you took a good, hard look at both the inside and the outside of your building? Are your carpets old, worn or dirty? Does your parking lot need re-paving or lighting. Do you have burned out lights on your showroom floor? Every potential customer that drives by or visits the store may notice a few of the much needed repairs. These renovations often cost a large sum of money. It's important and vital to your business to not only make your store attractive, but also to raise awareness in you community that you are a viable, active store interested in business.
During the last couple of years, the Ethan Allen chain renovated the exterior of its stores throughout the country. And they're remodeling the interiors now. It's no accident that this correlates to the growing success of the furniture chain. A properly run sales event brings in the much needed cash flow to defray the costs of repairs and remodeling, educates the customer and excites the community about your new future.
Many owners look at the cost of remodeling or renewing leases and find it's more cost efficient to change locations within their trading area. Another reason for relocation is that many thoroughfares and state buildings take over properties by eminent domain.
What happens after you move? In today's society, it's amazing how commercial and clan-like we are. When was the last time you traveled out of your little niche to dine out? We live in a lifestyle of convenience, so moving a store can result in lost customers.
Implementing a sales event promotes the moving of your business, by utilizing a four step process of creating a roadmap which allows you to keep your customer base and to establish a good solid foundation for your new location.
A properly orchestrated sale will get the consumers attention; personalize your relationship with the customers; intrigue the consumer with details about your new location, concepts and updated styles; and give you an opportunity to invite customers to your new site by disclosing your opening dates and upcoming plans. This creates an air of excitement about the future of the store.
Many storeowners change lines of furniture and don't forewarn the buying public of the conversion. Not only does this result in confusion, it also results in losing long-time customers and fails to reach the new customer base it seeks.
You can avoid these results by having an event that will not only provide an opportunity for the consumer to take advantage of your sale prices but also will begin announcing the coming of your new lines to the new customer base you endeavor to reach.
A re-merchandising sale allows you to update and refresh your product selection, keeping up with changing consumer trends while increasing your sales per square foot.
When a sales event to consolidate locations is not run properly, it can cause panic among your customers who always fear the worst, and create an atmosphere that will give the incorrect perception that you are going out of business. This is the last thing you want to have happen!
Of course, you may feel this is a step backward and may start to question yourself about the need to downsize and whether or not a consolidation sale is a good idea. Let us emphasize that it's a very wise decision and it manifests that you are committed to succeeding. Downsizing can lead to an increase in profits, a stronger bottom line, less overhead and quite frankly, does not have to leave a bitter taste.
INCREASING YOUR MARKET SHARE:
Activity breeds activity and we often refer to this because many businesses seem to rest on their past reputation or even their laurels. Having an event stirs things up, keeps people moving, creates excitement and refreshes your business. You will be number one in visibility during the event.
There is no good time or bad time to run a sales event when you use a professional company, because it has a plan. The success of that plan rests not in the retail season but in the integrity and reputation of your business. A sales event of this kind maximizes the results of a sale through careful, strategic marketing tools. A retailer fares much better with money left over, after paying the bills, if a store has the sale while still in position of relative strength.
INCREASING CASH FLOW:
Over the years, no one has ever said to us, “I've made too much money," or "I've made enough, I don't want any more money." After all, this is opposite at the heart of the entrepreneurial spirit. But, retailers will ask, "Why should I run sale?" Having a sale can turn old inventory into money, make money available to buy new product, reduce debt, and give you, the owner, personal satisfaction. Remind yourself that you are in the business of “selling” furniture.
Of course, doing this type of sale should include everything the store has to offer. That's right - no sacred cows! And, it should be discounted so you fulfill all of your customer's needs. Remember your goal here - to increase cash flow. Discount merchandise from your everyday sales price and, most importantly, do not raise prices before placing your inventory on sale.
This is a great time to turn all that "stuff" in the warehouse into a positive cash flow. This is a perfect opportunity to move out the old and move in the new while creating a more up to date business. If your inventory turns are less than the industry average, you may not be merchandising correctly. Turn it into cash, re-merchandise and don't be afraid of change.
SALVAGING A FAILING STORE:
A recent Fortune Magazine article highlighted six areas that tend to break a retailer. As we look at these areas, take an honest introspective look at your business.
Developing an identity crisis - What is your business all about? Identify your short and long term goals. Have a weekly sales meeting with your entire staff.
Failure of vision - If you don't have vision you will fail to plan for obstacles down the road. As the Boy Scouts say, "always be prepared." Don’t let your employees decide what is best. As owner, you are supposed to look at the big picture.
The big squeeze - Taking on too much debt inhibits the growth of your business. Your extra debt load robs your business of its strength. Increase cash flow by selling inventory instead of going to the bank for a loan.
Relying on outmoded ideas and resting on past glories - Complacency and "bloat" can lead to an unsuccessful organization. Don't be afraid of trying new ideas. Stir things up.
Losing touch with the customer - Obtaining the feedback you want may require a variety of techniques including surveys, personal contacts, and information from your employees. Get out from behind your desk. Work the sales floor.
The enemies within - Hostility between management and the rest of the employees always leads to failure. Engage the staff to work as a team and remember, "it starts from the top." Once everyone is on the same page, you can develop a workflow that best fits the company's goals.
Too many retailers wait until it's too late to save their store, before deciding to go ahead with a major sales event. In fact, our company has worked with many owners who would have been out of debt and on the course of recovery if they had begun a sale when they first contacted us. Too many retailers put off having a sale, with debt rising in the meantime, and regret it later. Too many executive meetings delay the solutions.
GOING OUT OF BUSINESS:
Many a struggling retailer has a hard time swallowing the fact that a failing business can be better off dead than alive. It's a very emotional decision and the most important one in a retailers business life. One thing is sure, if you need to close your business, the longer you wait the worse it will get.
How do you know if you need to go out of business? Consider the following questions. Are you experiencing a one year trend of downward sales? Have you laid off personnel? Are you on COD with your suppliers? Are your sales people making a good living? Are other stores in your area going out of business, stores you thought were doing well? Is your building and showroom in need of repair or updating? Are you working more hours and enjoying the business of furniture retailing less? Are the big box retailers entering your trading area? Do you show a profit, or just break even? Do you have the energy and expertise required to turn the business around? Do your sons and daughters show an interest in taking over?
If you should find yourself in the position of going out of business, I urge you to proceed quickly, with a professionally run sales event coordinated by a reputable firm; otherwise, most of the generous proceeds will go to creditors with nothing left over for you.
If you're in one of the above situations and you're considering a sale, you have two options - run it yourself or hire a professional. Running a sale of such magnitude and importance by yourself is a risky proposition. It requires a lot of time and effort - commodities that are scarce in good times, let alone bad.
You've been in the business for decades, why would you need to hire a professional? Hare are some benefits you might not think of:
- Consumers in your area and within a 50 mile radius will spend more time buying in your store than anyone else's store for the majority of your sale.
- Your competitors simply cannot compete with the extensive advertising campaign a professional will implement for you during your sale.
- You may have coordinated only one or two real storewide sales events in your entire career, whereas a professional has coordinated hundreds.
- If the company you hire is qualified, it will provide additional sales people, who will write the lions share of the business and force your existing staff to sharpen their skills.
- Supplemental inventory will be brought in to help fortify your sales floor, increasing volume and profits.
- A sale will generate enough revenue to pay debt, release special orders and put money in your pocket.
- Cash in. A Sale will provide an objective strategy for the maximum return of your many years of hard work.
WHAT TO WATCH OUT FOR WHEN HIRING A PROFESSIONAL:
- Do your homework. This is an important chapter in your business life.
- Make sure testimonials are current. Look for actual dates on letters. Contact their most recent clients.
- Avoid contracts that are more than one page long.
- Watch out for charge backs for advertising, accounting and travel or lodging expenses.
- Demand to remain in control of your checkbook.
- Avoid companies who have had scrapes with the law.
- Be wary of projections that sound too good to be true. They are.
-Everyone has a different technique when coordinating a sale. Learn the differences.
-Experience does matter. Hire a company that most resembles your way of thinking.
-Ask for a written proposal including all the costs. Arrange a face to face meeting.
Anyone can run a sale, but to do it with the exactness and credibility required to maximize your store's strong points takes real finesse, years of experience and a competent management team. A reliable sales event specialist will provide you with a comprehensive program that will be customer friendly, educational, fun and in keeping with your reputation.
Christopher Lynch is Co-CEO of Daniel Lynch Sales Company, a third generation family owned Sales Event Specialist Firm based in Grand Rapids, Michigan. The company coordinates Special Sales for furniture retailers in the US, Canada, the UK and the Republic of Ireland. He manages the Miami, Florida office. Questions can be directed to him at firstname.lastname@example.org or call direct at 800-824-2238.
Furniture World Magazine-Business solutions for furniture retailers