• Community Confer with friends, family and co-workers. They can be among the best people to clue you into potentially successful, new products. • Capabilities Consider your product knowledge, budget and space. Figure out how much of each you’re willing to expend for any new category. • Common sense If you’re down $200,000 a year in sales, it doesn’t take a genius to figure out you need to consider ways to get new business. Whatever new merchandise categories you add, shoot for the optimum amount. Too much and you risk a large financial loss if it doesn’t work out. Too little and your customers may wonder how serious you are about it which could negatively influence their decision to buy from you. Take a small dip, then a bigger plunge, and give yourself a sixmonth window to test out the diversity. Also, you should know when not to carry a particular product anymore. Just because you sold large numbers of umbrellas last year doesn’t mean you will this year or that this category should stay in the mix. Perhaps all your customers have already purchased umbrellas from you?
focus on what you’ve done well, and maintain enough of your regular merchandise while developing this new category. You’ll know both are successful when sales of each enhance the other.
FACE THE CHALLENGES
ONCE YOU DIVERSIFY
Any smart change to your store comes with challenges. Once you decide to diversify, your first hurdle is to find the right product. You’ll unearth plenty of new vendors, but, as any experienced retailer knows, it takes work to find the best ones. Then, what’s the best amount to charge and how should you display the new category? Indeed, adding a new category could shake up your customers’ perceptions of your store identity. Say you’re known for a wide variety of local, handcrafted jewellery and you’re thinking of bringing in imported gourmet foods. Keep your www.instoremagazine.ca
ASK YOURSELF Your answers to these questions will help you determine how you can best diversify your merchandise. • • • • • • • • •
How do I define my store, currently? Look at who you really are – what you sell and how you view your business. Do you like what you see? How do customers perceive my store? Ask them what they see, and compare their views with yours. If they’re similar, your perceptions are accurate. Why do I want to diversify? Don’t do it just because you read somewhere that it’s a good idea. Consider your store, what it might take and how you can benefit. How is my current product mix doing? Note the average transaction amount, sales per category and sales per square foot. Are you pleased with the numbers? How frequently do shoppers visit? Consider existing and new customers in this tally. Would you prefer more store traffic? Do I have the space for new product? If not, adding it could mean removing another merchandise category or leasing more space. Can you afford to do either? Do I have the budget to invest in new merchandise? Can you realistically allot additional dollars to a new category? If not, maybe it’s worth getting a loan. Am I prepared to train my staff? They’ll need to know all about the new merchandise so they can effectively sell it. The more you all know the better. Am I willing to take the time? Make sure you’ve got it. You’ll need it to learn about new products, train staff and develop relationships with new vendors.
To make the most of everything you sell, properly promote the new category. Start advertising in the most successful place for your store. Then increase your presence elsewhere like in newspapers and f lyers and on your website and social media. Come up with a campaign that ref lects the current merchandise mix, with an announcement of the new product, without saying out-right that you’re diversifying your merchandise that’ll only confuse people. Inside your store, give the new category sufficient representation. Display it prominently and with
confidence, so it doesn’t look like an afterthought. The best place is at the front and to the right of your store entrance, where shoppers can’t miss it. Cross-merchandise with other, related products, in attractive, realistic vignettes to inspire add-on sales. Don’t forget signage. Monitor sales of the new category. How’s it doing? Give it time. But then at some point, determine if the product is generating enough revenues to continue carrying it. Diversifying your merchandise is an ongoing process, just like everything else in your business. It’s also a bit of a gamble. But it’s a smart hand to play, if you do your research, prepare your staff and make room for that new product in your budget and your store. When you do, you’ll enjoy the rewards that come with the risks — and revel in the successful results. inStore. Summer 2017
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