Happy New Year

The year 2008 was not a banner year in retail, or almost anywhere else in business. With the credit crisis, economic downturn and housing meltdown, even the people with money were not spending as they have in the past. For the last few months each day’s news brought reports of job loss, stock market plunges and financial mayhem. After a cheery diet of financial news for breakfast, many shoppers did not seem to want to run out and buy gifts and accessories. Go figure.
Naturally, Christmas did indeed come, and people finally shopped, but the year-end numbers for many shopkeepers were not up to projections. In many cases, stores did not meet 2007 figures and in some sad places the numbers were the worst ever. There were a few bright spots in independent retail. While some shopkeepers did have good seasons, it was a hard season for all.
Other happy news is a big trend to buy local and to shop at independent stores. This is a movement that will grow in 2009 and will certainly help all of us mom-and-pop retailers.
Now it is time to start planning a new year and trying to figure out how to stay profitable in what promises to be another difficult year. Healthy margins and lower operating expenses are essential to stay profitable.

WHEN BUSINESS IS TOUGH, THE TOUGH GO SHOPPING.  
Since it is market time, keep a few things in mind when you head to the shows:

Go to the shows!
Try a new market or visit your old favorite, but be sure to go. If you are trying to get excited about the business and re-energized about your business, sitting in the back room will not do it. If money is tight, make it a shorter visit, share a room and pack a lunch, but don’t skip your trip to market.

Buy new products
Even in a bad economy, you must keep your store fresh and interesting. Your customers want to see new things, they want to depend on you for the basics they buy again and again and many of them are shopping for a little fun. Many stores who fared poorly last season did so because they either couldn’t afford to buy product or were afraid to.

Look for great buys and excellent margins
There are lots of good deals on freight, dating and merchandise discounts being offered by manufacturers in all categories. Look for these great deals—if you have the cash, it can be a great way to stock up at very profitable costs.
As you make your purchases, watch freight costs carefully. While this is a year to keep the inventory lean, you don’t want to pay a premium for small orders.

Ask every vendor about special deals
Look for: discounts, dating, free or capped freight, opportunity buys and closeouts. There is LOTS of great merchandise available with long mark ups, all of which make your store more profitable. If sales are down, we have to be very careful that the sales we make are lucrative.

Have a  big sale
Get rid of the dogs! Lose the losers! Mark down your slow movers so you can free some cash and shelf space for new product. Although the margins on the goods may not be ideal, you will get rid of it, which is a good thing. If you are planning a major mark-down event, consider buying off-price merchandise and closeouts to stock the sale with more profitable items.

Watch the expenses!
It is time to start penny-pinching again and this is the ideal time to start. As you compile your year-end figures, make a list of the areas where you may be able to cut corners and save a little money (or a lot). Those nickels, dimes and dollars will add up at the end of the year.
Heating costs: Just as we did at home, we adjusted the shop thermostats slightly to save on heating. The staff looks very cheery in their sweaters and the customers don’t even notice. Just one or two degrees will make a noticeable difference in the bill. This summer, aim for a temperate climate, but don’t make the store icy.   
Lights: Have you converted to energy efficient light bulbs? Are you certain that everything is turned off at night, including computers? It is easy for the closing staff to miss a few things. Make a big deal out of it.
Telephone/internet: Do you have the best service for the store? We just checked into our phone service and saved $40 per month, with the same benefits. Watch out for introductory offers: they often are great deals for a year or so, then they expire and your rates go WAY up. Internet costs are another area to watch. Look for bundles with voice and Internet service.  
Payroll: Never cut salaries unless the situation is very dire, but do consider your schedule carefully. Can you trim a few hours here or there? Perhaps some salespeople can come in a little later or take a few more days off. Payroll is a huge expense and one that can grow quickly, so be sure you need all the people who are on the floor.
Supplies: Compare different vendors for the bags, wrap and tissue you use at the register and ask your current supplier how you can lower the costs of these essentials. Buying in bulk or during the off season can help trim the total. Be very careful buying paper towels, toilet paper, garbage bags and cleaning supplies.  
Services: Wash your own windows and clean your store yourself. Most of the simple housekeeping can be done by the staff when they are not busy with customers and will save you a fortune.
Is your accountant doing routine bookwork for you? Do it yourself and give him the totals.  
Lease; No landlord wants empty spaces and filling storefronts is very difficult these days. When your lease is up (or even before), remember that one negotiates a lease, so you can tell the leasing agent what you need to stay in the building. Some property owners have reduced rent, stopped charging common area fees or other charges. It doesn’t hurt to ask, and if you have been a good tenant, they are much more likely to work with you than see you go.

THINGS WILL CHANGE
Experienced merchants know that times like these may be miserable, but they are not permanent. Running a tight operation, being careful the small purchases as well as the big ones and buying for better margins will help keep your store afloat now and make it more profitable as our fortunes change.
After all, what we sell is more than just stuff. We sell happiness, hope and a few little luxuries. No matter how bad the economic climate, there will still be birthdays and weddings. The world needs us.  

Mary Liz Curtin and her husband own Leon & Lulu, a furniture, gift and accessory store located in a former roller rink. They will attend several shows this season and, like many Detroit area companies, have made a commitment to flying commercial.

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