While the holiday shopping season is a goldmine for retailers, the month or two after can feel like a dead-zone. The First Quarter (1Q) is historically a slow time for retailers. Total retail sales went down over 8% in 2012 from the 4Q in 2011 to the 1Q in 2012 according to the U.S Census Bureau. This was the only negative percent change from quarter to quarter for the previous four quarters. Another document from the Census displayed the fact that: Since 1992 (earliest date in the study), total retail sales in January and February were BOTH significantly lower than the same sales in EITHER November or December EVERY single year. This probably comes as no big surprise for anybody who has shopped before; but it is a statistic that is very important and may shape the behavior of retailers in the slow months after New Year’s.
As mentioned above, January is without a doubt, a much slower month than the previous couple in the retail industry. With that being the case, the dip in store activity can be approached in one of two ways. The first option: Sit back and enjoy the slower pace. The only problem is that while the pace may slow down, the cost of running a business does not follow suit. The second option: Use this slower pace to get the creative juices flowing. Experiment with some new selling and promotional ideas in the slow times, reflect on the past year with what worked or what didn’t, and try to make some changes in the latter to position yourself for a stronger 2013. Although extended periods of downtime rarely exist in the retail world, the pace does indeed soften in the mid-winter months. The off-hours of business in a slow season can get quite frustrating, but they can also be used to the retailers’ advantage with some forward thinking. It’s time to begin the year with a recharged state-of-mind and attempt to gain a competitive advantage on the market.
The purpose of this paper is point out to retailers that the mid-winter lull can be a very valuable time-period in the retail industry. Instituting a thoughtful plan of action has the potential to increase the success of the business if effectively enacted. In this paper we will talk about the idea of running creative promotions and sales; optimizing the flow of the store, and maximizing on potential for store displays; tightening up backroom activities (inventory, safety, etc.); maintaining the attention to detail at the store level & things to look out for in the holiday refund rush; and doing a debrief on the past year with a special focus in the 4Q. Evaluate the good & bad, what can be improved, and what seemed to work. In the retail industry, every retailer is looking to find an edge on the competition. It is important to realize the significance of being proactive, and understand that there may be no better time for self-evaluation and experimentation than during the slow pace of the “Mid-Winter Lull”.
Promote: Find Creative Ways to Increase Store Traffic
Coming up with fresh & innovative promotional ideas is a way to help business in the future; not to mention, a method of enticing customers during the mid-winter lull. During the months after the holidays, individuals are in both a recovery and comfort-seeking mode. Recovery because of the heavy spending that was most likely done during the prior months, and comfort for the obvious reason…it is not a pleasant time to venture outside of the house if it is not necessary (for most of the country anyway). For the warmer climates, it still remains slow because there just is not much going on during this time. It is that time of year where if it’s not recovery, it’s anticipation of spring-time when things tend to liven up again.
A number of publications these days are talking about the “Age of the Consumer”. With the emergence of online shopping, and the abundance of information via the web and social media, people are always looking for the lower price at the higher convenience. Additionally, with the economy and the amount of information at consumers’ fingertips, it almost appears that individuals won’t actually make a purchase unless there is some type of sale involved. Add to this the lack of motivation leaving the house to brave the weather, and the retailer can find themselves in quite a predicament. This makes generating new promotions to influence consumers to leave the comforts of home, even more important.
Depending on the type of business, there are a number of interesting promotional ideas that could be implemented for increasing store circulation. One recent article spoke about the success of the Cash-for-Clunkers promotion that the automotive industry has previously run. It does not apply to all products, but may be a path for retailers who sell goods with any type of return value. There could be a rate set to certain items, where a customer receives a discount on a purchase made that same day. There does not even have to be a straight up trade for discount. Maybe the store could give a complimentary item for an item worthy of a trade-in. An example would be a pair of nice gloves at a clothing store, or a set of towels at a home goods store. Things that would be worth the customers’ time, but that also encourage the purchase of more items.
For the smaller businesses, it could be in spur-of-the-moment sale. If it snows, sell white items at a discount. If the home sports team wins, give away a certain grocery item with a subsequent order. If the word can get out on small impulsive sales, it could excite the customer waiting to see what comes next. Calendar tie-in can be a jump-off point for new promotional ideas. There may not be much action going on in the mid-winter months, but there are always smaller days of interest that can be capitalized on. January and February contain MLK day, Abraham Lincoln’s B-Day, The Superbowl, among others. Retailers can even invent holidays and create corresponding sales. Use a celebrity birthday, two week anniversary of Christmas, etc. There does not technically need to be an excuse, but consumers like creativity, and they love sales.
It is the enduring argument of whether a sale saves the shopper money, or just prompts them to spend on items that they otherwise would not purchase. There is NO argument, however, that the tactic works time after time. Receiving a discounted or free item makes a customer feel okay with purchase of more merchandise, although they most likely would not have entered the store without the original promotion. In the current retail industry, if the customer finds value in leaving the house and entering your business, half of the battle has already been won.
Flow: Creating the Optimal Store Experience for the Customer
Creating a distinct image in the customers’ head that showcases the products and/or service offerings is essential to a successful retail business. A strong visual merchandising effort can reinforce the store’s image to the customer, and induce impulse purchasing that otherwise may not have existed. Point of Purchase Advertising Institute (PPAI) indicates that nothing influences the consumer’s decision to purchase more than advertising at the actual point-of-sale (POS). The idea of creating a positive visual experience should be looked at as a requirement for any successful retailer. A quote put forth by a professor at Ohio State gives a very strong opinion in favor of the importance of this idea:
Visual merchandising is a major factor often overlooked in the success or failure of a retail store. It is second only to effective customer relations.
Now, this may be an aggressive interpretation of the importance of visual merchandising, but it can be argued that it is something which is routinely overlooked. 80% of our impressions are formed by sight, and a strong display is an impression forming advertisement as close to the point-of-sale (POS) as you are going to get.
Retailers can display interesting sale items, with a strong emphasis on complementary items that might be more expensive. Experiment with the rhythm, and proportion of the displays (structured, decorative). Pleasant and relevant colors for the season will boost the attractiveness. Also, avoid over or underexposure of items. It is not good to have a display that is too busy, or too empty. There should be emphasis on one or two things, but some complementary items to tie into the theme.
Another factor in the creation of a positive shopping experience is to enhance the flow of the store. Inviting displays throughout the store combined with a very organic flow will keep the customer in the store longer. Keeping the customer engaged longer will increase the chances of an impulse buy. Researchers found that 64.8% of all purchase decisions were made inside a supermarket, and 67% percent of items purchased in liquor stores are impulse items. A store flow with intelligently placed displays will create that pleasant perusing atmosphere, and it could also lead to repeat patrons.
Understanding the behavior of individuals in a store may seem like a difficult thing to gauge, but there are technologies out there that specialize in measuring this very focus. People-Counting & Dwell-Time (PCDT) technologies are designed to:
Implementing a technology like this makes the calculation of conversion rate not only plausible, but accurate. The ability to take the number of people that entered the store, the number of sale transactions, and find the EXACT ratio of sales to visitors can be extremely useful information for a retailer. Technologies such as PCDT also give the store insight into which displays work, which need to be worked on, and other places in the store where a display can become effective based on the data.
Agilence, Inc. is an industry leader in retail big data, cloud, and point-of-sale (POS) video analysis solutions. Agilence delivers rapid analytics, retail analysis, and intuitive reporting solutions that provide unprecedented visibility into daily store operations. Agilence’s proprietary technology and interface – Retail 20/20™ - provides users with a full view of their business, empowering them to make informed decisions faster, to increase efficiency and profit margins across the enterprise.
Founded in 2006, Agilence, Inc. is headquartered in Mount Laurel, NJ. To learn more about Agilence, Inc., please visit www.agilenceinc.com or call 856-366-1200