feature story

specialty retailing:

What you need to know to survive in 2007

FR’s exclusive look at the leading factors affecting today’s consumers’ buying decisions, and how you can put this knowledge to use in your shop.

by Randy Eller

I have always found that at least once a year it benefits me and my business to pause and honestly question my strategy choices. As a specialty retailer, you should do this, too. The two most important questions you can ask yourself are: “What have I learned in the past year?” and “What is going on globally that will affect consumer thinking in the year ahead?”

The first question will challenge you to determine whether you are really “listening” to the marketplace and responding as you should to maximize your revenue and profits. The second question will encourage you to thoughtfully recognize trends, not in product but in terms of what is happening in the world around us and how it will affect consumer spending.

lessons from 2006
So what did we learn during the previous year? First, we saw and experienced the overwhelming power of the Internet, not only to make sales but also to affect consumers’ buying decisions and drive traffic to stores. According to CNNmoney.com, “E-tailing is on fire, the fastest-growing segment of retail.”

If you are not already aggressively using a Web site and the Internet to market and promote your store, you are running seriously behind retailing in America today. A vibrant, attractive Web site is a must, and you should be actively creating a database of e-mail addresses for all your customers so you can e-mail them monthly specials, news of special events, new product launches—literally anything that will keep your store in the forefront of their minds as a place where something good is happening every day.

Second, do you want to grow your business? Go upscale! Again, from CNNmoney.com, “There is a clear divergence in retailing between the up-market and down-market retailers.”

  retailing in 2007: Six key factors affecting today’s marketplace

1 The Internet. To compete in retail today, you must have a vibrant, attractive Web site, and you must market to customers via e-mail. The Internet is influencing consumers’ buying decisions more than any other type of marketing and promotion.
2 Merchandise mix. As a specialty retailer, you must upscale and differentiate your product offerings to present consumers with distinctive choices they can’t find at other stores.
3 Store environment and service. Today’s consumers want “experience events” when shopping, so create a store and offer personal service that will make them feel special and expect more from your business.
4 Spirituality. The threat-filled world in which we live now is causing consumers to seek merchandise that comforts them and helps them show and practice their faith.
5 Environmental issues. Increasingly, today’s consumers are searching for Earth-friendly products that make them feel they are helping the environment.
6 Minority population growth. Hispanics control more disposable income in the United States today than any other minority group. Asian buying power is No. 2. If minority populations are growing in your area, market to them, and offer products they want to buy.



Plainly stated, consumers today have many choices of where to go if they want to buy basic, no-frills merchandise at a low cost. The world is now full of big-box discount stores that gladly fill this need. As an independent specialty retailer, your job is to offer consumers clear, distinctive choices that will convince them to spend more money and indulge themselves, whether they are buying something for their homes or a gift for a family member or friend.

It is no accident that the fastest-growing retailers in America today, in terms of same-store sales, are higher-end stores such as Nordstrom, Tiffany & Co. and Saks Fifth Avenue. Consumers are voting with their wallets every day to spend more money if they can significantly upscale their purchases. At the same time, same-store sales at Wal-Mart and other big-box stores are relatively flat.

The message is clear: People go to most big-box stores to buy the commodity, “have to have” items in their lives. When they’re ready to splurge on the “want to haves” they are going to stores with higher-end images.

Finally, successful retailing is becoming more and more of an “experience event.” Creating a store environment and service regimen that plainly make people feel they are in a special place will help justify your higher prices, and consumers will gladly pay the difference.

Do you need confirmation of this? Think Starbucks. Why are people willing to pay $5 for a cup of coffee? The CEO of Starbucks has publicly stated that his stores are about a “lifestyle,” an experience. Walking into a Starbucks touches all of your senses and makes you feel like you are treating yourself. Do your customers feel this way when they walk into your store? If not, upscale the shopping experience you offer!

These key learnings are things you need to be doing in your stores today to raise the expectations of your customers. As soon as your customers expect more from your store and see that you are delivering, they will gladly shop with you and understand the value they are getting.

As stated on Forbes.com, “The problem brick-and-mortar retailers have is not what they offer but their inability to differentiate and improve service.” Personal service is the most important key to making people feel special in your store. It is no accident that Nordstrom has the highest level of personal service in the department-store arena along with the highest growth rates per store in the retail industry today.

looking ahead
What about the future? What is going on globally that will affect consumer thinking in the year ahead?

Spiritual merchandise sales are rising rapidly. As an example, studies show that the Christian retail industry, currently at $4.5 billion in annual retail sales, will grow to $9.5 billion by 2010. We live in a world today with lots of threats. From terrorism to wars, America is concerned and conflicted. Spiritual merchandise helps people show their faith and practice it, and it comforts them. Your merchandising plans for the future should include an expansion of this type of products in your store.

Global warming has moved to the forefront of concerns about environmental issues. According to ABCnews.com, “Sales of environmentally friendly products, from energy-efficient light bulbs to cleaner locomotive engines, topped $10 billion last year, almost double the year before.” Just imagine the power of that statement. Can you think of any other product category in the industry that doubled in the last year?

Helping to improve the environment is something most people want to do, but the issue is so overwhelming in scope that it is hard for consumers to decide what to do. Carry products in your store that are Earth friendly. When it is easy for consumers to make purchases that make them feel they are helping the environment, they will respond.

The cost of energy, particularly gasoline, also is of great concern to consumers today. I know one retailer who offers her customers a $5 gasoline gift card with every purchase of $100 or more in her store. This is a fantastic way to show consumers you are sensitive to what is going on in the world and that you are willing to buy their gas to come shop with you. What a great example of a creative way to drive business to a store instead of continuing to have bland sales like everyone else!

Finally, diversity in our population will offer you tremendous new markets to sell to in the coming years. For example, 2007 will be the first year Hispanics control more disposable income than any other U.S. minority group. Asian buying power is No. 2.

If minority populations are growing in your area, are you studying the cultures of these groups so you can adequately market to them? Do you know what their holidays are? Do you know how they celebrate birthdays, anniversaries and significant events in their lives? Do you offer the products in your store that will enhance their lives and welcome them as part of your community and as a customer of your store?

keys to success
In 30 years of observing highly successful retailers in this industry, I have seen that they do an exceptional job of the things I have discussed. They are always up to speed on current trends, making sure their stores are viable in today’s market, yet they also find time to study trends of what is coming in the future and adequately prepare for it to maximize sales.

Success is no accident; it is the result of hard work and keen observations of the world.

A 30-year veteran of the gift and home industry, Randy Eller has spent 10 years as a retailer, 10 years as a sales rep, and five years as president and part owner of CBK until its sale to Blyth, Inc. in 2002. Currently, he is president of Eller Enterprises, LLC, a Nashville, Tenn.-based consulting firm that serves companies in the home accent, furniture and giftware industries. His clients include both wholesalers and retailers as well as marketing, PR and advertising firms. The company also offers personal executive coaching and public speaking. Contact Mr. Eller at (615) 771-1112, or visit www.ellerent.com.

Mr. Eller first presented this information in his seminar, “The State of the Industry: How It Will Affect You,” at the Dallas Market Center’s International Gift & Home Accessories Market in January.

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