To paraphrase an old saying, “When the going gets tough, retailers start slashing operational costs.” Ironically, cost slashing usually exposes a retailer to even greater risks instead of fortifying it against economic uncertainties. All businesses have felt the impact of today’s volatile economy. Retail has been hit especially hard, with sales in 2007 rising by only 2.4% - the smallest year-to-year increase since 2002. Despite such dour statistics, there are plenty of opportunities to gain share in today’s market.
st45 West 21 Street New York, NY 10010 1-800-444-1717 info@iccds.com www.iccds.com
Big Opportunity in 2008
Prospering In Hard Times
Through Customer Insights To paraphrase an old saying, "When the going gets tough, retailers start slashing operational costs." Ironically, cost slashing usually exposes a retailer to even greater risks instead of fortifying it against economic uncertainties. All businesses have felt the impact of today's volatile economy. Retail has been hit especially hard, with sales in 2007 rising by only 2.4% - the smallest year-to-year increase since 2002. Despite such dour statistics, there are plenty of opportunities to gain share in today's market. Possible gains, however, require aggressive actions. Moreover, gains will be even more significant if your competitors concurrently pull back on their programs and staffing following the cost-cutting crowd. Hard times offer a tremendous opportunity to increase your market share! If hard times are indeed the time to play harder, then we need to remind ourselves how we can increase our sales. Three Easy Ways to Increase Sales In good times and bad, retailers' sales are, of course, dependent on several basic conditions: store locations, merchandise offered, inventory, proximity of competition, and staffing to name just a few. Beyond these basics there exists three additional, service-oriented ways to improve sales. 1. Sales Increase as Conversion Rates Rise Today's typical apparel store retail conversion rate stands at only 18% (82 out of 100 people who walk into a store leave without making a single purchase). While this is a statistic begging for Increasing understanding, in harder economic times it makes even more sense to know why shoppers leave your your stores without making a purchase. Astute executives also track transaction volume to guard conversion against an apparent but false rise in conversion rate caused by a drop in shopper traffic. To rate can illustrate the dramatic effects of increasing your conversion rate, try using the ICC Decision dramatically Services sales calculator (shown below) to calculate the lift in sales you would receive from an improve incremental improvement in your conversion rate. In the example, increasing conversion from the your sales. benchmark 18% to 23% results in a yearly additional $8,176,000 in sales per 100 stores! Do you know why shoppers leave your stores without making a purchase? Perhaps you should consider asking them by employing a customer exit interview program in select locations. Exit Interviews are conducted on premise, just as customers leave your stores. Trained interviewers intercept customers leaving without making a purchase. The interviewers ask them a series of questions created to explore exactly why they left your store empty handed. Exit Interviews often dispel intuitive explanations. For example, one, big-box retailer discovered they were not losing sales t due to inventory outages, but because shoppers could not find the merchandise they wanted. Example ICC/Decision Services Sales Calculator - Customer Conversion T
Page 2
2. Sales Increase as Suggestive Selling Is Employed Our studies show that improving suggestive selling can increase the bottom-line by millions. To effectively increase suggestive selling you need to provide your sales staff with real reasons that customers should buy your merchandise. This will help them to reinforce the customer's decision process. Next, you need assurance that sales associates follow through with each and every customer. You can further expand your suggestive sales programs by increasing sales through accessories and related products. Obviously, the more merchandise the customer is exposed to, the greater the likelihood that she will buy something. This means active selling, not passive assistance. Sales associates need to be reminded to actively sell and be motivated to follow through. Do you know how actively your sales associates conduct follow-through selling? Use a Mystery Shopping program to objectively assess the compliance with your selling guidelines. Mystery Shopping utilizes trained shoppers to visit your stores and observe how gui... [download for more]
