Beyond the gloom of relentless retail layoffs and abysmal revenue reports is a surprising find: retailers that are reporting solid sales in December and January. Retailing Together visited some of these extraordinary businesses to discover how they were bucking the recession. How are they generating respectable sales while nationwide retail trade sales are down 2.7% from November 2008, 10.8% below last year? And why are some independent retailers calling this the best period of business they have seen in years?
Lisa Zajdel, owner of Sassy Sarongs, is a confident business owner with a bright smile and a fierce dedication to her business who sees this downturn as an opportunity to grow her business, despite the fact that other retailers "might be retracting."
Like most successful retailers, Lisa knows that recessions are part of a cycle, and good times follow the bad, but solid management is always a requirement. Rather than hunkering down, she’s changing her business to fit new realities and prepare for the recovery.
"I’ve actually stepped up my advertising and changed my pricing strategy to be more promotional," reports Lisa. She’s reaching out to bloggers, advertising on other websites, using Google Ad Words more, and expanding her online advertising. And her consumers are responding. While larger chains are struggling and laying off employees, many independent retailers have adapted, and some are thriving.
Lisa also recommends that other retailers be very careful with merchandising and avoid "overbuying products." Overbuying products "will slow your turn and also tie up your financial resources."
Fortunately, manufacturers are changing their business practices to accommodate retailers’ new merchandising needs. Many manufacturers are lenient with canceled orders and are allowing retailers to buy more immediates, making small, frequent orders a practice that significantly improves retailers’ cash flow, if the retailer is good at moving the product. Lisa explains: “the manufacturers really understand the environment and have stepped up.”
Another major change is that Lisa is not going to trade shows this year. She’s asked manufacturers to send buyers’ packets, samples, and swatches for first and second quarter. She expects to return to the trade shows by next year to stay abreast of new lines and trends but will be saving both time and money during the downturn.
Patrice Sanders talked about similar struggles and challenges at her store, Stefan Mann. Stefan Mann, voted "Best Bags" by Phoenix Magazine in 2005, has been a fixture in Scottsdale, Arizona, for over 25 years, and the main focus of the boutique is to find unique handbags and accessories for its customers. Handmade inventory from Paris, Milan, Czech Republic, Italy, China, and many more exotic places decorates the store in the middle of the el Pedregal outdoor shopping villa.
To owner Patrice Mann, this economy is nothing new. "When we came through 9/11 it took everything we had. We had to buy things on credit and it was very very difficult. We did what was necessary, but at that point my husband decided that he never wanted to get into that situation again. So we established budgets and we are very grateful because we could see a recession starting last year around the holidays.”
By establishing budgets and controlling their inventory, Patrice developed a solid merchandising strategy that paid off when the economy soured, and merchandising has long been a strength of Stefan Mann. The boutique was one of the first accounts for Dooney & Bourke, and Kate Adair, the designer for Desperate Housewives, will be bringing in her collection this year.
But most of their best lines come from suggestions from their customers. "Our customer base"they are just so wonderful"they will drive up from Tucson or down from Flagstaff or from across the nation," says Patrice while smiling at her best friend and employee Victoria Macy.
Patrice has a stern warning for retailers starting out now: wait for conditions to improve before buying or building a store. She compares buying or building a store in this economy to "buying a house with debt" because of the cost of construction and inventory. ”I think you really have to pay attention to that now, because people don’t have the resources."
Both Patrice and Lisa have demonstrated that independent retailers can survive if they adopt solid business practices. Like many successful retailers, they addressed the recession by reorganizing their strategies, increasing customer service, increasing their promotion budgets, and keeping close watch on inventory. Patrice and Lisa have decided to face this economy like any other business challenge and have found an opportunity for growth.