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Can You Pass The Rent To Own Test?

How do independent retailers take on big-box stores? By selling quality products with great customer service, obtaining higher initial markups, and avoiding corrosive sales down the road.

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For just about every independent retailer, funds are king. Whether the focus is on daily and weekly sales in order to guarantee that there are profit the financial institution in order to meet payroll and other expenses, or on constructing a cash balance through the busy season to help you get from the slower times, most independent retailers keep a very close eye on cashflow.

Obviously, there are several factors that evaluate if a tiny retailer is meeting, or exceeding, its cash requirements and building cash balances on an ongoing basis. But for the majority of, the money profile from the business might be traced directly returning to a number of fundamental decisions concerning positioning and merchandising strategy.

The critical strategic benefit of any independent retailer may be the ability to focus on, and respond quickly to, customer needs, while providing an excellent degree of customer service and state-of-the-art product knowledge. The one thing that this big-box retailers excel at is driving down costs and offering their customers the lowest price for commodity or near-commodity goods. They realize that because of these items the vast majority of shoppers are highly price sensitive.

But for just about any item, and also for people who are certainly not commodities, there's a critical segment of consumers who are not price shoppers, who focus instead on product quality, service, plus a relaxed, friendly experience.

In short, independent retailers should avoid competing on the basis of price, concerning can be a competitor with larger, deeper pockets who definitely are in a position to undercut you. Competing on the basis of product quality, product knowledge, and customer care enables a small retailer to provide to their customers a compelling value proposition and keep critical price integrity.

Strategic positioning, therefore, leads directly to product selection and pricing policy. Selling high quality, specialty products on the basis of their intrinsic value, and also the product knowledge and customer care that provide them, insulates a tiny retailer from price competition, and enables the retailer to get a higher initial markup, and prevent corrosive sales, price promotions, along with other incentives that eat into margins.

How is done? Here are a few specific ideas to help position your store being a premium destination for the optimum products, knowledge and service, and generate the margins you'll need in order to guarantee continuing positive cash flows:

Adopt a better/best charges, as opposed to a good/better/best structure. The classic retail costs for any product category is three-tiered, by having an opening priced "good" quality item, a mid-priced "better" quality item, plus a higher-priced "best" quality item. The nature of latest retailing is for the majority of any product category, there exists a big box who's planning to secure the opening price point. Let them. They are delighted to trade margin for volume, and have the deep pockets to acheive it. Instead, protect your margins by focusing your time and efforts on better made goods, utilizing a "better" quality item since your opening price, and focusing your energies across the quality and features with the "best" item.

By a similar token, avoid carrying the identical items since the competing big-box store. This may not always be possible, in case you have to, consider those things as accommodations in your customers, as opposed to key items which you try to increase the sale of. Rather, build your business around unique items and unique product categories in niche markets to your carefully targeted clientele.

Keep your inventories lean to attenuate markdowns as well as their effect on margins. The instinct of several small retailers is always to have sufficient stock to prevent miss a procurement, but all of that inventory carries tremendous markdown risk, which can decimate margins and income. Bring fresh inventory to your store as close for the period of anticipated sales as you can. That way, you'll also also have something new and exciting to make available your visitors.

Don't get locked into standardized pricing formulas, like keystoning. Your pricing mustn't be merely a function of everything you paid your vendor for the item, but instead the intrinsic value of the item, and the accompanying service you provide your customers. The product knowledge and customer satisfaction that accompanies your product or service offerings features a value in your customers. Don't be afraid to add that value in your pricing.

Avoid price-item advertising at any cost. Focus your advertising on building the company cache of your respective store, not specific sales or promotions. When customers think about you, make certain your advertising has left these with thinking that you are a destination for high quality and selection, state-of-the-art product knowledge, and outstanding customer satisfaction, and never price.

From a client's perspective, customer service and product knowledge would be the means to resolving problems. Whether an individual turns for your requirements for something to knock back the pesky weeds of their vegetable garden and a very unique anniversary gift for their favorite aunt, company is happy to pay for solutions. Make sure you and your staff are furnished with state-of-the-art product knowledge and the offer your clients abdominal muscles finest service.

Define your mission around offering your customers premium specialty products, state-of-the-art product knowledge, and also the finest customer care, and you may insulate yourself from corrosive price competition, while protecting your margins and cash flow.