Retailing is an unforgiving business: it’s all buying right and selling fast

Teddy bears.  As a gift you can’t go too far wrong. My daughter now 19 still keeps dozens of teddies she had as a child. She fondly remembers the name of each one of them no matter how large or small and who gave it to her. It didn’t matter if she gets another teddy as a gift – she shows the same excitement and appreciation. To any kid it’s family.

I happen to chance upon a soft toy gift shop recently at an international airport and must share his retailing skills with you. You see retailing is a tough business. You pay rent for more air space than usable space: practically space that is above a person’s height is unused. If you got your location right you got a fair start. But that’s about all you get. The rest is hard work unless you follow a true and tried formula which most retailers are oblivious to. There are basically 3 types of retailers:

1. Ones that are doing well and making a good sales and profits (20%).

2. Ones that working for the landlord: just enough to cover rent and a small owner’s wage (50%).

3. 3.And those going out of business within 2 years (30%).
   

(The percentages are my observation and not supported by formal research).

This retailer at the airport is of the first type. We can learn heaps from just making sense of what he does. To an untrained eye he sells soft toys – literally lots of it – but to a marketer he sure knows what he is doing down to a tee! Let me share this with you because the formula for success in retailing is the benchmark for any other business. Good retailers start with the customer value proposition (CVP) like any good marketer. A well defined and understood CVP does wonderful things to your business. Take this retailer for instance: his CVP is simply:

“Put a warm smile on a kid: give him/her a soft toy”

This retailer shouts: “Soft toys are us!” to borrow from a giant retailer. You can’t miss it even if you are blind! The walls of the shop are literally covered with teddy bears, rabbits, doggies, tigers from floor to ceiling – outside and inside. He has focus. Focus gives a perception of strength differentiation specialization authority credibility and choice.

But this retailer builds on his CVP: In  support of his focus there is a range of toy cars and Barbie dolls inside the shop. Because the retailer is a gift shop he has placed a range of small soft toys hanging on a rack – right in the centre of the shop. These are ‘impulse’ or ‘appetizer’ products. ‘Impulse’ as they are smaller with lower price points for those travellers in a hurry; and ‘appetizers’ because they may prompt a purchase of the larger versions. Placed in the centre of the shop floor it is designed to get brisk impulse sales. Farther inside the retailer stocks a range of breath freshening Mints – great idea for a passenger just off a long flight – and displays them near the cash register. It’s the ‘Ahh.. I need that!” display strategy. Roses are out in the front. Yes, he has a gift wrapping service, too. And what does he do with spaces left over? He displays a small range of school bags, sun glasses, and other knick knacks as a fill-in.

Here’s how it all hangs together in a CVP model:

David Lo

A Marketer in an Airport