In my article “Five Keys to Successful Retail Sales,” published in June’s issue of HomeCare, I provided an overview of the steps involved to succeed in retail sales. In the next five installments, I will delve deeper into these elements of successful retailing. This month’s topic is merchandising, which many people confuse with the term “retailing.” Whether it’s the DME industry, clothing, electronics or furniture, merchandising is a critical component of being a successful retailer. A common mistake among small business retailers is misinterpreting what merchandising actually means to their business. Many business owners think merchandising is about buying products, putting them on their showroom floor and selling them. In this mindset, a store merchandiser is really a purchasing manager. But, there’s so much more to merchandising. Merchandising refers to the specific product selection, design, display, packaging and pricing to stimulate and entice customers to make a purchase. Merchandising includes decisions about which products are to be presented to which customers, and at what time and location in their shopping experience.
Product Comes First
Product is clearly the most important element in merchandising your showroom. Even the best products won’t sell if they aren’t properly presented. It’s important to understand your market and target customer base for every product. If you’re not sure, talk with your vendors. They are the experts on their particular product. Experienced vendor reps can share historical data with you to determine the best choices for your market. Make sure you showcase a wide variety of price points, styles and options to attract the right customers. Merchandising is a lot like fishing. Every fisherman knows that in order to be successful, he needs to know what he is fishing for and must have the right type of bait, rod and reel to catch the type of fish he desires. Spend time learning your market, determining your target customer base and selecting the right product mix for your showroom. Remember, the whole point of fishing is to reel in the big fish, not to get nibbles. The whole point of merchandising is to close the sale of the right product, with the right accessories, to the right customer. Most product lines offer much more than the average DME provider is able to show in his store. Showcase a range of styles and price points within your limited space for that particular category. Don’t duplicate too much—maximize space with choices, including larger-ticket items.
Be the Product Category Expert
Second to product selection is product knowledge. Know everything you possibly can about the product. If your business is large enough and has multiple employees, you can develop category experts. Understand the features and benefits of each product so that you can explain them in terms that your customer will understand. Remember, people buy with emotions; they justify the purchase with facts. Understand more than each product’s features and benefits. Understand available options and accessories. Understand lead times. Understand how much inventory you need to carry on your floor or in your stockroom to cover the rate of sale. The ultimate goal is for you to carry as little inventory as possible, but still be able to meet the needs of your customer base. Your product selection can be a lasting impression on your customers. How the store looks overall is the number one influencer on consumer behavior. Remember that it takes seven steps and seven seconds inside a store to influence someone’s behavior. Your team must interact with the customer in that time frame with a greeting and acknowledge their presence in your store. If not, then it’s up to your showroom’s appearance to welcome customers further into the showroom and make them want to stay.
Good-Better-Best Selection
If at all possible, categorize every product line you carry with a good, better and best selection. Remember that it’s easier to roll down a hill than climb up it. When presenting product options to your customers, start at the top, with the best model you have, and then roll slowly down the hill if you need to. You’ll be putting money back into your customer’s pocket this way.
Accurate, Transparent Pricing
In the DME industry, pricing has always been considered an afterthought. Retailers must stay in the mindset of separating their retail business practices from their third-party pay business practices. It’s a completely different business model. When you are preparing to put a price tag on a product on your showroom floor, know the fixed and variable costs of each item. Know more than just your acquisition cost; know how much time it takes your average salesperson to sell the product to a customer. Know what it costs to deliver and set up the product. Factor these costs in when establishing the price. In addition to knowing your costs, know what your competition is doing. Your customers will do comparison shopping, and so should you. (That comparison shopping also includes the Internet.) It’s important to know what the market is bearing for the product you wish to sell. In regard to the Internet as competition for a brick-and-mortar store, there are ways to beat the Internet players. Make sure your customers understand the personalized service you provide, especially when it’s free, such as equipment delivery. If you offer service after the sale, make sure the customer knows how easy it is to come back to you in the event of a malfunction. Have a target gross margin you want to hit by category. Consider volume profit vs. unit profit. Again, you should focus on not getting beat in the marketplace. Selling 87 lift chairs at a lower, more aggressive, but still profitable price will be a lot better than selling 20 lift chairs at a higher markup on each chair.
Tagging
Pricing information displayed directly on the product builds trust with your customers. If someone doesn’t see pricing on a big ticket product, or the salesperson has to go to the manager to get pricing information, the customer will feel uneasy. Big ticket items should have a price tag with the manufacturer’s suggested retail price (MSRP) and then a price of the product as it’s shown on the floor or as the sale price. Make sure your sales people have a retail price list accessible to them for every item in your showroom.
Make it Work for You
Now, it’s time to put it all to work. Selecting the product, displaying it, understanding it, tagging it—put all of that together and you’ve got your merchandising toolbox. You’ve invested a great deal of money in this display and the floor space its use. Keep it intact as best as possible. Keep it neat, clean and organized—ready for a customer at all times. Realize when someone buys a product off of the showroom floor, you’re out of business on that particular model until you get a replacement for it. So, try not to sell off of the floor if at all possible, or until you’re ready to update your merchandising display. Merchandising should work for you. Proper merchandising should pre-sell the product. If a customer walks around your store without talking to a staff member, they should be inundated with information. They should be able to easily find what they are looking for and have basic information about the products available to them. We are in a need-based industry. People don’t walk into a DME store to kick the tires and leave—they walk into a DME store because they need a certain type of product found only there. They can certainly get by with a basic lift chair or scooter, but a well-merchandised display, in a well-designed showroom staffed by knowledgeable salespeople will encourage them to purchase a higher-ticket item in that same category than they otherwise may have.
