The funds states use to pay unemployment benefits are running low, raising fears of higher taxes on businesses and less money to help out-of-work employees during tight economic times. Wall Street is worried that rising energy prices are causing consumers to pare their spending in other areas.
It's ok to say it: the economy is depressing! You can't help but see these ominous warnings wherever you look. And if you lead a nonprofit that has one or more thrift stores, or perhaps manage a thrift shop, you cannot help but be concerned by the serious implications for your business. Will donors stop giving financially in the face of their own shrinking dollars? Will there be enough money to fund programs? Will our shoppers disappear? You know the questions! If you have been in business any length of time, you have had to deal with them before. Undoubtedly, you have had, also, to make tough choices that in some material way have reshaped your business as it operates today.
So here we go again. How you respond to these economic uncertainties can define the difference between thriving and closing the doors. Importantly, the right responses are not that difficult.
The Discretionary Income Fundamental
Retail thrift stores are uniquely positioned to be good performers irrespective of the economy's strength. This is due largely to how shoppers manage their discretionary income, i.e., income which remains after necessary (non-discretionary) expenses have been paid. When the economy is robust, there is greater discretionary income; therefore, more dollars are available for shopping—including visits to retail thrift store(s). When the economy slows, discretionary dollars are tighter. Though this may tend naturally to shrink your shopper base, the questions you ask, how quickly you ask them, and how you answer each can actually help boost customer numbers—and profitability.
Which brings us to some questions you simply must ask first thing Monday morning:
Q.1. If I change nothing of what I currently do, will the economy hurt my profitability?
Actually, the answer to that question depends on how aggressively you manage your stores currently. Make no mistake, however, you will need to be very proactive if you are going to survive a sluggish economy! Even more so, you will need to manage with intentionality. You must also take action at the front-side of the downswing, not at its tail-end. Protecting your business in lean times takes courage and foresight. Equally important, you must be smart about what your business is targeting, whom you are targeting as customers, and how you are positioning your offering for greatest attractiveness.
Q.2. What is likely to happen to my shopper base?
If you take the right steps, you will undoubtedly notice a change in who is shopping your store(s)—not so much from customer shrinkage, as from expansion. Remember always to think through the mental filter of discretionary income. Whenever income contracts, so do unobligated dollars. Hence, the relatively low pricing of your thrift offering can act as a powerful magnet for persons who find themselves in the position of needing to stretch their purchasing power. This is the shopper base that offers the most promise for expanded revenues to your store. On the other hand, shoppers who are insensitive to shrinking dollars will undoubtedly remain unchanged in their shopping patterns and will continue to provide a predictable revenue stream.
Whether you see a hike in overall shopper numbers (and profitability), however, will rest fully on how you answer the following related questions.
- Who is shopping my store(s)? Hopefully, you have already dealt with this question; however, you are likely to see more-and-more first-timers, so be certain to answer it again—especially if the economy remains sluggish. It is important to capture the demographics of these new shoppers. (When you understand who is shopping your stores, you have critical information for improving overall net profitability.)
- What are the specific needs of my shopper base? Now that you have meaningfully identified who shops your store(s), how well you anticipate—and market to—their wants and desires will have everything to do with the likelihood they will return to shop again. Make no mistake about it: moving a visitor from shopper to customer takes purposeful action. It is not a guessing game. For example, have you carefully tied your store's background music to your shopper? Music that appeals to a young mother will do little to motivate the shopping pattern of a senior. What about the ease with which products can be accessed? What gets marketed in your prime retailing space? (By the way, do you know which area of your store is the prime retailing area?)
Whether you, or your competitor(s), get the shopper's patronage will have everything to do with who best recognizes that the shopper is someone to be (a) identified specifically, and (b) cared for accordingly. The economy will drive shoppers to your store . . . but it is you who must earn the next visit.
- Have I positioned my store to succeed? You have now identified your shoppers demographically and have determined their specific shopping needs. But do you deliver consistently . . . and in a way that matters? Positioning is the process by which you seek to create a store image or identity in the minds of your target market. It is the "relative competitive comparison" you occupy in the retail thrift world as perceived by the target market. Ideally, proper positioning distinguishes your store in such a way that no other business evokes the same sentiment. If your shoppers think all retail thrifts are alike—lower prices, lots of stuff, okay customer service—you are NOT sufficiently differentiated. You can begin the positioning process simply by asking your customers to tell you the first thing that comes to mind when they hear your business name. You may be surprised by what they say!
Q.3. Will I recognize success if I see it?
This question can perhaps be rephrased as, "Do I capture the appropriate retail indicators that will tell me whether we are succeeding (or failing) as a business?" Retailing is both an art and a science. To do it well, you need much more than intuition alone and much more than comparisons of gross revenue—but that's the subject of another article. Good metrics are the tools a skilled workman uses to craft careful decisions.
There are many more questions that can, and perhaps should, be part of your Monday morning agenda. These will get you started. What's important is that you seize the opportunities that a skittish economy presents. Admittedly, taking aggressive steps will expose you to risk. If you fail to move purposively, however, you will likely risk more.
Back to Our Cannibal
Running a successful thrift shop is not unlike teaching a cannibal to eat with a fork. You have to start with the right premise. For our cannibal, that premise is: Don't eat the teacher! Miss this one and you could be consumed with delight (and not your own). In retail thrift, the right premise acknowledges that shoppers are the main fare. The more you know about them, the more prosperous you will be. And remember this: they love to be served with relish!
i. Welsh-Huggins, Andre. "Nations Governors Meet Under Financial Cloud," AP, 7/11/08 ii. Pardis, Tim. "Wall St. Struggles on Oil Woes," AP, 07/03/08
» left by Anonymous (139 days 7 hours ago.)
targeted to the retail thrift market, but highly appropriate to any business. very interesting. Respond to this comment
» left by Susan Thom(9,073) Susan Thom (139 days 5 hours ago.)
hi rus,
i think this was a very well written, interesting article, and in these days, every shop owner must think this way. if they haven't thought of all the ways to improve their intake, this article would be very helpful. thanks for sharing and keep writing, my hardest part of any article is the title, and i believe if you change the title to something that is said in the article, you will pull more people in who are interested in retail, and how to save their business..."Tips To Help You Save Your Retail Business" something like that.
whenever i change a title, i get more people to read it.
best regards,
sue thom Respond to this comment
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