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How to Sell 3 Types of Retail Stores

In this article, you will learn to identify the three types of retail stores and they keys to selling them merchant services, POS Systems and Web Design.

Being an independent retailer in the age of Walmart, Target, Walgreens and Hobby Lobby is no easy task.  Selling to Independent Retail Stores takes a basic knowledge of what retailing is all about and the ability to create custom solutions that will add profit to the bottom line and give the worn out store owner some much needed time off and peace of mind.

Let me start by outlining a few different types of independent retail stores and some of the unique challenges and opportunities related to them.


Selling High End Retail Stores

These independent retailers sell things such as designer clothing and Jewelry.  They are in direct competition with larger corporate chains however, their strength is ironically in their size and location, as well as their service.  High end retail chains, tend to focus on larger cities, so these independents are able to thrive in markets with a small but well defined target market and they can operate nearly unchallenged.  They must sell the idea of style and luxury in a market where consumers are not as conscious of this as they are in New York city.  A big part of their success comes in the form of networking and branding to position themselves in the mind of local consumers as the premiere place to shop.  Once a potential customer walks in the door, they must shower them with over the top service to confirm the image that this is the place to shop for cultured, wealthy clients.

Anytime you are dealing with a high ticket size merchant like this, you want to have a focus on the percentage fees rather than the transaction fee.  If someone is spending $1,000 on one order, taking the transaction fee from $0.30 to $0.28 doesn’t really matter much but, if you can take their non-qualified rate from 4% to 3.5%, you just saved them $5.00 on one transaction.  Also, because of the high end clients they serve, they will get a lot of AMEX cards and a lot of non-qualified transactions in the form of corporate cards so talk with them about this.  Probably the most important thing to them is reliability.  It will hurt their image if their credit card machine goes down so encourage them to have an internet line with a back up phone line so that even if the internet goes down, they can still run a transaction.  I personally take it one step further and get them to purchase a used VX510 terminal (About $75 usually) and I program that as a back up terminal and stick it under the counter, just in case.  When someone is standing in front of you with $1,000 in clothing or a $4,000 engagement ring, you need to be able to process that order no matter what.

In terms of point of sale systems, a recent trend is providing the retail sales associates with an iPad or iPad Mini and having them walk around the store with the person and ring up the order as they go.  They then “park” the order and ring it up at the front counter.  This is a lot easier to set up than you might think.  Our retail POS Solution is all in the cloud so there are a few extra monthly fees associated with the additional iPad registers but not much and it is well worth it.  If a retail store has 2 associates working the floor, they can get two iPad minis and we can integrate those into their in store experience and then have a full size iPad register at the front of the store.  This will really help them improve their image as a top tier retailer and it will also help them manage their business and specifically their inventory better.  Keep in mind that these businesses are investing thousands of dollars into high end inventory, so it is vital that they know what is selling.  It is also very important that the employees are able to see purchase history for a customer so they can understand what they like and what they are usually able to spend per visit.

For a high end retailer, a website should serve three purposes:

  • #1 – Establish this retailer as the dominant local high end retailer for their niche.  This is not at all difficult if they have limited competition but, it does require some initial content creation and an ongoing monthly newsletter.
  • #2 – Provide an eCommerce type experience for potential clients and prospects to scroll through pictures and window shop.  Even if the store owner doesn’t want people to actually be able to purchase things online, just having a gallery of products that are organized effectively is very helpful.  Contrary to popular opinion, displaying the price for high end items is not a bad thing.  The consumers who are interested in buying these items are not price conscious and you actually want to scare away the lookers who can’t really afford to shop in your store.
  • #3 – Mirror the in store brand experience online.  As I mentioned above, branding is absolutely vital to the high end retailer and the website is a great place to reinforce and even introduce their brand.  Unlike most of the websites we do, this is one that does need a serious focus on “looking pretty” so they will want to work closely with their web designer and invest some time up front to make it look sharp.  They may even want to go a little outside of what we offer with our standard package and get some custom graphics done if they haven’t done so already.  We are glad to help them out with this and bring on the right graphic designer to take their in store experience and replicate that on their website.

Selling Low End – Low Ticket Size Retail Stores

At the other end of the spectrum, we have the low ticket size retailers.  A few common examples would be consignment shops and other retail stores that sell used goods at a steep discount.  Also, think of independent convenience stores that are basically a scaled down, slightly more expensive Walmart in a more convenient location.  Discount book stores also fall into this bracket.

Helping these stores succeed is not complicated at all, it is just hard.  The secret to success is lower costs and higher convenience.  All their customers care about is that they have what they want, when they want it, at a price that they can afford.  I know what you are thinking, “How can they compete with Walmart?”  And the answer is, they can’t.  I worked with a client recently that had a consignment shop and she moved her business to rent a spot in the walmart plaza.  I told her in no uncertain terms that she was making a huge mistake and sadly, she went out of business 2 months ago.

These businesses must place themselves in a spot where they have a target market to serve that doesn’t want to drive to Walmart every time they run out of something.  Probably the best example I have is a client who owns a convenience store.  His store is literally across the street from a group of apartment complexes.  The building directly across from him is a retirement type home.  His prices are slightly higher than Walmart or Walgreens but there isn’t another competing business withing walking distance and it would take 10 or 15 minutes to drive to a Walmart.  These apartments are low income and many of the residence use public transportation so his business is booming simply because of the convenience factor.  You will find many such businesses in low income areas that are thriving.

For these businesses, merchant services is a major expense for them and something they do care about, so lead off with that and try to save them money, especially on the transaction fee and their fixed monthly fees and equipment costs.  Reliability is still a major concern here but since many of them don’t want to pay for an internet line, see if they have at least a dedicated phone line so transactions don’t get cut off by a phone calls.

Many of them will not invest in a point of sale system but, the pitch for it is very simple.  In order for them to make the most sales possible, they must have accurate order / inventory tracking so they can see what people are buying and when.  Unlike Walmart, they don’t have 100,000 square feet of groceries, they probably have about 100 square feet, so they must fill that small space with exactly what the consumer wants.  They have to get serious about retailing.  I recommend they have a table or shelf of some kind right at the front of the store where they place items at different times of the day that they know sell good during those times.  Repeat purchases must be in the back of the store such as milk and diapers, so that people walk by all the sale items.  This is just retailing 101 but it is a lot easier with a POS System.

Selling Specialty / Niche / Hobby Retail Stores

The last retail store type I will cover today is the specialty retailer.  These retail stores target a specific niche market because of that target market’s career or other interests.  One of my clients has a thriving business, selling uniforms to nurses.  Most hospitals provide reimbursement for shoes and nurse uniforms but they don’t actually provide the clothing so my client fills that specific niche.  Hobby stores are another one that come to mind.  Also golf stores, skateboarding / snowboarding stores, etc.

For these businesses it is vital that they become the experts in their field and that their target market recognizes them as the expert.  That doesn’t mean my client needs to get a nursing degree, it just means that she needs to be the expert in nurse uniform styles which is the need she fills.  Many times these businesses fascinate me by filling a need I never even knew existed!  One of my clients has a business that sells the small action figures and materials to create these 3D war worlds.  Think of it as video games without the electronics or a dungeon and dragon version of the board game “risk”.  Every weekend he has dozens of people that drive as much as 2 hours away to pay and participate in his tournaments and most of these individuals are late high school and early 20’s.  I never even knew this market existed but this guy is the undisputed expert in the area on what he does and he processes $10,000+ per month, just in credit card transactions with what I imagine is a very good profit margin.

These businesses traditionally have good gross margins so saving them $20.00 on their merchant services is rarely going to peak their interest.  Unless you can offer them some good savings, the big hooks for these businesses will be online presence and help building a better online community to support what they do.  I recommend all of these businesses get into facebook with either a fan page or group depending on their target market.  If it is a niche hobby and they specialize in only that one hobby like the gentlemen I mentioned above, a closed facebook group that is “invite only” can really foster the exclusivity they want in their community.  They could collect email addresses and only invite people who shop in their store and then allow any member to invite someone else who shares this unique hobby or passion.  By the way, if your thinking, “How do I make money on that?” you are missing the point!  Think about how you can help these clients succeed and then the money will come!

The other hot button for them is inventory.  Not so much inventory control as selection.  First of all, many of these businesses don’t even know what they have in their store because they have so many items in a quantity of 1 or 2.  The problem is that if they had every item that every customer wanted, they could probably sell 30% more but, it is just impossible.  One of my clients sells phone cases and that’s it.  He has a multiple location business with a lot of square footage but of course he routinely gets people in the store that want a case promoting the one sports team he doesn’t have.   Encourage these retailers to think about an eCommerce store with a much wider selection.  They can carry everything that their main suppliers offer on the eCommerce store and simple have a policy of “in store pickup within 10 days.”  These consumers are willing to wait a little longer to get what they want and they are willing to pay a little more.  Between an all inclusive eCommerce store and a well stocked physical location with a thriving online community, these businesses can really be both a fun business to operate and a profit center for the owners.

I hope these insights will help you sell more retail stores this week!

James Shepherd

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