A smart retailer wouldn't go into business without a business plan, nor should he/she enter into the holiday season, especially in a difficult economic climate, without a solid sales and marketing plan to ensure that he/she comes out of the holiday season in the black.
Now is the perfect time to formulate a holiday sales strategy, beginning with setting sales goals for the months of November and December. Equally important when considering these goals is to realistically predict what the net profit margin will be when markdowns and returns are factored into the equation. Once these goals are set, inventory levels can be planned accordingly, wholesale and retail pricing strategies formulated, and all efforts directed toward meeting these goals.
Now that the sales objectives have been established, how will these goals be met? Establishing an assortment and pricing strategy early in the season gives a retailer time to find the right inventory at the right price, with enough time to avoid last minute orders, rush shipping charges, and vendor shortages on popular items. Key items should be identified early and "magic price points" established so that adequate orders can be placed and sharp wholesale prices negotiated to meet the sales and profit goals set for the holiday selling season. Many customers adopt a price mindset when shopping for holiday gifts, such as "under $50" or "under $100". To address this mindset and to adopt the "magic price point" strategy, a holiday assortment might include a number of gift items priced at $49.99 or $99.00. Once orders for key items and gift items have been placed, retailers should try to secure co-op advertising dollars with their vendors to help to promote these items.
Special signage, display tables, and fixtures should be ordered well in advance of Thanksgiving weekend to ensure that holiday items are optimized and ready to sell on this traditional holiday kickoff weekend. Ordering sale signage which offers a point-of-sale discount, such as "25% Off", used in lieu of physical markdowns can prolong the regular price shelf life of an item, and save a retailer's profit margin.
At holiday time, it is important to evaluate the store's return policy and assess whether change is necessary to avoid post-season financial setbacks. Apparel retailers are hit especially hard after the holidays if seasonal merchandise is returned after demand for those items has dwindled. A beaded dress, for example, might sell at regular price through New Year's Eve, but in January would necessitate a hefty markdown. To offset these problems, a store's normal policy of issuing a cash refund with a receipt might be changed to "store credit only" during the months of November through January. Any changes in policy should be carefully and politely worded and prominently displayed well in advance of taking effect, to avoid surprising or offending loyal customers.
Another policy that can be implemented now to assist a small retailer in a difficult economic atmosphere is the commitment to meet competitor's prices on identical items. This gives customers the confidence and incentive to shop in the neighborhood rather than at the mall or big box retailer.
Now is also the time to consider holiday hours of operation and how that will affect the current staff, and whether additional staff will be necessary to cover the extended selling hours. Retailers should be advertising now for seasonal sales assistance, and notifying current staff of any additional hours that will be required of them in the months to come.
A well executed retail plan is unquestionably the key to a successful holiday season.
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