No one needs to tell you that profit margins are tricky. Adjust them a little bit in one direction to please customers’ financial sensibilities, and you’re losing too much money. Sway too far the other way and suddenly, you’ve outpriced your own clientele and will lose them to competing stores. It is difficult at the best of times, let alone during financially turbulent ones.
Fear not, it is possible to increase your profit margins while retaining your dedicated shoppers. You simply need to bring more value to them while making smarter selling decisions yourself. Luckily, many of the strategies you can use to accomplish one goal will also help you accomplish the second. Read on to learn more!
1. Understand Your Niche Clientele
One of the biggest problems retailers face is when their target demographic clashes with the product they’re peddling. In an upscale area, for instance, you need a shop full of fewer, higher-quality pieces. In more depressed or gentrifying areas, folks are looking for value that makes them feel attractive while respecting their budget. Always align the two.
2. Align with Customer Values
Speaking of aligning, customer values matter as well. What do they prioritize: Family? Recognizable brands? Nightlife? Make sure your products, shop vibes, salespeople and general aesthetic represent those values as well.
3. Level Up Your Online Presence
Lots of your future customers live online, and would be only too happy to check out your shop – if only they knew it existed! This is especially a struggle for established mom-and-pop or brick-and-mortar stores that got their start before the explosion of the digital age, but it applies to everyone. If you don’t have a great website and one vibrant social channel, get them now.
4. Use Display Areas Well
Displays are the cornerstone of your shop, whether you treat them that way or not. Use them to feature new product, yes, but also use them to showcase your values and connect with your customers. Funny signs, staff picks and chalk art, for example, are great ways to do this.
5. Train Employees in Cross-Selling and Upselling
These are basic sales tactics, and yet they are frequently ignored by management during training. Cross-selling is when a salesperson tries to interest the customer in an item that will go with what they’re purchasing. Upselling is when they show them nicer versions to see if they can get a higher-quality sale.
Both are great ways to increase your profit margins, if you do them right. It’s not necessarily intuitive, however, so you might benefit from investing in training software or an online course your employees can take.
6. ABD (Always Be Discounting)
Ideally, your store always has something desirable at a nice discount. Yes, the sales rack is good incentive for people, but you also want to encourage them to come in and buy just-in products, by showing them you offer good bang for their buck year-round. The best way to do this is to purchase discounted wholesale orders, so you can afford to pass that savings on to your customers while still making a tidy profit.
7. Prioritize Customer Needs
At the end of the day, your goal – and indeed your job – is to get the customer what they need. If they do, they’ll likely come back so you can help them again. Fail to do that, however, and you’ve likely lost them – especially if it’s the first time. So while upselling and cross-selling, steering them toward the sales rack, and showcasing your value alignment are all important, you need to prioritize. When a shopper needs a coat, find them that coat, and then work on the rest.
In Conclusion …
Increasing your profit margins is not a one-and-done prospect. It requires making small changes, over time, then analyzing what worked and what didn’t. If you need to make a few big changes at first – rearranging your display areas, for instance – that’s okay. Afterwards, though, keep the thoughtful tweaks coming and you will see results.
Want to learn more about how you can increase your profit margins? Buying wholesale items during discounted promotional periods is a great way to do it. Contact your rep or the showroom to learn about all current promotions.