How to Improve Your Lighting Retail Business
August 19, 2013 - 8:16am
Consultant Barbara Crowhurst shares areas where lighting showrooms can perform their own retail boot camp.

Residential Lighting: Where do lighting showrooms need help?
Barbara Crowhurst
: Four key areas. The first is a financial review of the business. I’m noticing a poor focus on technology, such as point-of-sale reports that show margins, daily sales and average sales.

Product has to be put into your point-of-sale database. Have someone do that job. Give them information to price things properly. When everybody prices differently, you lose money. It’s all about setting standards, training and then troubleshooting. If you’re not tech-savvy, why not train yourself or hire someone to track it for you?

Next is setting targets. You can only set a sales target as a projection for a year or a quarter, so review what you did in the year period. Retailers are timid about setting decent sales targets. A minimum realistic increase is 15 percent. Let’s say the average sale is $50. So $7.50 is the add-on sales number. This is the amount that your staff has to keep in mind and say, “I can easily keep talking about things that naturally are add-on sales to the main element I’m selling.” Now you have a strategy, but it has to be drilled down to the customer experience.

Let’s say the sales target for today is $2,000. If the average sale is $50, we have to close 40 sales. Now we know what we have to do today. It shifts the consciences of the people that are working in the store. The average conversion rate in a lighting store is under 50 percent. So that means I have to approach 40 people today in order just to close 20, and we need to close 40 customers for the day.

RL: What are the other key areas?
: Buying budgets. Few organizations understand that you set buying budgets and operating costs against sales. They set these numbers up ficticiously, almost intuitively. I’ll ask how they came up with that number and they’ll say, “I’ve been buying that way for a long time.” Then I look at the P&L report and I can see they overbuy.

I teach the “open to thrive” method. I set budgets based on a formula against sales; operating costs against sales to right-size the business against sales. What I see too often is companies being highly financed in order to make the business run.

Next is inventory control. I see far too much dated product in stores. Product that has been in the store a year or longer is dated product. That means money is tied up in inventory. They’ve overbought and the customer doesn’t want it anymore.

RL: What other ideas do you have?
: Retailers need promotional calendars to ensure that regular customers come to the business. How? Invite them. Tell them what’s going on and pique their interest. Promotional calendars are a fantastic marketing tool. They should be written at the beginning of the year against sales targets per month, one to three events a month. It’s not about sales. It’s about new product coming in. It’s about what product does the consumer need that month. Have demonstrations. Make your place of business a vital place to come and visit. You can launch seasons with special offers. Perhaps you can buy the product with a gift attached to it, which you work out with your rep.

At the point of contact with the customer, you should say, “How do you like to receive information?” Most retailers ask for the contact information incorrectly. You should say, “Would you like an e-mail?” Or, “Do you check Facebook regularly? You’ll see that we post information daily.” You have to ask how the customer gets their information.

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