Are high-end businesses any different from budget-goods businesses?
A friend of mine is an artist. She and her husband, another artist, operate a gallery where they sell their paintings and run art classes.
She asked me recently if I could help them look at new ways of doing things as finding new business was as hard as ever.
I don’t know much about how good quality art galleries work, except that artists value their work because of the effort and the pain of creativity put into their creations. An artist does not paint a painting in one or two weeks. Ask any artist and they will say that each painting took a lifetime, because it was a lifetime of experience and emotion that went into each painting.
So that means they sell high-end value goods.
However I do know that selling high-end works of art is nevertheless a retail business, and retail is hurting at the moment, whether it is a high-end store or the local $2 budget store. People are more careful with their money, they look for bargains, they haggle, and if they can, they buy online. At the same time, costs are rising – from shop rents to wages for staff, and, as the cost of the shopping basket rises, the owner has to make more profit to afford their own shopping basket.
All retail businesses have the same needs, whether a high-end art gallery or a cheap market stall selling trinkets – it’s all a matter of scale – and we should pay attention to feeding these needs.
Any retail business has three basic needs.
First, you need to get them through the door – but you have to get the right people through the door. The core customers of a $2 shop are different from the core customers of an art gallery. They come from different demographics and have different social and economic characteristics. You need to reach your target market, not just any warm body that’s passing, to increase the chances of the second need.
Second, you need to have them buy once they are in the store. It’s great to have a busy shop, but you need to make sure they buy once they are in. Your products need to meet the needs of the target market.
Third, you need to bring them back and hope they cause someone else to come as well. If they have already bought from you and had a (hopefully) good experience, why give them an opportunity to forget you?
So what can a retail business do to meet these three needs? Here are a few ideas that can be re-purposed to suit any retail outlet from a high-end art gallery to a $2 shop.
- Define and get to know your target market. You need to know their ages, geographic locations, social class, economic strata, shopping habits, even (depending on what you sell) political leaning – and much more! Once you truly understand your target market you can focus all your marketing efforts (and some of the ideas below) to meet exactly the type of people who are likely to buy from you. Much better than firing off the marketing equivalent of a shotgun and hoping you hit one or two people who might find your wares appealing.
- Shape your marketing to appeal to the needs of the target market. Too many businesses market the features of their product, rather than the needs their product meet. Remember, people don’t buy features, they buy what those features mean to them in satisfying their needs. An art gallery sells a painting to someone because the painting evokes a feeling (or matches their decor!) not because of the type of paint or the style of the artist. Similarly a $2 shop sells trinkets to someone who needs something cheap, not because it is made of plastic.
- Be prepared to offer value if they are likely to buy more. This may be provided in bulk discounts (the $2 shop end of town) or in a discount on a second high-end painting. Let me digress here to deal specifically with high-end goods – at first it seems counter-intuitive to offer a second say painting for a discount. But look at it this way. Say someone buys a $10,000 painting and they are attracted to another $7,000 painting. If you do nothing, you have $10,000 in the till and a painting still on your walls that may stay there for a while. If you offer the second painting for $5,000, you may end up with $15,000 in your till. Cash in your hand is usually better than stock on your shelves.
- Give them good service. It’s not hard. Have you been in a checkout queue and watched the checkout-kid sullenly and silently ring up the sale? How would you feel if they smiled and talked to you? How would you feel if while in the store, they come up and ask if you need help (leaving you alone if you say no, by the way!), and if when you engage, they are full of information and ideas about your intended purchases? Good service always brings them back, poor service kills you a hundred times over because they tell their friends.
- Give them diversified service. Take my friend – they offer art classes. A simple additional service that makes people (of their target market) happy, helps people understand art (and encourages them to buy art and art supplies), and brings in another income stream. It’s the same principle in $2 shops – you can buy anything in them!
- Upsell and cross-sell – but when you do this be careful that you are providing value when you upsell or cross-sell. If someone comes in to buy a painting and you sell them another more expensive one, that’s upselling. But that could just be aimed at increasing your sales and will be easily seen through. However if you upsold them into a better value painting, because the artist was about to break through or had better impact in their collection, that would be upselling to a better value for the customer. They will appreciate that. Cross-selling is to sell them a second item that is compatible with their first buy. The value principle applies here as well. If they buy a $2 screwdriver, sell them a $2 box of screws – something to make their first buy more valuable to them.
I hope you can see that the same principles apply whether you are operating a luxury goods retail store or a bargain basement goods store. Customers are your life blood, catch the right ones, don’t let them go!
I’d love to hear from you – what rings true and what would you do differently from my suggestions?
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