today i want to knock down some advice i heard online.. ...since he isnt here to defend himself he can be my strawman..
its from an accountant...
heres the advice to a store ....RAISE YOUR PRICES A LOT AND SUCK UP TO THE RICH PEOPLE.....he suggested a 3 to 4x markup over wholesale...
.PRICES....first of all if a store isnt making enough money it could be for many reasons...like, under capitalization, the wrong product or not enough customers or bad recipe in general......if your customers arent buying the thing you picked out why would they buy it if it were higher? you might really need better suppliers and more customers, or a better idea in general....
there are 3 ways i see to make more money...one is to raise prices, one is to buy cheaper, one is to turn your inventory over more times.....a large jump in prices would be my last choice ...
i would love to double my current mark up.. now that would be great but where am i going to get that product? or that customer? remember it has to sell...customers arent stupid, the good ones shop everywhere and all over the map....
much better would be to do the math and figure out how much more you would make if you increased your turnover..then have that be your goal.....lots better path than recklessly raising prices....imho... or look harder for that product you really can raise the markup on....but not across the board...and best of all would be to bring in more buyers....
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one more thought ...what if your landlord or your suppliers get the advice to double their prices and do it......would you notice, would you care..? does your answer mean that you are poor or cant afford the raise? would they get your business?
PEOPLE...his advice to join where the rich people hang out... and generally suck up to them is pretty wierd....they arent stupid...they might not let you into the country club, lol..it might cost thousands to get in... ...you dont need a makeover.....your effort might seem totally phony and forced and they could see right thru it....
...we sell to lots of rich people and dont do any of that...we are in a lake district...with some million $$ homes....i think they come here because they like our store and our stuff....they really dont want to golf with me or go on a cruise with me.....its all about them all the time...they can shop anywhere and are bored easily.... the nice thing is if they want what you are offering they will have the money to buy it... .i try hard to get wonderful things for them....
they are pretty used to being buttered up but why? and isnt that a really hard road to go down? maybe they would like things on approval, limitless credit, revamping their purchases, special hours, wide open return privledges........ etc etc...im not going there..
im not sure the accountant has known many viable retail stores....our store makes us a good income, , and his advice seems foolhardy..is there really a connection with overpricing items and success? i know several viable retail stores and they dont run that way.......especially this year...
..i think this advice is kind of narrow and rash and probably comes from the accountants view of numbers and him seeing lots and lots of stores go belly up....and him thinking if they made more on each sale they would have survived....thats very true but....but it leaves out a whole lot of retail reality.....starting with you have to make a whole lot of sales ...
another thought on socializing with the customers...or trying to...i have to watch my employees about that....to me the customers are in here to talk about themselves not us....and i have had a few employees who act like it is a social situation and would gladly talk for a long time about all their ideas and experiences....to me thats all off topic, the topic being the customer...and the main topic being what are they considering buying....and presenting our things as well as possible...
3 comments:
Ann, I love your business, its YOU and the charm/branding, the overall experience of shopping in your big 10,000 sq. ft shop would amaze me. The dynamics of a family business...still working together.
An All American dream. You bring the point about we need to carry what the customer wants, sometimes that gives us a challenge to find... and we keep trying.
Mark up on antiques can be very good when bought right, we all know that, same in real estate, its at the buy that we make the profit. Buying wholesale from companies is trickier for profit and thats why I would never give up the vintage part of my shop as there is good profit.
What I want to touch on is there is truth in what this accountant has suggested and here is what I have seen over & over through the years in observing:
I will use my daughter/husband as an example okay, respecting their privacy though.
Daughters Husband is a Dr. but not only that he has developed himself to be a public speaker for network marketing co's, drug co.'s all paying good money.
He will chose to run a company say like Hospice rather than be an employee.If someone comes to him with a good medical product he will invest in that product. He just developed a hand sanitizer, which "knowing the right people" will make millions.Someone wants to buy him out right now. He is smart, personable and loves what he does, meets tons of influential people all day long.This is a drop of what this man does and loves doing.
Now my daughter has a passion for humanitarian work, being in her circles has opened the doors to more progress than I could ever have even THOUGHT of. No they don't golf or join country clubs, but they do know influential people that they dine and travel with & when they just start talking about what they are doing the doors open freely to what they NEED.The saying its not what you know, its who you know many times is so true. I have never seen anything like it over the past 12 years.
Okay...I could go on, but wont as we get the picture.
Now me...I open a shop, which I am proud of, work hard at it,I put the shop in a nicer area than I have been use to doing business in for 20 years. Mid to high end clientle. Haven't joined many things but try to participate in activities going on in these areas and know my surroundings. I still overspend, paycheck for myself? struggle ,work hard and keep learning and growing.
Hey,what am I trying to say here? If I keep doing what I am doing I will stay in the same boat. I need to change. Had I been born smarter, had more education, etc etc. what would I be doing? I don't know.
So, I have to agree that being in some different circles creates more opportunities.IF that is what we want or sometimes NEED for our business' .
Again, I love your business, respect your views and would shop your business frequently if I lived close by for sure. Love that you too are always learning and sharing your business talents.
We are all different, thats what I love about America we all bring something different to the table AND we can talk about it and respect each other.
You know, our average per capita is $44,000 in this area...and, if I have to kiss someone's you-know-what to get them to buy, it's not going to happen...good post, Ann!!!
Susan
www.thedutchrose.blogspot.com
there are so many sides to this.... we have a good cpa......her advice on taxes and all that is important to us....but she really isnt in retail...she might say you need to raise your profit....but she wouldnt say how a store in our position would do that...
on rich people, i sure appreciate them and feel right at home with them..i dont feel intimidated by them and i hope i dont look at them ir on awe......i just think they are pretty smart shoppers and come here for their interests..they bring their friends here and we are a nice destination for ther house parties or their days out.....i have a lot of cool inventory for them..
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i agree on the value of the networking like brenda says.....especially when its natural...
and im all for advertizing where they might s ee....butthe hanging out parti would be bored todeath...i can hardly deal with my own teeny sociallife....
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