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Ask INSTORE: May 2011



Should you include price tags in your displays, sales incentives for the slow season, and more.

 [h3]PRICE TAGS[/h3]Ask INSTORE 5-11

[dropcap cap=Q.][h4][b]In the past we haven’t included price tags with our pieces. But I’m seeing more stores do this and wondering whether we should join the trend.[/b][/h4][/dropcap]

[dropcap cap=A.]Most customers these days feel more comfortable shopping in a store with clearly priced merchandise, but unless “Lowest prices!!” is your competitive strategy, it’s not necessary to tag every piece. Price a few items that will serve as a guideline for customers and let them know they can afford what you sell. Left to their own imagination, customers will often widely over-inflate what they think a piece is worth, or the complete opposite, which is what Babs Noelle, owner of Alara in Bozeman, MT, discovered when she started experimenting with small signs in her windows. “Because we’re fashion-forward, there were people who thought we sold high-end costume, not fine jewelry. So, they didn’t come in because they would never buy anything fake,” she says. At the same time, the price information encouraged people who thought that Alara’s was “too rich for their blood” to come in and browse the store. “Not every piece — just a few pieces need to be accompanied by a neat, tiny sign,” Noelle advises.[/dropcap]

[componentheading]COMMISSION [/componentheading]

[h4][b]Our sales associates are on very high commission rates but low base. When summer comes they ask for a lot of time off, which is understandable given they don’t make much money in the store, but it means our service becomes patchy and I’d like to build up our low season business. What should I do?[/b][/h4]


Let them know about your plans to boost your off-season sales and be sure to ask for their input. That alone, however, is probably not going to be enough to keep their hours up — and for you to avoid an ugly showdown if you insist they work long hours through summer in a near-empty store. Your best bet, while sales remain low (put that in writing), is to hike the commission rate on any sales they close in July, August and September and hope that the increase in summer sales will more than offset the larger commission checks you’ll write.

[componentheading] DISPLAY [/componentheading]

[h4][b]What kind of trim pieces do you suggest I use for special sales like Mother’s and Father’s Day, Valentine’s and Christmas? How much is the right amount?[/b][/h4]

There are a few unbreakable rules that govern trim, notes Larry Johnson, senior VP of Pacific Northern and the author of The Complete Guide to Effective Jewelry Display. The first is never use shiny trim. Use trim comparable to or better than that found in your clientele’s own homes. And the second: Never let the trim distract from or overpower the goods. Decorate the store more than inside the showcases.

[componentheading]VALUATION  [/componentheading]

[h4][b]As part of a divorce settlement, I’ve agreed to pay my soon-to-be-ex-wife one-third of the value of my store. The point of contention is how we value the store, especially given the current economic climate. What would be the fairest way to do it? [/b][/h4]


Fundamentally, the value of your store will be based on a multiple of its annual cash flow, generally in the 2x to 4x range, notes Mike Handelsman, general manager of, one of the Internet’s largest business-for-sale marketplaces. However, there are a host of other factors that can dramatically affect the valuation including the store’s performance, market conditions, tax laws, and the number of potentially interested buyers. “Certainly now is a good time (for you) to conduct the valuation, since small business prices and valuations are at the lowest level in several years,” says Handelsman, noting that his company’s 2010 Insight Report on Small Business Sales concluded that small businesses in the retail sector are currently trading at an average of 2.92 times their annual cash flow. “I would recommend hiring a well-qualified business appraiser to value your business. You can find one in your local area by searching sites like or,” he says, adding that for a very quick answer, you can also purchase a valuation report for under $69 at

[componentheading]COMPETITION [/componentheading]

[h4][b]I need advice on how to compete with big boxes and online stores.[/b][/h4]

The only advice you need is to go pick a fight with someone your own size. “You can’t be like a Walmart and just stack it and hope someone will buy it,” says retail consultant Bob Phibbs. “The reality is you’re going to have to do a better job of displaying and selling it to justify selling it at that higher price. At the end of the day, they’ll pay more if you make the store a place that makes them feel better. That’s what’s missing in most retail.”

[span class=note]This story is from the May 2011 edition of INSTORE[/span]



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