How should I position myself to profit from the economy’s slump?
We like your positive outlook: History shows that the best deals are made in a downturn. Having a war chest prepped is essential, but like all things in business, relationships matter, especially with the various types of creditors in the market. They need to know you’re available as a possible buyer. “When banks foreclose on your competitors and sell their assets for pennies on the dollar, unless you have relationships with banks, and you’re one of their first calls, the cheap assets will be sold to someone else,” says business consultant Jonathan Slain at recession.com. As for potential hires, make a habit of touching base with the best ones every few months and letting them know all the cool stuff you’re doing. Then, if they are let go because of a recession, you will be their first call.
People are saying it’s going to be the worst Christmas in more than a decade. How should I be preparing now?
Focus on the things you can control and the things you can do. Make big plans to be well positioned when the rebound comes, but get very modest about everything you do in the meantime. That means tight inventories, micro-marketing (work those referrals and word of mouth), and scaling back on your purchases of the more ostentatious designs. Use last year’s best sellers and best-performing price zones as your strict guide. Don’t resort to price-cutting too quickly, but remember that customers are looking for value, so start thinking of ways to ensure that your presentations reflect the idea of a “value proposition.” Brainstorm on ways to sell more gift cards, since consumers who receive them tend to be less price sensitive. Our final piece of advice: Stay positive with yourself and with your sales staff. Insist they be positive with each other and their customers. Things are going to get better.
I have a brand-name line that’s underperformed all year and am thinking of discounting it to ensure I’m not stuck with it at Christmas. Are there any legal risks?
It nearly always comes down to the contract you signed with the manufacturer or brand owner, says Barbara Mandell of Dykema Gossett PLLC, which focuses on antitrust and intellectual property issues. Mandell notes there are three basic kinds of pricing programs that manufacturers seek to impose on retailers. The first is minimum advertised price, or MAP, programs (Under which the manufacturer states it will only sell to distributors who advertise resale prices at a level at or above X dollars. Typically, these programs do not restrict the price actually charged). Second is co-op advertising programs (which also restrict price advertising, but only on those ads paid for by the co-op funds). And third is “Colgate” policies, in which manufacturers set a “floor” resale price and announce that they will only sell to dealers who abide by it. The punishment for violating any of these programs is usually termination of supply, regardless of how much you’ve spent on supporting the brand. If you’ve got concerns about damaging your wider relationship with a vendor, you may want to seek legal advice on whether it’s worth cutting the agreed prices, Mandell says.
When’s the right time to bring on new staff for the holiday season?
Don’t delay – the earlier you can bring them on, the better. While some people have a natural gift for jewelry sales, it’s still a trade that takes time to learn, both the knowledge (gemological and brand) and the sales floor skills. Trying to save money on payroll by having staff join just as sales start to pick up toward the end of the year is a false economy. “There’s nothing worse than having staff not knowing what to say when the store is full of customers and people are walking out because staff doesn’t know how to close sales,” says Andrea Riso, owner of Talisman Collection Fine Jewelers in El Dorado Hills, CA. She says having salespeople who started as late as October and November was one of the main factors that hurt her store’s performance during the last holiday season. New employees need time to absorb the training, get to know your store and its culture, and build their confidence. It’s best if that happens well before you reach the often year-defining holiday sales season.