Blow Out your Dead Inventory and Improve Your Bottom Line!

Dead Inventory = Dead Money. 

We all make mistakes when buying inventory.  Years ago I couldn't keep Crystal Square Frames in stock...they flew out the door as fast as I could get them in and sourcing them was a real challenge.  After much thought and deliberation I opted to meet the manufacturer's minimum order quantity ("MOQ") so that I could have the stones specially produced for me.   Mind you, the MOQ required a $5000 commitment per color---it was scary, but I ordered 4 colors.   It was awesome!   Those stones sold like hotcakes and I found myself placing another large order.

Oops.

Sales inexplicably flattened, and there I was....sitting with boxes and boxes of very expensive "cold" product.   I was overly attached to my inventory in those days and refused to discount the stones to move them----they had been  hard to get and might be  hard to find again.  The stones are truly magnificent--they remain my personal favorite to this day---and I didn't want to let them go for a pittance!

Unfortunately, while I was busy sticking to my guns, the internet retailers had taken over and were offering the stone for a retail price that was only 30% over my COST as a wholesale distributor of Swarovski Crystal Distributor.  Yikes.   I put them on a shelf and tried to forget about them for a while.  I eventually decided that some return on my investment was better than no return on my investment.

I got busy and got creative with merchandising: I put the stones into grab bags, turned them into necklaces and sold them to local boutiques, used them for door prizes, recast them in challenge kits, etc.  Finally, I sold the the bulk of the stock for about 1/2 of my cost.   It hurt, but the cash influx enabled me to purchase fresh inventory at a time when money was short and new inventory was needed.  It was an expensive lesson, but it was a lesson that stuck.  Life is funny that way...the painful lessons seem to be the most effective, don't they?  I sure as hell don't want to go down that road again so I am much more careful about my purchases these days.  I will often pay a bit more to purchase a smallish quantity  from a distributor, rather than dealing directly with a manufacturer in order to avoid the onerous minimum purchase requirements.  After all, dead inventory presents a bigger risk than a slightly reduced profit margin! 


I am also much more aggressive about rotating my stock.  I start marking down merchandise earlier in its life cycle---preferring the fast nickel over the slow dime.  NOTHING is allowed to sit for long.  Sitting inventory has a deleterious impact on your business:  it slows down cash flow and tells your customers that you are broke or disinterested, which will impede cash flow even more!  If you have some duds on your floor, make it your mission to get rid of 'em to make room for winners!

Re-arrange your store regularly.  How many times have you heard a customer squeal with delight over something "new" that was simply old stock that had been relocated to a more visible spot?  It happened every time I moved products around in my store.

Make something that you love, using at least some of the duds. Feature it as a class, free tutorial, or sell it as a kit.

Host a craft challenge using the duds. The copper components that I am featuring in this week's challenge are the last of a slow seller.  The product line was beautiful, and I use the materials in my own work all of the time, but it didn't sell well.

Most important .....Think outside of the box!

Saturday, May 14, 2011 is "Give Your Stuff Away for Free" day.  Seriously.  The idea is that we are major consumers and have accumulated lots of stuff that we do not use and do not need...so GIFT IT AWAY.  The project founder,  Mike Morone, is hoping to create the world's largest recycling event, urging folks to drag "for free" items to the curb for others to enjoy. 

Why not participate in the event, but give it a crafty twist like Cynthia Deis of Ornamentea has chosen to do.  She is brilliant!  Cynthia sent out a quick email blast introducing the concept and urging her customers to bring in unwanted craft supplies.    I bet the email resonates with her clientele...it certainly struck a chord with me.  I have a huge box filled with fiber that I will never use. I  feel too guilty to throw it away, so it takes up precious closet space.   The materials would be a real find for the right taker and I would love for the box to find an appreciative home so that I can reclaim my closet.  I am sure that I am not alone!   Those that give, can also take.  You can see Cynthia's upbeat, cheery newsletter here.

The Bonus:  this is a perfect opportunity to unload some of that dead inventory you have been dragging around...it will make someone smile.  Better yet, the excitement --and extra sales generated due to the event--- will ease the sting of having to give away "perfectly good stuff."  It ain't good if it ain't selling.

IN OTHER NEWS 
It has been a busy time in my home.  My youngest is graduating from High School and my middle son just graduated from the University of Florida.  I will be turning 50 the day after I drop my daughter off at college. WAHHH!  Sigh.   I have been pouring through generations of family photographs, laughing and crying...you know the drill.  It is a time of  celebration and reflection, for sure!  

Perhaps that is why I was so delighted to come across the Dream Boxes manufactured by HHH Enterprises---they are perfect for creating wearable memories!   Designed to hold collages, dimensional items and photos, the Dream Boxes have a hinged glass door so all you need to do is open and place your favorite image, momento, or design.

They retail two for $12.99.  The company's owner, Homer Hillis, offers retailers excellent wholesale pricing.  He and his wife, Ronda, have established a solid niche offering interesting components for  mixed media and altered art.  I spent quite a bit of time perusing the site and was impressed---the product line would nicely supplement the inventory offered in the "typical" craft shop and the price point should be particularly attractive to those bead stores looking for crafty alternatives to pricey gold and silver.   Readers can get FREE SHIPPING by simply using Coupon Code crafty11 on any order over $25.
 Now for the really good part:  Homer has graciously agreed to provide 10 dream boxes for the current Crafty Throw Down!  10 lucky particpants will receive a Dream Box and the kit pictured below:

  

The kit includes a generous selection of copper components, only a few of which are pictured, as well as hand dyed silk ribbon, and Swarovski crystal beads in Rosaline, Light Colorado Topaz, and Sand Opal.  There are also some Swarovski pearls and squaredelle spacers....YUM!

The rules are simple!

We will draw names for the participants on Monday 5/17/2011.  The dream boxes and the kits will be mailed out by Friday 5/21.  Participants will have until June 30 to create something using the components as a jumping off point.  

Create anything.  Use any medium. 

Theme:   Change/Metamorphasis 

Send us pictures of the completed project on or before June 30 with a brief description of the techniques employed. We post the pictures and everyone OOHS and AAHS.  The pieces remains yours to keep, sell or give away.

Wanna Play?

Send me an email if you want to be entered in the drawing.  Please include your address and contact information. 

Coming next week:  The Fiber Cuff Challenge BIG REVEAL! 

Use your web site to move dead inventory!

The tepid economy has many retailers watching stale inventory grow staler.  It is no fun to see all of that money going down the toilet, is it?   Many of the retailers I speak with tell me that they have way too much stock that has been around much too long--it is old, old, old.  They know it and their regular customers know it.  Thank goodness that craft supplies don't smell rotten when they have outlasted their expiration date! 

 What is the Crafty Retailer to do?

Shake things up a bit!  You can do it several ways:  Get on the phone and call your customers.  Send out an exciting email blast.  Both are quick and easy. Inexpensive store promotions are a great way to expedite the sale of dead inventory and we have promo ideas here, here, here, and here, but one often overlooked means to a profitable quarter is through your website!  Seriously, making better use of your website can make a real difference to your bottom line.  Most of my retail store customers have a web presence, but for too many the site is a stagnant presence that is informational only.  Once the site is live, it is often left to wither on the vine.   There is no opportunity for customer interaction---what a waste!  I mean, seriously!  Unfortunately, many retailers use an anonymous "web guy" and find that getting the site updated in a timely fashion is either an exercise in futility or a major drain on the budget.  If it ain't working, fix it!

Ten years ago I paid over twenty six thousand dollars (yup, $26,000.00 !) to get a web site with a shopping cart. I was an idiot.  My webmaster was competent but painfully slow.  It cost me more to add a new item to the site than I could ever hope to recoup by the addition of the product.   The site was ascetically pleasing but proved to be a functional nightmare.  My experience was fairly typical "back in the day."  My partner and I vowed that we would never again pay big bucks to be held hostage by a web guy!  Bells and whistles are nice, but a simple, functional site THAT YOU CONTROL may better suit your needs.   Easy to follow templates make creating your website a snap.  Shopping carts require a bit more finesse, but you can sell product without one.  Take a great picture of a sample you made from your dead stock and offer a discounted materials package.   Customers can shoot you an email to order.  Sophisticated?  Nope.  Workable?  Yup.  Offer a new enticement every single week to keep folks coming back.

Want a shopping cart but nervous about the investment?  I spent a lot of time, but crazy little money, putting together my site.    There was a heck of a learning curve, and we still have big room for improvement, but it has been well worth it.  I pay  Volusion $100 a month and have total control.  Happy Sigh.  Of course, if you want a site but would rather pay for the convenience, it is doable and it won't cost you a princely sum.  Bead Retailer Brenda Hinesley of Beading  Elements in Sarasota, Florida is opting for a more sophisticated site which will be going live in a few weeks.  Brenda has invested about six thousand dollars and will have a beautiful site, replete with all of the training she needs to maintain it herself.  You go, girl!

Offer web content that has value. Some folks will read your blog, others will read your newsletter, while others will go to your site.  Put the information everywhere!   Like many other crafty bloggers, I offer free tutorials.  It is fun to spread my love for my craft, but it is all part of my evil plan to grow my customer base.  It has brought me a lot of new business.  No time for a tutorial write now?  Link to some cool work by others, provided they are not competitors, and give attribution.   Surf the net for  imagery that would be of interest to your customers.  Post a picture from a site such as What Not to Crochet to garner a giggle.

Showcase an artist whose work would be inspiring to your customer base. Jewelry and fiber aficionados would be charmed to see the work of  Ivy Long of Edera Jewelry.  Ivy has magic fingers, to be sure!

A quick google image search will provide a wealth of imagery to inspire even the most reluctant crafter.  Find it, share it, and offer the materials needed to make it!

Be a resource for your current customer base and your potential customer base.   Use your home page as a fluid means to communicate with your customers.  Shoppers don't like to go into stores that look the same every single visit and web site visitors feel the same way!  Engage your community and change it up often.....you will reap the benefits in increased sales and a more engaged clientele!




IN OTHER NEWS:

We had a bumper crop of peaches this spring on a tree that we planted about five years ago.  What a delight!  I made a peach cobbler a few nights ago that  had my husband and daughter singing my praises.  Honestly, you woulda thunk I was June Cleaver.  Where did I put my pearls?  I have been using this easy recipe for over thirty years and it hasn't failed me yet:

EASY PEACH COBBLER

Step one:  Melt a 3/4 to one stick of butter in a deep baking dish 

Step two:  

Make a batter from:

 1 cup of sugar

3/4 cup of flour

3/4 cup of milk

2 teaspoons of baking powder

pinch of salt 

Pour the batter over the melted butter.  DO NOT STIR!

Step three: 

Mix together:

2 cups of sliced peaches

1 cup of sugar

Step four:

Put peaches on top of the batter.  DO NOT STIR!

Bake at 350 degrees for about an hour.  Don't forget the vanilla ice cream!

SUMMER PROJECTS:

Warm weather can pose a challenge for fiber retailers.  After all, creative humans generally have more than one crafty muse calling them.   If it is too hot to have a fibery "work in progress" draped across my lap,  I tend to move on to something else...gardening, weaving, sewing....any one of a dozen projects that I have percolating at any given time.  Unfortunately,  yarn shop owners have rent to pay during the summer months, too!   Look for a different sort of project to entice your customers when the weather is wicked hot!

A friend of mine recently turned her son's prized artwork from many years ago into a treasured Softie. You can check out the HOW TO here.

I made a wool project this week-end that is PERFECT for summer fiber enthusiasts!  It was quick and easy, did not require a sewing machine, and can be taught to even a novice crafter.   I used a 1/2 yard scrap of silk and some wool top from my stash to create the sweet summer handbag pictured at left.  Excuse the mess of my studio.  Notice the chicken cage on the table?  Not much room to work these days!  But I digress....the project took me about four hours from start to finish.  It was nuno felted and then hand stitched with a wee bit of bead embellishment.  The strap was made from yarn scraps, including some yummy Swarovski yarn that adds a bit of sparkle.  Even more sparkle was achieved through the addition of Swarovski chessboard hot fix stones for the flowers.  I used an iron to apply them and they are on to stay!   It is light and airy, but strong enough to withstand the beating that I administer to all of my purses.  It is very functional and even has a little pocket for my cell phone.  I am working on the tutorial and hope to have it available next week.

Crafty Retail Superstars know that moving inventory is the key to success!

One of the primary benefits of writing this blog is that offers me a chance to connect with some amazing people.  Creative, smart, driven, focused women who inspire and delight me---women like me and women like you---business owner/ busy  mom/good wife/creative  types.  We are kindred spirits...just trying to keep the balls in the air and the smiles on our faces.  Oh.....and the extra ten pounds off of our asses.  I had a chance to interact with two such women this week...one by design and one by chance.  Both brightened my week.

The first is a Crafty Retail Rock Star who is managing to get it all done.  Jackie Goff is the owner of Uptown Fibers, a fairly new yarn shop near Toledo, Ohio.  You first heard about Jackie in a November post when I happened across a copy of her June 2009 newsletter.  Jackie's newsletters are always chatty and informative, but this one caused my mouth to hit the floor.  

Several of her competitors had closed and customers were asking her if she was going to be following suit.  Jackie told them that it was up to them.  No fairy tales.  No sugar coating.   No slick marketing twist.   Instead, she gave them the following economics lesson:

To honestly answer your questions, I am not PLANNING on going out of business, but it all depends on sales. Plain and simple. And, quite honestly, sales are significantly below what was expected and what is needed for long-term survival of the shop as it exists today. The last thing I want to do is break your heart. . . and mine, and I’ll do anything to try to keep that from happening. Which is why I have information to share with you.

Last week, one of my yarn distributors told me that 3 out of every 5 shops in his territory have closed since September ‘08, and that probably one out of every remaining two will not survive this summer. His territory is Michigan, Ohio, Illinois, Wisconsin and, I think, Minnesota. It includes Chicago, Detroit, Cincinnati and other cities bigger than Toledo. He reports this trend happening across the US.

Why Shops Don’t Survive
1. Customers stop buying. No explanation needed.
2. Profit margins fall below what is needed to re-stock. Example: a skein of yarn is sold at $10. The first $5.00 is needed to pay rent, taxes, salaries, utilities and the remaining $5.00 is left to re-buy another skein of the same yarn to restock. If the yarn goes on sale, the first $5.00 still has to pay rent/salaries/taxes, and now there is not enough money left to re-buy yarn because it still costs $5.00. Suddenly there is less to sell, customers get bored or already have it, and stop
buying. (not all “sales” create this condition, but most do, unless the item was greatly discounted to the LYS at the time the shop purchased it)

The above is a very simplistic explanation, and there are things a small shop owner can do to increase the profit margins somewhat, but the two items listed here are the major components to success or failure for retailers.

Jackie then went on to ask each of her customers to spend $40 a month with her. She was referencing the 3/50 Project, the brainchild of retail consultant Cynda Baxter of Retail Speaks, which encourages consumers to spend $50 per month with the three independent retailers that they would be miss the most if the stores disappeared. Jackie spent some time running the numbers and decided that she didn't need $50 per customer since $40 could keep the lights on.

Jackie's letter was impressive...That gal has brass cajones, to be sure.    Most sales people are conditioned to avoid anything that could be "uncomfortable" so I found her forthrightness quite refreshing. Fortunately, her customers agreed. Most had little insight into the retail experience so Jackie's newsletter was a real eye opener for them.  Read Jackie's entire newsletter.

It has been almost a year since Jackie published that newsletter and I rang her up recently to see how it played out for her.  I was tickled to hear that she is "cautiously optimistic" about the future of her almost two year old store.  The average sales ticket is half of what she projected it would be in Year Two, but the fact that she has doubled her customer base has helped to make up the difference.

As Jackie says....business is "not good, but good enough." Jackie is working aggressively to refine her business and make necessary changes to enhance her chances of success.  She recognized -- and rectified -- one early mistake that was standing in her way.  She made the typical new store error of buying "too deep and too wide."   HA! I hear ya, sister!  We have all made that mistake.  It is easier to deal with when times are flush, but if you don't deal with it when times are slow, dead inventory will kill you.  Well...not really kill you....but it will probably make you eat too many chocolate bars and yell at your husband.  At least that is what I have been told.  By other people.

Jackie was looking at shelves filled with inventory that was one and a half years old.  So were her customers.  They wanted New Stuff and she wanted to give it to them.  Unfortunately, the money was tied up in all that Old Stuff.  Jackie took care of the dead inventory brilliantly in a two part strategy.

First, she did not take the easy route of a generic mark down.  Customers are deluged with "SALE!" signs everywhere and Jackie wisely noted that she does not want to encourage "sale only" buying habits.  However, she wanted to generate fast cash and unload that pesky stock.   This Crafty Retail Superstar designed a fun and engaging store promotion that went a long way toward helping her reach her goal. 

She used a "Brown Bag Sale" to spur activity.   She did not advertise ahead of time because she did not want customers cutting back on buying activity in anticipation of the event.   Rather, she sent out an email blast a few days before the weekend of the event.   Customers were encouraged to stop in to fill up on yarn.  Purchases that fit into a lunch bag were rung up at 20% off.  Once the customer had exceeded the limits of the lunch bag, they were offered the opportunity to move up to a larger shopping bag, with a 25% discount.  Finally, the true bargain hunters were awarded a large grocery bag for 30% off their purchases.

The  response was huge....Jackie rang up half of her monthly sales numbers in just two days.  She followed up with a postcard mail out to those customers who do not use email, offering them a two week window to make purchases.  The response has been strong.  Jackie handed out extra postcards to customers, relatives, and friends offering them the discount yet again if they brought in a buddy.

  

There is no doubt about it...creating an EXPERIENCE  will do more for you than a simple mark down.   Every time.

The second thing that Jackie did was reach out to other yarn store owners via Ravelry's LYS forum.  She offered to sell them the excess yarn at 20% off her cost.  She included the shop model (the sweater/scarf/etc. made from the yarn that serves as a promotional display)  with the yarn.  What a deal for the yarn shops and what a Godsend for Jackie.  She raised the money she needed and her customers are delighted to see the new inventory that she has put on the floor. 

Jackie didn't just sit around bemoaning the economy and wishing that things would be different.  She got busy and made 'em get different.   I have a feeling that Jackie will be around for her second anniversary and many more to come.  WAY TO GO, JACKIE! 

So...what about you?  What are you going to do differently to increase your odds of success?

OTHER NEWS:

I often hear store owners complain about classes...the need to develop an exciting class calendar, the difficulty in finding teachers, etc.  Consider conducting an Etsy search for your teachers!  

Etsy has a  "shop local"  search feature that makes it easy to find Etsyites in your area.  What a great way to identify some local talent!    I did a quick search yesterday and was pleased as punch to find "Glowstoes."   Glow Greenfield-Duarte is the second bit of crafty goodness that brightened my week.  Glow is a Tampa gal who makes incredible jewelry and wearable assemblages from found objects  and I was curious as to her buying habits and experience with Etsy.  She was nice enough to agree to a telephone interview and was generous and engaging.  Unfortunately, I learned that she is not a shopper, per se.  In fact, she does not shop at the local bead stores (Ouch!) because she worries that she will blow her budget.  Rather, she finds most of her materials from her personal stash of found objects, as well as estate sales,  Etsy, and online from Ornamentea [note:  owner Cynthia is another Crafty Retail Rock Star!].  

Glow has no formal training and has never used a crimp bead, or any standard bead store item for that matter...yet she has a very successful Etsy store that affords her a steady little income.    She described Michael's as a "sad place."   She is an "out of the box" kind of gal who is all about problem solving as she deconstructs vintage pieces to painstakingly reconstruct them to serve a new life.  

A vintage silver salt shaker becomes a pendant, while tiny books from a doll house become beads.  It was a treat to talk to someone who has no preconceptions about how things "are supposed to go together" and just follows her instincts.    She is a generous spirit who willingly shares the "thought processes" behind her artistic choices.   A fresh perspective can change everything.   After all, sometimes the best lesson is simply to step back and learn how to look at the world a little bit differently.  Glow does it and does it well.  Central Florida Bead Stores take note:  Glow is a former pre-school teacher who would welcome a chance to teach others what she does.  

Gotta go!  I have some vintage bakelite salt shakers that are crying out to morph into a necklace.  

Thanks, Glow!

Economy Be Damned....Many Crafty Retailers are Beating the Odds!

Oops!  

For those of you looking for the post on the Craft Industry's "Dirty Little Secret"....it is here.

For those of you who want to read about Crafty Retail Rock Star Paula Rosenberg...read on!  

My family took a quick week-end trip to visit Nana Eileen this past week-end.  Nana is my husband's 86 year old mother and she is truly the Matriarch of the family.  It is a gift to have her around and it has been too long since I visited my old hometown of Columbus, Georgia.  My son was in rare form as he tormented Nana by walking around flexing his muscles.   She does not like muscles and he thinks that she is funny.  My 17 year old daughter found adequate mall time, my husband considered a toupee and even Rosie, our newly three legged dog was clowning around.  A good time was had by all.

One extra treat was a chance to pop in to one of the finest bead stores in the country:  The Bead Cage.  The Bead Cage was established 7 years ago and is owned by Paula and David Rosenberg.  I have known the pair for several years, having first met them at the Tucson Gem Show  a while back.  The duo is incredibly business savvy.  David, a radiologist, designed the killer acrylic bead bins used in the shop and Paula is a talented artist whose tiny size and sweet southern accent belie the business savvy she possesses.  A winning team, to be sure.  I was delighted ---but not at all surprised---when Paula reported that 2010 was up by almost 100% over 2009.

What makes them different?

 INCREDIBLE STAFF!
When I got to the shop late on Saturday, the place was busy.  Very busy. Nonetheless, within seconds of my arrival a friendly staff member approached me and immediately commented upon a piece of jewelry I was wearing.  She "Oohed" and "Aahed" in a genuinely interested manner.  She asked knowledgeable questions about the technique used to make the piece. I was impressed and the exchange made me feel good.  Our shared interest gave us something to talk about.  I was already into the experience.   How does your staff compare?  When I commented on the excellent staff, Paula smiled and said that she has an outstanding team.  She employs 8 employees, 4 part timers and 4 full timers.  When I visited David was away on "doctor" business.  He called in to report on his side trip to 4 different bead stores in the town he was visiting.  He noted that out of the four visits, only ONE SALESPERSON GREETED HIM!  Hmmm......  He also observed that the shops were low on basic inventory...with empty bins announcing the fact to all who were looking.  Bad Service.  Sad Inventory.  Coincidence?  What do YOU think?

DEVELOP A NICHE!
Paula has worked aggressively to maintain a reputation as "the" place to go for beady education.  She regularly brings in national instructors which draw students from much larger cities, such as Atlanta (100 miles away).  Additionally, this year will mark the second annual Southern Bead Retreat, which will be at Callaway Gardens.  The instructors are industry rock stars:  Sheri Serafini, Cynthia Rutledge, Diane Fitzgerald, Laura McCabe, and Huib Petersen.  Paula carries an impressive selection of the basics which are often utilized in the classes.  However, she knows that a beader willing to drop cash on quality instruction will be equally inclined to splurge on an unusual bead---so she has plenty of them, as well.

KNOW YOUR DEMOGRAPHIC!

Despite the name, the The Bead Cage sells much more than just beads.  Paula told me that although she is a passionate beader, the city's demographics are such that beads alone would not sustain her retail store.  Accordingly, she made the decision to incorporate several different lines of fun and unusual gift items.  Beads take up about 1/3 of the shop's 5000 square feet, while gift items take up the remaining 2/3, with proportional sales revenues.  The Bead Cage is a great place to go for a wedding gift, birthday present, or a special gift for yourself!  Paula noted that most beaders are women and all women wear shoes.  Yup...that explained the expansive selection of "Switch Flops."   I want a pair for summer!  They are cute and functional and have little interchangeable snaps:  plain/festive/sparkly/etc.

HAVE WELL DEFINED GOALS THAT YOU ARE ABLE TO MEASURE!
Paula and David use the Microsoft Retail Point of Sale system.  Every item in the store is bar coded so inventory is a snap.  Additionally, Paula has a plethora of valuable reports at her fingertips and most of her work day is spent working on the business, rather than on the sales floor.  In a hilarious side conversation, Paula explained to me that it is better for everyone if she is not on the sales floor, noting in the cutest little accent that she does not have "the friendliest face and tends to roll her eyes or make a face if a customer says something stupid."  Note to readers:  Paula has a very friendly face and is an absolute delight.  My guess is that she simply prefers the strategic side of the business!   Her ability to establish systems and processes enables her to make decisions based on logic rather than emotion.  If a product is under performing, she can quickly identify it and get it out the door, which brings us to her next attribute....

GET RID OF DEAD INVENTORY QUICKLY AND RUTHLESSLY.  Paula identifies her deadbeat inventory before it has a chance to strangle her cash flow.  If a product is on the floor for six months without selling, it is marked for termination.  Month 1:  sale at 25% off.  Month 2:  sale at 50% off.  Month 3:  donated to her favorite local woman's charity. 


GO FOR THE RESIDUAL SALE!
Paula also knows that the gift buying, shoe wearing, bead loving gals who shop in her store probably like their homes smelling fresh and fragrant. She offers the Lampe Berger lamp line.  The "common" fragrance oils found at the big box stores will ruin this fuel based lamp, so her customers must come back to her for refills.  The residual sale is a big part of Paula's overall strategy.  She likes to stock inventory that requires a follow up purchase from her customer.  Buy one pair of Switch Flops and spend lots more money on the snaps.  Buy one Lampe Berger and come back often for the fuel and for new scents. She offers great product lines so her customers are happy to return.  Win-Win! BRILLIANT! 


Impressed?  I am!  Paula is an inspiration to see...a veritable Steel Magnolia!  You will learn more about her and some other retail success stories in the coming weeks.


In other news

 We have been getting in wonderful pictures from our MARCH CRAFT CHALLENGE volunteers.  The participants were given several colors of Swarovski cup chain and asked to play with it in whatever manner tickled their fancy.  The cuff bracelet pictured at left makes it easy to see why Kelli Burns of The Hole Bead Shoppe has had her work featured on two separate covers of  Bead Unique magazine!  We were blown away by the breadth and scope of the talent!  Click here to see the other equally creative contributions!



APRIL CHALLENGE PARTICIPANTS ARE HARD AT CRAFTY WORK!


The April Challenge kits have been mailed to the lucky participants and we are looking forward to seeing what they can do with the components pictured at right.  Pictures are due on May 1.


NEW CHALLENGE!  
Calling all ETSY JEWELRY DESIGNERS!

The "Crafty Retailers Create" Challenge series has proven so successful that we are launching a new Challenge geared to Etsy Jewelry Designers.  We have 24 kits identical to the one pictured above.  The kit has a retail value of over $100 and is free to the lucky participants who will be chosen in a random drawing on April 15.  Send an email with your Etsy Store identified and we will enter your name in the drawing.  Check out contest details.

'NUFF ABOUT BUSINESS.....

.... I want to talk about more important stuff....like my current crafty personal projects!   I have been spending a whole lot of time in vet waiting rooms of late, so I needed some easy lap work.  Nothing complex, nothing that required thought.  I was looking for soothing, repetitive, "thumb suck" kind of work.  I found it with this great ripple afghan project.  The pattern is from Attic 24 and the instructions are absolutely fantastic.  I chose unusually bright colors, but plan to use it to bring some color to a dark leather couch.  Although the summers get wicked warm in Florida, my daughter loves cozying up on the couch with a blanket regardless of the temperature.  This cotton afghan will be perfect!

 I seem to have been bitten with the crochet bug again and am considering a granny square ensemble for my bed.   I saw this wonderful patten on Wonderland5, which is from a retro Better Home and Garden publication.  I was able to score the book from an Amazon affiliate for only $3 and should have it this week...I am very excited!

So...what is on your crafty agenda?

Got Dead Inventory? Turn that excess inventory into CASH!

The lackluster economy is daunting to many retailers. Fortunately, the crafty retailer will recognize great opportunity in the midst of the challenge. Seriously! Your areas of weakness will become more evident, which will provide you with a chance to refine and strengthen your retail business. After all, it is easy for busy store owners to coast along the sea of mediocrity when times are good. You know the drill... you put up with less than stellar employees when the cash register is jingling merrily. A weak economy pushes you to expect more from your staff...each team member must work at full capacity to justify the expense of her salary. Empty classes and workshops are not unduly painful when product sales are strong. However, you recognize a need to change when sales slow and you are paying teachers full price to conduct half empty workshops. Similarly, it is scary to realize that you have a store full of old merchandise when the economy dictates that it is more important than ever for you to be at the top of your game.

The overstock issue is insidious....You do not have a crystal ball and there is no guarantee that the merchandise you order will send your customer base into a buying frenzy. Craft inventory doesn't come with an expiration date or start to smell sour when it is past its prime. Mistakes happen. Czech glass was selling fast and you kept ordering it. You didn't clue in to the fact that sales had started to slow in that category and continued to order it at a rapid clip. Now you have more Czech glass beads than you can sell in a lifetime. You got a great deal on Swarovski crystal bicones and blew your entire bead budget on them. They were flying out the door for a while but things have changed. The internet retailers are virtually giving away the same commodity item and no one wants to pay your price. The RasberryLicious Art Yarn that had you misty eyed at the trade show has not elicited a similar reaction from your customers. Sigh.

What is the Crafty Retailer to do?

Turn a sharp eye toward Inventory Management in an effort to recapture profitability. It will take imagination and some elbow grease, but you can turn that dusty old stash into cold hard cash! The biggest mistake you can make is to hold on dead merchandise in a desperate belief that it will sell eventually, or tighten your grip out of some stubborn refusal to sell the product below a certain price point.

Get over it and GET ON WITH IT!

I often hear merchant's say that "they don't have to feed it or clothe it" to rationalize dead inventory and their refusal to unload it creatively. Please do not adopt a similar approach because dead inventory carries a very hefty price tag. It takes up valuable store real estate, prevents you from buying new stock, and screams "stale" to your customers. There is not a shopper alive who likes to go into a store that has the same merchandise week after week. It is boring and uninspiring. Crafters are creative folks, so "boring and uninspiring" marks the beginning of a store's death spiral. Don't let it happen to you.

Increase profitability by creating a system for effective Inventory Management:

Step One: Determine which inventory items are winners and losers by evaluating inventory turns. You want to have a high number of inventory turns. A product that hasn't turned in the last six months is dead inventory and should not be a staple on your shelves. How much of your existing stock has been sitting around for six months or more?

Step Two: Get rid of the product that is not moving. Cash flow is critical and you will be amazed to see how quickly you can generate revenue if you focus on moving dead stock. Here are some ways to do it:

Use your dead stock as a loss leader. Take a deep breath and get ready for some major price slashing. Mark down the price so significantly that it will draw customers to your shop. The product isn't moving. It hasn't moved in a very long time. You are not making any money on it. Quit smoking HOPIUM and get what you can while you still have time to bring in more "sellable" stock before the holidays. Chalk it up to a lesson learned and get it off your books.

Build a promotion around it! The only limit is your imagination.

*Put dead stock in grab bags that are given away with every purchase over X dollars. You will encourage your customer to spend a little more to qualify for the gift with purchase and you will be liquidating stock that has become a liability.

*Put all of the dead inventory on a table...or two... or three... and have a progressive sale. Spend $10 and save 20%, spend $20 and save 30%, spend $30 and save 40% and so on all the way to 75%! Most retailers have at least a keystone mark-up so any losses will be minimal.

*Put the dead inventory in a treasure box by the register. Consumers can pick one free item from the treasure chest for every $20 that they spend.

*Make some beautiful gift baskets that include slow moving inventory as well as some inventory WINNERS. Have a sealed bid auction for the baskets. Consider donating a portion to charity to encourage participation.

Ask your vendors to consider a product return. It doesn't hurt to ask! Most vendors don't like to do it, but will consider it for a good customer. Expect some sort of a penalty and a requirement that you order a comparable dollar amount in exchange. It is an easy way to minimize your losses with little effort.

Make a trade with another retailer. Many craft store owners are part of trade associations. Use those contacts to work a barter or a trade. Cotton yarn might be dead inventory come September for a New York yarn shop, but Florida knitters purchase cotton year round. What is a liability for you might be quite attractive to a shop in another region.

Use the dead inventory in a store sample. It is well known in the retail craft community: make a sample and it will sell. Case in point: I recently designed some craft kits and I challenged myself to use only product that had a slow sell through. The product worked beautifully and the kits are selling like hotcakes....no discounts!

Offer employee incentives to move the merchandise. Identify which merchandise will be targeted that week and offer an incentive to the employee who sells the most product in that category. The incentive can be small....an extra half hour for lunch, a store credit, etc. My partner prints a list of slower moving product for the staff to review at our Monday morning staff meeting. It helps to inform staff members and to define the sales goals.

Step Three: Monitor your sales for Profitability. Small retailers sometimes confuse sales volume with profitability. I was one of 'em. I found that I was selling the heck out of a particular product line and kept ordering it, selling it and ordering more----watching my dollars grow tighter with each passing day. Hmmm. It didn't seem right and it wasn't--- a close inspection revealed that a small pricing error meant that I lost money with every sale. It wasn't significant, but I am in the business of making money, not losing it! Sigh. Some sales are better left to those retailers with deeper pockets.

Step Four: Buy Smart. You won't pick a winner every single time, but protect yourself to minimize risk. Limit your quantities and negotiate terms for returns. Your vendors are dealing with the same economic challenges facing you...now is a great time to leverage your position as a valued customer. The vendor who once had very high minimums might consider lowering them, thereby reducing your exposure. You won't know if you don't ask! Moreover, while it is important to maintain a solid stock of the basics, your customers are looking to be dazzled. Make sure that you offer enough "speciality" inventory to set you apart from the competition. Finally, avoid the "I am going to buy it at the lowest price possible" pitfall that derails many retailers. A store full of red yarn that you got for an incredible price means nothing to the customer looking for yellow! Specialty retail requires you to buy wide and buy shallow. It makes sense to pay a bit more per unit if it enables you to stock your store with a wide variety of goodies.

You are smart, capable, and talented! Think outside the box, watch your inventory numbers closely, and enjoy the ride!