HOW TO INCREASE SALES IN RETAIL IN A RECESSION
The economy is in a scary place right now. News articles report decreasing consumer spending. But, if you're savvy, I promise you can succeed. Today I'm going to show you how to increase sales in retail, even during a recession.
But, before we get started
Have you heard about the super secret document that everyone in the fashion industry uses, but no one is talking about? Probably not. That is because you can't find it on Google or Instagram (believe me, I've tried).
It's a form I have used for over 13 years at every job I have ever had. Literally everyone from brands to fabric suppliers use it, but you can't find it anywhere publicly.
The best part? It can cut your sourcing time in half, and save you tons of money in product development! This is the kind of info consultants charge the big bucks for. And, I'm giving it away for free until the end of the month.
So, get ready to make fashion startup life a whole lot easier, and GRAB YOUR FREE DOWNLOAD OF THE NOT-SO-SECRET SOURCING DOC HERE
What You Will Learn:
- What metrics you should actually care about, and be tracking
- Encouraging lifelong repeat customers
- How to add (yes, add) more products to your line
- Optimizing your current systems
- Additional resources
RETAIL METRICS 101
If you have a fashion brand and you’re a smart founder (which I know you are), my guess is that you have been trying to get ahead. And that you’ve been focusing your time on learning how to recession-proof your business.
Unfortunately, in a bad economy, your sales are going to be lower than they normally would be. And you may not see the rapid growth you planned for. This means you might have more inventory on hand than you accounted for. And that inventory is going to tie up your cash, which is no good.
New founders often make the mistake of thinking they need to sell more products to more buyers to make more money. But the secret to how to increase sales in retail, isn't always volume. It’s speed . . . meaning, selling your items more quickly.
Old, stale product wastes money. It ties up your cash. And the older inventory gets, the less value it has (meaning, the more you need to discount it). So, if you focus on taking the inventory you have and selling it faster, you can actually increase your bottom line without having to increase your order size.
THE RETAIL METRIC YOU NEED TO KNOW ABOUT AND BE TRACKING
Have you heard of INVENTORY TURNOVER RATE, also known as STOCK TURNOVER RATE? This is a crucial number that no one talks about. This number is the number of times your stock has been replaced in a year. For example, a stock turnover rate of 5 means that inventory was replaced 5 times.
A good stock turnover rate is between 5 and 10. If your stock turnover rate is 2, that means you get 2 main deliveries a year. And 2 is actually the average for new brands, though that doesn’t make it correct or ideal. If you’re only turning over your stock twice a year, that means you have cash tied up in product for 6 months.
When talking about how to sell clothes online, you need to know that on average, styles become stale after 2-3 months and then need to be discounted. This is why I tell my students it’s better to sell out quickly than have tons of inventory.
During these uncertain economic times, you need as much cash on hand as possible to allow you to adapt and make changes.
So, in this post, I am going to teach you my best tricks to help show you how to increase sales in retail and sell excess inventory. And don’t worry, none of these tips involve running sales or marking items down – they are all designed to increase your bottom line.
Ready to get started?
STRATEGY 1 - DON’T TAKE YOUR CURRENT CUSTOMERS FOR GRANTED
If you have spent even a tiny amount of time in the world of e-commerce, listening to podcasts or reading blog posts from “the experts,” then you’ve probably come across advice that says you need to constantly fill up your sales funnel. The reason people say this is a good idea is because, on average, only 1-3% of the people that land on your website will convert to paying customers. This means that for every 100 pairs of eyeballs that look at your product, you can expect to get about one sale. So you need a constant flow of new eyeballs.
This is in fact solid advice when times are good. However, it’s not necessarily the most economical advice during a recession.
Instead of spending your dollars on growing your audience, I suggest you change your mindset and spend your time and money on the people who already know who you are.
Here are some suggestions for showing your existing customers that you appreciate them:
THE 3-STEP FOLLOW-UP EMAIL SERIES
Like a dog in a meadow chasing butterflies, brands are often onto the next customer as soon as they close a sale. When you get the sale alert on your phone, instead of thinking, “Okay, how am I going to find my next customer?” I want you to think, “How can I show this customer just how much I appreciate them?”
STEP 1 - EMAIL AUTOMATIONS
The first step is to create a new customer flow with 3 automated emails:
1. Email #1 – After a customer places an order, thank them for supporting your brand. Let them know that you understand there are many businesses that they could choose to buy from, and you are honored they chose yours.
2. Email # 2 - Send out the second email after the customer receives their shipment. Ask them what they thought of their order and if they need any help with it or have any questions.
3. Email #3 - About one month after the customer makes a purchase, give them a special customer appreciation discount code. It doesn’t have to be huge, just something that is for current customers only (meaning, it isn’t being publicly advertised on your website). You can even encourage them to share the secret discount with their BFF.
The best part about this automated email series is that you can set it and forget it. And very few brands take the time to appreciate their customers, so you are really going to stand out in the overly crowded e-commerce space.
STEP 2 - SEND FORMER CUSTOMERS A SURPRISE
The e-commerce game is hard. You constantly feel like you are like, “Hey, look at me, hey buy something from me.” It all feels very one-sided and sometimes kind of icky constantly asking people to do things (buy, share, like) for you.
So, give your past customers a surprise instead!
You already have your customers’ addresses from when you sent them their orders, so why not send them a little something-something special in the mail too?
One of my favorite things to do is to send customers a surprise sticker pack in the mail.
Yeah, digital products are virtually free, but they are so overdone. They don’t feel special anymore. Getting real snail mail feels old school and exciting.
And there are so many pros to sending stickers:
1. They are branded, so your customer will be reminded of your brand.
2. They are cheap to make.
3. They are cheap to send.
Now into sticker? Here are a few other ideas!
- If you are a yoga company, a great free surprise gift might be a small crystal.
- If you are a workout company, a good gift might be some surprise hair ties. Like the kind that don’t snag your hair.
- If you are a swim company, you could partner with a cosmetic brand and send a little free sample (like the kind that used to come in magazines) of after-sun aloe vera.
- And, of course, there are always stickers!
STEP 3 - CUSTOMER LOYALTY PERKS
My last suggestion for showing your customers how much you appreciate them is customer loyalty perks.
Big brands do this like Sephora and Bloomingdales. Basically, with perks, the more you spend, the more you earn, and the more you can get from that brand for free in the future. It’s like airline miles, but for retail.
For some reason, small startup brands never think to create their own loyalty programs. And let me tell you, you are missing out on larger orders and repeat business if you skip setting up your own program.
While it might feel overwhelming, Shopify has quite a few loyalty program apps that make setting one up as easy as clicking a few buttons.
STRATEGY 2 - ADD NEW PRODUCTS. YES, ADD!
The first thing brands think they need to do during a recession is scale back and produce less inventory. I agree that it is safe to make lower MOQs (minimum order quantities) in a rough economy. However, you might actually want to add a few strategic products into your assortment.
Like what, you ask? Like small, giftable items.
During a recession, people tend to spend less on big purchases for themselves and more on smaller purchases for other people. The sweet spot here is items that cost under $35 dollars so that people don’t really have to think twice about making the purchase.
This is a great place to try out white labeling product. Basically taking existing products and adding your logo. You can read more about how white labeling works, and how it can save you money, here.
The key is you don’t want to sell random crap for under $35 – it needs to be something useful.
What’s useful depends on your brand. What’s useful to one customer is garbage to another.
Here are a few examples of small giftable items you can add to a product assortment:
- If you are a yoga clothing company, try adding some props like mats, meditation guides, or other branded accessories.
- A workout company, a good additional product might be branded resistance bands, or weights.
- And, if you are a swim company, think towels, beach hats, and cute waterproof totes
- Get where I’m going here?
STRATEGY 3 - OPTIMIZE YOUR CURRENT SYSTEMS
Whatever money you spend on your brand, you want to make sure it goes as far as possible. This is especially true during a recession.
When people ask me how to increase sales in retail, I tell them that the answer might actually be in just slightly tweaking what they are already doing.
So, here are some ideas for getting the most out of your current and future efforts:
TIP 1 - IF YOU ARE GOING TO A POP-UP, COLLECT PEOPLE’S EMAIL ADDRESSES, EVEN IF THEY DON’T BUY
Remember, pop-ups aren’t free. You are spending money to be there. And a lot of times, brands walk away feeling discouraged because they didn’t get as many sales as they had hoped.
Here is where the mindset shift comes into play.
Instead of thinking of the pop-up only as a place to sell, think of it as a place to refill your funnel.
Your goal shouldn’t be to get every person that comes to your booth to buy from you (because that’s impossible, and it’s important to have realistic goals). Instead, make it your goal to get every person that comes to your booth to sign up for your email list.
The way to do this is to offer something. My favorite pop-up-funnel-building activity is to do a giveaway. If people sign up, they are entered to win your top-selling item.
So, even if people don’t buy from you right then and there, you can get a conversation going and nurture them for the coming weeks or even months. Then, one day in the future, they might buy from you.
TIP 2 - GET REGULAR WITH YOUR EMAILS
I like to send an email once a week. But you can get away with every other week. Or even once a month. Decide on a frequency that you can realistically handle.
Whatever you decide, just make sure you are consistent. Customers start to feel agitated if they get a bunch of emails from you, then nothing for a while, then you show up and blast their inbox again. Being consistent makes your brand seem more credible and reliable (read, people feel safe buying from you).
Now, what should you send in these emails? Again, that is up to you and your brand.
Let’s go back to our original examples.
- If you are a yoga company, maybe you want to send a guided meditation every week.
- A workout company, maybe send a monthly workout routine.
- And, if you are a swim company, you could send travel deals to beach destinations.
See how each brand’s emails are tailored specifically for their niche?
TIP 3 - CONSIDER YOUR ROI (RETURN ON INVESTMENT).
When I take clients down this journey of how to increase sales in retail, they often get worried I am going to add a million things to their to-do list, and totally overhlme them. And, that's definitely not the case.
The goal here is to determine what you spend the most time on and compare that to what makes you the most money.
This is one of my favorite exercises to do with clients because it is truly eye-opening. It’s going to be a pain in the butt, but I promise it will be worth it.
As a first step, I want you to clock your time for a full week. This means, record how much time you spend doing everything you do—scrolling social media, cooking dinner, traveling. And be specific. Were you on social media to revenge-follow your 6th grade nemesis? Or where you on social media so you could research influencers to partner with?
I want every minute in your 24-hour day accounted for.
Then, after you’ve done this for a full week, it’s time to analyze the data. Where are you spending the most time? And is that time really worth it?
From there, you can determine which efforts to amplify and which efforts to cut back on.
What most founders find out during this exercise is:
- One, they spend (or waste) way too much time on social media.
- And, secondly, they are spending time on the wrong things. They are focused on the tasks that don’t make them money.
The best way to make more money is to do less of what doesn’t lead to sales and more of what does. It’s that simple. So, do this exercise and learn how to shift your focus to be as productive as you can be in the same 24-hour period. This way, you can increase your bottom line as much as possible without cloning yourself.
THIS ISN’T EVEN THE GOOD STUFF
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Questions about sales during a recession or working with me? Ask away in the comments!
Ways To Work With Me:
- The Fashion Startup Club - This is NOT AN ONLINE COURSE. This is me showing up live week after week, to help you stay accountable and do your best work to finally launch your fashion brand. (And, yea, you also get a ton of pre-recorded fashion industry insider info you can’t find anywhere else on the internet).
- Private Consultations - click the link to contact me for more information.
- For custom stickers, I love using UPrinting. They are cheap, quick, have great customer service, and the quality is amazing!
- Nervous you will need to compromise on your ethics if you use white label products? Check out Eco Promotions Online for conscious products you can brand easily.
- To stay consistent with emails, and review data to see what’s working and what's not, I personally use Klaviyo.
- Want to start your own customer loyalty program? Try the Shopify App, Referral Candy - with over 1800 reviews and a 4.9 out of 5-star rating.