Stay up to date

Posted by admin Comments

Addition By Subtraction

Have you ever wondered how certain stores are able to offer popular products at prices lower than everyone else? If you’ve ever thought to yourself, how are they making money? Spoiler alert – they’re not. It’s called loss leader pricing.

A loss leader is a product a retailer offers at an extreme discount in the hopes of getting shoppers through the door, where they’ll ideally buy other regularly priced products. A loss leader is generally priced beneath its normal profit margin, but not necessarily below cost. Typical loss leaders are products that are sold frequently, that customers are very familiar. So, the shopper knows right away that he or she is getting a great deal.

Loss leaders can be used strategically to establish a retailer’s reputation of offering overall good prices, and when executed correctly, can result in a massive long-term payoff. But making loss leaders work requires planning. In this post we’ll explore a few of the dimensions that you need to understand before moving forward with this strategy.

Loss leaders have traditionally only been used by bigger retailers who want to squeeze out the competition, but the fact is, with a few smart strategic plays, even small retailers can derive huge benefits from the loss leader strategy. This post will show you how.

Defining the Objectives

Perhaps the most important factor in the success of a loss leader promotion is identifying your target audience. Ideally, the loss leader is targeted at customers who have a long lifetime value and are likely to return. This means choosing the right products to offer as loss leaders, and clarifying your goals up front by asking the following questions:

Do we want to attract new customers who will love our store and come back? This approach requires that you select loss leader products with mass appeal that will bring in a variety of shoppers.

Do we want to bring back customers who have drifted away? To bring back shoppers who have lost enthusiasm, you can offer a product that is unique to your business at a bargain price. This is great for rekindling interest.

Do we want to generate specific future sales? If you have a product that tends to be the centerpiece of a range of products, you can use the center product as a loss leader. Before holidays, for example, grocers heavily discount main dishes like hams, knowing that people will also buy side dishes, vegetables, desserts, and drinks at the same time.

Determining loss leader price is also important. Knowing your break-even cost, you’ll need to know what competitors charge. Then you have to determine whether you want to offer the product at cost, for a very thin margin, or at a loss. For example, if you have a large quantity of items you need to move quickly, you can sell them below cost to clear them out and drum up cash flow. If your goal is to lure shoppers from competitors, pricing products slightly above cost, but below competitors’ prices is ideal.

When you use loss leaders in conjunction with the valuable data you amass from customer loyalty programs, you can provide the right incentives, enjoy high response rates, and help your business thrive over the long term.

Posted by admin Comments

All You Need Is 48

Too many times I’ve heard salon owners say the reason they don’t have retail products is because they don’t have enough space. My reply is always the same, how much space do you think you need? Most salon owners think they need a ton of space to sale retail products. The truth of the matter is that all you need is 48 inches!

When major retail stores design their products sets, it’s based on a 4-foot layout. They’re called planograms and every product on the shelf has a strategic location. The key is to focus on in-demand products that complement the services provided in your shop. Hair care finishing products like edge control, leave-in conditioners, and sleep caps are great options for any salon. Your clients listen to your recommendations and if they see a product offered for sale in your salon, they will buy it. Why? Because they trust you. You’ve earned your clients trust with the styles you provide, not its time to monetize the relationships you’ve cultivated.

So, how do you get started? First, find a new or used glass retail cabinet, preferably one with a lock. The upright cabinets take-up less space and provide a clear line of site for your customers. The more they see without bending over the more customers will purchase. Next, stock products that your customers use on a daily basis and ensure they’re displayed in the case. Next, when pricing the products be sure to account for possible commissions paid to your staff. If you allow them to make a profit from the sale, they’ll be motivated to promote and sell the products offered in your salon.

Finally, invest use your social media platforms to let current and potential know you have products. Create bundle deals around services and hair care products to facilitate sells. Incorporating retail in your salon can be a little scary, but don’t let that stop you from making money! Happy Selling!

Posted by admin Comments

Don't Fear Crowds

The technical term for a fear of crowds is Agoraphobia. However, when it’s related to the business industry, it’s called saturation. We’re going to discuss how a saturated market can actually be a good thing.

When a market is saturated, many competitors sell similar products and services. That tells you the market has many eager buyers. Otherwise, it wouldn't be sustainable for so many players to be in it. And that’s fantastic. It says the whole industry is aware that a great opportunity exists.

Big Opportunities in a Saturated Market. There are at least 3 ways you can stand out in a saturated market:

1. Personality: Different approaches and styles resonate with different people. When you have a distinct style, voice, or brand personality, you’ll appeal to specific types of buyers. This also includes your values, your mission, and your vision. That’s enough reason for people to buy from you instead of a competitor, even though you may be the more expensive option.

2. Niche: In a big market, you can stand out by serving a specific slice or niche. Look for a sub-group whose particular needs aren’t being met. For example, the hair care industry is a saturated market, but there are sub-niches that are being ignored, such as hair care for postpartum women and hair styling focusing on anti-aging techniques for men. These potential customers are probably buying what’s out there, simply because they haven’t found a better alternative. But when they see an offering that’s created especially for them, they’ll happily buy it instead.

3. Offer: Finally, you can stand out by addressing a gap in the market. If you look around the industry and see that all buyers’ needs are being met and they’re achieving the transformation they’re after, then you might not need to get in there create and something new.

But sometimes you look at the landscape and see a gap. You notice things that should be offered but are not available or not being provided in an effective way. That’s a great signal to you that, not only is there a demand in the marketplace, but that demand is not being met, despite the offerings out there. You need to create something to fill that gap.

Go ahead, step in and fill that gap and lead people to the outcomes they want. Don't worry about saturated markets. Worry about what you can contribute to that saturated market that everyone else is missing.