However, some independent retailers are holding their own, and even growing, because their smaller size allows them to be nimble and quickly respond to customer's needs. And they will have to continue being nimble.
The third annual Retail Finance Outlook study, released by CIT Group in October, found that while 76 percent of retail executives remain pessimistic about the economy, they are cautiously optimistic about the holiday season. Nancy Kyle, president of the Retail Merchants Association of NH, says, Everybody still thinks its doom and gloom, but there are retailers that are doing well. New Hampshire has benefited from the fact we have a low unemployment rate compared to other parts of the country. More of our consumers are still working. She also cites the lack of sales tax as a plus.
Some NH retailers even grew during the recession. Attrezzi, a kitchen accessories store in Portsmouth, is doing well. Owner Corradina Arangio, bought the bankrupt business a decade ago, and sales have grown steadily. When we took over the store, we had $10,000 in merchandise. Now we
have $100,000.
Cheryl Plunkett opened Fresh, a fashion boutique, in Nashua in 2008 just before the meltdown. I thought, I am in trouble', Plunkett says. I thought for the first year, I am not going to survive. The economy tanked, we had an ice storm and we had a snowy winter. I thought to myself, How can I turn this around?' Plunkett not only survived her first year, but also managed to grow sales by 30 percent between 2009 and 2010. And she's on track to increase sales by 10 percent this year.
Even stores with higher ticket items are holding their own. Family-owned Persian Rug Galleries in Nashua increased sales by 5 percent in FY 2011, says Owner Sy Mahfuz. Baron's Major Brands, a family-owned appliance business with six stores throughout the state and 72 employees, experienced double-digit sales growth during the past year, reports President Mike Baron.
Red's Shoe Barn, an institution in Dover for more than 50 years that also has a store in Plaistow, has also grown, says Dave Whitehouse, general manager. Contributing to its current sales is an increase in doctor's prescriptions for specialty footwear and demand in other niche areas, including Eurocomfort shoes and minimalist running shoes (those funky sneakers with five toes). We have intentionally maintained a large inventory even in the face of the recession, Whitehouse says. If you anticipate less business and buy less, you will get less business. We buy to grow.
But that's only part of the story. One thing successful retailers are saying is, It's all about customer service, stupid.
I often tell people we're only in the footwear business secondarily. Primarily we're in the people business, Whitehouse says. We treat our staff and customers as family. You see the same faces when you come in and get the same good service.
Mahfuz adds it comes down to referrals, which he claims is the easiest way to grow business. That means offering great customer service, especially in an era of Facebook and Twitter. A store can generate a lot of business through great referrals on social media, but it can also lose potential customers from someone posting about a bad experience.
Connecting With Customers
Successful independent retailers develop relationships with customers, Kyle says. They find ways to connect with costumers. Retailers are doing community events. A local independent bookstore will have authors come in to do readings, she says. [A store] might have wine tasting or have representative of a product they sell come in to do a talk
or demonstration.
Runner's Alley, a specialty store with three locations (Manchester, Nashua and Portsmouth) has served runners for 15 years. Jeanine Sylvester, owner of the store, holds training programs for runners to help them prepare for various races. About 130 runners participate, and when these serious runners need supplies, Runner's Alley is top of mind.
Runner's Alley also brings in national speakers, and Sylvester uses social media to promote events. You have to be creative and fun. People are busy. You have to think what you can do to bring people in and make it worthwhile, she says.
In the age of Kindles and Nooks, in-store events and author readings are one way for an independent bookstore to compete with national warehouse operations like Amazon, says Willard Williams, co-owner of The Toadstool Bookshops, which has locations in Peterborough, Keene and Milford. One of our stores has a reading group that meets there. We're doing more events like that, he says. That will be a trend moving forward-to create interactions between authors and readers or for readers to get together to discuss books. It's something you can't get by Internet.
Toadstool also caters to customer's reduced budgets. When the recession hit, it added used books to give customers lower priced options. Used books now account for 20 to 25 percent of all sales. The store also carries out-of-print books that customers cannot easily find elsewhere. People are always surprised what they can find here that they wouldn't find in a typical new book store, he says.
If you're selling kitchen accessories, what better way to move merchandise than to allow customers to test it firsthand? Attrezzi offers a cooking school four days a week, which helps strengthen relationships with customers while attracting new prospects. We work with different chefs in town, Arangio says.
Attrezzi also offers concierge services for those with special requests and needs. Sometimes a customer is having a special occasion and we go to them with anything they need, Arangio says. We had an elderly woman who needed new stove pans, but couldn't come to the store. We put together samples and brought them to her. She was very thankful.
Seasonal Specialty Stores in Amherst derives half its business from selling pool equipment. One way Owner Dennis Dipaulo differentiates his store from competitors is by holding classes about pool care. We have a classroom that sits up to 60 people, and we hold 14 classes a year, Dipaulo says. It's a key way of getting new customers here. If I spend 90 minutes with 35 people teaching them something on a Wednesday night, I'm not spending 90 minutes with 35 people individually on Saturday afternoon. It's a more efficient use of my time.
Liz Wright, owner of Fa La Lo, a gift shop in Portsmouth specializing in fair trade and locally made products, uses events to educate people about fair trade.
Fresh offers about 15 Girls Night Out events annually, from birthday parties to bachelorette parties. It's a shopping party. We close the store and you get personal service, she says. Depending on the size of the party, she will partner with local restaurants to provide complimentary hors d'oeuvres, possibly a signature drink and an evening of personal shopping for two to four hours. We tailor it to your needs, Plunkett says, adding the events are lucrative. The shop then maintains wish lists for clients, who can send their significant others in when it's time to gift shop. Such strategies are working. Plunkett expects the store to be profitable by the end of this year.
Partnerships
Strategic partnerships, such as those Fresh has with area restaurants, are another way to garner new customers. A lot of hotels and restaurants in tourist areas with high shopping density do overnight shopping deals that include dinner and a get-away weekend. They make it an event, says Kyle of the Retail Merchants Association of NH.
The Toadstool Bookshop in Peterborough rents space in its store to Aesop's Tables Caf. It brings in a lot of people. It often fills the store with great smells. In the store, you want people to linger and stay and that helps if someone can get a bite to eat there and come back and browse some more, Williams says.
Independent retailers are also banding together with Shop Local initiatives. Wright of Fa La Lo is part of one offered through the Greater Portsmouth Chamber of Commerce. We're working together to make people aware of shopping in downtown Portsmouth, she says, explaining one successful initiative involved persuading retailers to stay open until 8 p.m. on Fridays. It created a festive feel, she says and allowed retailers to capture business from people already downtown visiting restaurants and bars.
Inkubus, a gothic clothing store in Marlborough, participated in the town's recent Marlborough Madness, a community event, that attracted brought out a lot of new foot traffic in. Owner Malaise Lindenfeld says among her visitors that day was an older woman, not their typical demographic, who ended up buying a dress for a wedding. The store did fantastic, Lindenfeld says. We did really, really well.
Giving Back
Another way retailers find customers is by giving back to the community and hosting fundraisers. Small retailers often miss the boat, Mahfuz of Persian Rug Galleries says, by getting so wrapped up in their business that they don't get involved in the community. What better way to get your name out there than to have a room full of people bidding on your rug (at a charitable auction), he says.
Plunkett of Fresh has partnered with Saffron Bistro and Scontsas Fine Jewelry for the past three years to organize the annual Denim to Diamonds Fashion Show to benefit ovarian cancer research. She says it not only benefits a good cause, but also shows off the store's fashions and brings in customers.
Red's Shoe Barn, known for its annual road race, has raised money for local charities for the past 25 years.
Investing in Employees
Stores depend on repeat business, and whether a customer comes back may depend on how well they were treated. How many time have you left a place saying, I will never go back there again because of the way I was treated'? Mahfuz says. If anybody is sitting in their store wondering what is the most damaging thing for their store, it's not trying to satisfy every customer. There is nothing wrong with doing a bad job. It happens. There is everything wrong with not trying to dazzle a customer by fixing it. That's more memorable than anything else.
That means making sure employees are trained to deliver great customer service and know the products. [Our staff is] not only friendly and conscientious, but know every product that we sell in the store. It's the knowledge and service that sets us apart, says Sylvester of Runner's Alley.
Peter Edwards, co-owner of Zeb's General Store in North Conway, a tourist destination that has everything from penny candy to country gifts offers items from more than 500 vendors. Because it's a lot to keep track of, the store launched a Section Management Incentive Program, making each full-time employee responsible for three or four of the store's product categories. They are responsible for making sure their sections are appropriately stocked. We give bonuses based on how they are doing, Edwards says. What that does is make sure they have product knowledge and invests them in success of store.
At Seasonal Specialty Stores, Dipaulo boasts his senior staff has been with the company from 10 to 30 years. He says he also cultivates team spirit among seasonal employees, who are often high school students. Once a student has worked for the company for three years, Dipaulo gives them a scholarship from $400 to$1,000 a year, retroactive to their first year, that the store pays directly to their college.
Going Green
In this economy, it's not enough to pull in customers. Retailers must also shave costs. One option is going green. The Retail Merchants Association of NH offers a program to help stores evaluate energy use. Baron's Major Brands participated, and after updating its lighting, insulation, and equipment at its Laconia store, saves $32,108 in energy costs annually.
Attrezzi is also investing in greener practices. In addition to updating all light bulbs, they don't print receipts unless the customer needs one, they recycle cardboard, and a glassmaker takes empty wine bottles, Arangio says.
Investing Online
According to the Retail Finance Outlook, 58 percent of retail executives are shifting marketing from old media to new media, and 68 percent are increasing marketing in social media. And it seems to be working. In fact, 63 percent report growing web sales.
Kyle says smart retailers are selling online, engaging customers through Facebook, and have a QRC code that people can scan with their smart phones to get more information about the store.
While still using newspaper and radio advertising, Red's Shoe Barn is sending coupons and promotions to customers via email. It's become an important and cost effective tool in our marketing, Whitehouse says. Baron's Major Appliances also has a robust online and social media presence. We ran a deal through social media on TVs and sold to bare walls, Baron says.
Inkubus in Marlborough does most 60 percent of its sales online, but the flourishing business was once online only. Only after relocating to NH did Lindenfeld decide to open a brick and mortar shop. You have to keep it fresh. You can't have the same website for years. You have to change its look so people don't get bored, Lindenfeld says.
And, of course, there are NH retailers who forgo having a shop altogether. GourmetGiftBaskets.com, based in Londonderry, sells high-end gift baskets online, and is doing so successfully. We are projecting to be up 30 percent through the first thee quarters for FY 2011 over FY 2010 year-to-date, says Jason Bergeron, director of sales and marketing. The company was named to the Inc. 5000 list for the third consecutive year (a list of the fastest growing companies in the United States) and is on track to generate $14 million to $15 million in revenue this year, Bergeron says.
Niche Markets
Being in a niche market is helpful. Sylvester of Runner's Alley says people run no matter what the economy. Lindenfeld of Inkubus is making a cottage industry of filling niches. In addition to her successful clothing business, she has opened a vegetarian caf next door (Zeppelin & Kaleidoscope), as well as a Laundromat, and a boutique hardware store.
Perhaps there is no tougher place for retail than the Berlin/Gorham area, which has been hit hard by mill shutdowns. Add to that a shrinking and aging population. But Top Furniture, located on Route 16 between Berlin and Gorham, manages to keep its doors open.
While it relies on local customers, Top Furniture built a strong customer base among second-home owners in the area, says Owner Donna Goodrich, the third-generation to run the family-business. We have a good second home base in Bethel with Sunday River, she says, noting they are the largest furniture store in that market and deliver within a 100-mile radius. The store is now marketing heavily to the second-home market in North Conway.
Goodrich says the lack of a sales tax especially helps when second-home owners are from Connecticut, Massachusetts and Maine.
The Future?
The annual Retail Finance Outlook study shows retail executives concerned about consumers' ability to finance their own purchases and household costs. When looking ahead 12 months, a third of retailers see consumer access to credit worsening.
My son is the fourth generation in this business. I am concerned that he will not have the quality of life that my grandfather, father and I had by staying in this business, says Mahfuz of The Persian Rug Galleries. The economy has been challenging for almost four years now. It looks like it will go another year or two. I don't know what small retailers are going to do.
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