Secrets to a Successful Sale

Have you heard? Schoenfeld Interiors is having a sale. Not just any sale, mind you, but the semi-annual sale that has loyal customers holding off on their home furnishings purchases until next month when everything in the store—from custom orders to kitchen tables—is one-third off.

To say that Schoenfeld will be bustling next month is an understatement. “We do a good amount of business,” says NAHFA member Bob Schoenfeld, whose two Washington stores in Seattle and Bellevue will have extra staff on hand for the increase in traffic and, hopefully, business. “We pay a little price in January with slower sales because our loyal customers know what’s coming, but come February it’s all worth it.”

You can hear the excitement, the anticipation in Schoenfeld’s voice, and why not? A good sale goes a long way to curing some of the ills of your store. Customers go home happy, perhaps even willing to come back in a few months to update another room. Commissioned sales associates go home happy, too, with a little more heft to their paycheck. And store owners get a nice short-term infusion of cash.

But retailers know all too well that putting together a successful sale has its risks. Will shoppers show up? Have you targeted the right audience in your advertising? Are your prices too low or, worse, too high?
“You can’t just wake up one day and say, we’re going to have a sale,” says Schoenfeld. “I wish it was that easy for us, but it takes a lot of planning, coordinating, and making sure the right message gets out to the right people. That’s not always easy to do for a retailer.”

Nobody knows this better than Chris Lynch, CEO of furniture sales promotion specialist Lynch Sales. Lynch, whose company puts together promotional events for home furnishings stores, says the secrets to a successful sale are few. But dropping the ball on just one can be the difference between a successful sale and one that’s a dud.

“There’s a lot of work in planning a sale and a lot that can wrong,” says Lynch, “but if a promotional event is done correctly you’ll look back and see that the risk is well worth the gain.”

Start with the date. The traditional events pegged to the holidays—Memorial Day, Labor Day and Fourth of July—should always be part of your sales calendar, says Lynch. Just remember that you’re not alone. “If everyone else is having the same Labor Day sale, how are you standing out?” asks Bob Nelson. “Why should a shopper focus her attention and money on you when so many other furniture stores are doing exactly what you’re doing that weekend?”

Nelson, whose company, Power Retailing, helps stores with promotional events, urges retailers to break free from the calendar and come up with a date on their own. Lynch agrees, and says the fourth quarter is the best time of year to throw a sale.

“It’s the busiest time of the year,” Lynch says. “It works for both parties. The retailer wants to make an impact at the end of the year and the consumer typically has more disposable income and seems more in the mood to buy.”
Lynch also likes to start a sale on a Tuesday for larger retailers and a Wednesday for smaller retailers. The first two days of the sale are reserved for customers who bring in the private invitation that was mailed out a week earlier. Lynch can hear the collective groan of home furnishings retailers: you want us to turn away customers who are walking in off the street?

“Yes,” he says. “When they hear that you’ll be open to them on Friday, they’ll be back and probably be back early. There are (retailers who are) skeptics to this, but they find religion when their customers are turned away from a sale, but know they can take part in a few days and return. They walk away knowing you’re having a real sale and that it’s not like all the others.”

So you’ve settled on a date. Now comes the hard part: what’s your reason for a sale? Lynch cautions retailers to think about the consumer when answering this question. He says it’s difficult for a home furnishings retailer—any retailer, really—to convince consumer’s that the store is motivated to offer good deals.

“They’re so jaded at this point because they can’t go anywhere without a sale being advertised,” says Lynch. “A lot of them are looking for reasons not to go.”

NAHFA member Bruce Weintraub, who owns Tarpon Furniture in Hudson, Fla., sees first-hand why consumers are often unmotivated to shop for furniture. “Just open the newspaper every Sunday and there are four or five ads or inserts for furniture sales,” he says. “And it’s the same people week after week after week. If I’m a shopper and you give me a price there’s no compelling reason to buy it on the spot. I know I can come back next week or the week after that because I’ve seen how you run a sale, which is to say you’re always having a sale.”

Lynch says a good home furnishings sale conveys information to the consumer that this is not the same old, same old. A good sale convinces consumers that the retailer is motivated to sell. “There’s the obvious ones like going out of business or the store is moving or will soon be undergoing major renovations,” says Lynch. “Those events tell consumers you’re serious about moving product because it also benefits you. The stronger the reason, the stronger the sale.”

Getting the message out is important. Lynch suggests a retailer budget 7 percent of their projected sales volume for advertising. Start with your private invitations. These go to current customers in your database or to targeted ZIP codes you want to hear about your sale. Two weeks before the sale Lynch and Nelson suggest meeting with your television and radio reps and putting together a message that speaks to the reason of your sale.

“The idea is you need to hammer home the reason,” says Nelson. “Just telling them it’s a remodeling or remerchandising sale isn’t enough. You need to explain it so they see the motivation for your sale.”
Lynch offers a caveat: “Don’t just say it, do it,” he warns. “Consumers are smart and have long memories. If you don’t remodel after the sale, they’ll remember—and often by shopping elsewhere.”

The most common mistake with any promotional event, says Lynch, comes with pricing. Lynch and Nelson say the retailer needs to be objective, which is not always easy. “Sometimes it’s just too emotional for them,” says Lynch. “They look at a piece of furniture and they see their trip to High Point to buy it, the three nights staying at the Marriott and the shipping to get it to the store. By then, they’re too attached. Either they don’t reduce the price enough before the sale or a few days in they’re running around a deserted store with a magic marker and slicing prices. By then it’s too late. You have to load the shotgun while the ducks are still around.”

“After all,” says Lynch, “when that sofa you’ve had for two years is still on the floor, what good was the sale?”

Lynch believes one reason retailers are hesitant to reduce prices too much is because they look at each piece individually. “They look at each individual item as it sells and then calculate the margin,” he says.
One of the benefits of hiring promotional specialists like Lynch or Nelson is their company will have a more objective view of the big picture. “We look at your inventory as a whole,” Lynch says. “Where a retailer might start with $1 million in inventory and, by the end of the sale have sold $1.4 million, they might be happy with that 40 percent profit margin because they’re more wired to get 40 percent on everything in a sale.”

Lynch says promotional specialists hired to run a sale sell on strong margins and at cost and are more likely to produce 50-percent margins. Regardless of whether you choose to use a professional promoter or go it yourself with your staff, Lynch and Nelson urge retailers to be bold in their pricing.

Another secret: Lynch and Nelson advise retailers to throw a sale that is store-wide and not just for slow-moving product. “Nothing gets a shopper to turn around and walk out faster than seeing only a special corner of the store is on sale,” says Lynch. “You’re not going to make the same margin on your best sellers, but you’re going to sell more of them.”

A professional event run by Lynch or Nelson can be expensive, but with their targeted advertising and aggressive pricing, they often produce. A recent sale at Masin’s in Bellevue, Wash., pulled in 8,600 people to the store in six weeks. “We’re not talking business as usual,” says Lynch. “A special event creates a buying frenzy. The only downside is you’re going to sell way too much furniture and you’re going to bust your tail making deliveries. I suspect most retailers are willing to put up with that.”

Lynch said a good sale like Masin’s can be replicated elsewhere by throwing sales within your sale. In other words, after the first week of the sale, think about closing for a Wednesday—or stay overnight—and rearranging merchandise, lowering prices even more, adding from your warehouse or ordering even more. “A good sale doesn’t have to be over the weekend,” says Lynch. “The best sales build on the frenzy first created, and the hype only gets better and better because you are telling them after they bought the dining room set that the $799 sofa they were looking at in passing will be even less, maybe $599 next week. Now you’ve got a buzz.”

One of the hidden benefits to a good sale is the special-order business, which can account for more than 40 percent of a store’s overall business during a promotion’s run, says Lynch. “Don’t just focus on floor samples,” says Lynch. “The margins are higher on special orders and you engage new customers by giving them choices.”

Schoenfeld says most of his store’s business is special order, which means next month’s sale will produce better-than-average margins. Then, he says, there’s the bonus: “We usually get a few more customers who weren’t regular customers that, after the sale, are loyal to us.”

Original Story can be found here