Transitioning from the boom of Christmas sales to the January sales

Q: I have heard it reported that last year many retailers found themselves forced into early sales for the Christmas period. How can a small retailer like myself, entice customers in?

A: The answer to this would have to depend on who you wanted to attract, who your ideal customer is. When you are clear about that then you need to put yourself in your customers' shoes – what would catch their eye? Spark their imagination? What media do they respond to? What interests them? Do they see your shop front regularly or infrequently? Are they typically passing by or do you have to become a destination? When you begin to think through your answers to these questions then you can apply those to your marketing and customer engagement approach which should include four parts that act as an upward cycle – attraction (getting them in), conversion (getting them spending), retention (keeping them spending) and referral (encouraging them to introduce you to new customers), thus this part completes the upward cycle and becomes part of the next phase of attraction!

My suggestions are:

- Themed window and instore displays. Change these frequently if your customer passes often, you can get away with keeping the same display longer if your customer is a less frequent passer-by

- Value-add promotions – not just discounts, but promotions that encourage increased basket size such as “spend X and get Y free” or try bundle deals which offer a discounted price for all elements of the package but only when purchased together

- VIP customer events – out of hours occasions for your loyal customers (and their friends) to come to your store, learn more about the products, perhaps to have demonstrations or some kind of learning experience. Doing things like this really helps to re-engage customers who have perhaps not been back for a while, introduce new potential customers and also they “get people talking” – saying what a great time they've had, what fun it was etc. – your store might become the talk of the town!

There are so many possibilities – think what will be most likely to work for your customers and then try it out – trying new ideas is the best way to find out if it's something that works and is worth repeating.

Q: It seems that once the doors shut on Christmas eve, customers expect it to be all about post Christmas sales. As a retailer how can I get round the image of sales as a method of clearance and create a demand for those products?

A: Obviously any “seasonal” products need clearing, but you can use some of the ideas from above and create some interest around the next calendar event that might influence your customers. Valentine's Day isn't that long after Christmas... and is quickly followed by Mother's Day and Easter too. You could also play to other “trends” in the post-Christmas period – perhaps seeding the idea with customers to be more creative in the New Year – to make it their New Year's resolution to make more of their own greeting's cards for instance. You could run instore events and workshops for customers' benefit on a range of creative ideas that help to capture their imaginations and then getting them buying products for use at home.

Q: How do I decide which products to put on sale and how much should I mark down?

A: It will all depend on the items – for instance, if you have very obviously “Christmassy” stock you can either reduce it heavily to clear (thus getting the cash flow back into the business) or, if you can get away with it, you could store it until next Christmas then put it back on sale. Weigh up the cost of storage and the risk of customers noticing carry-over stock from previous years against the margin impact of discounting.

January is a good time to clear out anything old as well as slow sellers – if items aren't selling then you might as well get what you can back for them so you can reinvest the money on more productive items. If rapid clearance is your aim then take a look at retailers like Next whose deep discounts ensure they close each season “clean” (with almost all products completely sold out) – but you need to budget for discounts of between 50% and 70% to entice the January bargain hunters.

If you just want to have an area of sale, because it's expected, then choose a few items you would feel happy to discount, perhaps old season stock, and offer a lower rate between 25% and 50% for your sale. My advice is to really consider why you are offering a sale and what you want to achieve from it and then hopefully you'll have a better idea about how you need to go about it.

Q: How can I tell potential customers about the January sale?

A: It depends how you would generally communicate – flyers, window posters and emails are all typical ways of sharing offers and news with customers. You might even have a “sale preview” for loyal customers, so they can buy the best of what's available before you sell out. This is a great way to get them to spend – it's a time limited offer – while stocks last – if they want something specific they have to get it now!

Q: When should the January sales end?

A: My personal view is the best executed sales offer deep discounts, run for a very short time, and the retailer can transition quickly to full price merchandise. Again Next is exceptional in this –there is such hype around their sales that customers queue for hours! With heavy discounts and only limited items, people make a point of going to the Next sale. Those queuing might not be their regular, full price customers, but that's fine – Next want to get old stock sold as swiftly as they can and restore their shop floor to the calm of non-sale as soon as possible. So, to answer this I'd suggest you time-limit your sales too, to encourage people to buy now or miss out.

Further information

Clare Rayner, the Retail Champion, has regularly made guest appearances on BBC radio, TV and has contributed to various retail-focused articles and opinion pieces. Clare shares her expertise in developing strategies with retailers of all sizes to increase profit, customer base, revenue streams and channels to market. Clare is also Owner/Director of several businesses servicing the retail sector including Retail Acumen, The Retail Conference and e-mphasis Internet Marketing.

Source: Craft Focus