The Practical Entrepreneur: Simple Truths About Retailing, Part I

By Manny Drukier
Manny Drukier
Manny Drukier
January 14, 2010 Updated: January 14, 2010

“A person without a smiling face should not open a shop.”
—Chinese proverb.

The very first thing for you to do in your new retail location is to get to know your neighbors—an obvious truth that escapes most new retailers. Visit your local hair stylist, green grocer, dry cleaner, pharmacist, florist, and butcher. Make the rounds. Visit the stores, introduce yourself, and make a point of shopping. Tell your employees and spouse to do likewise.

Wherever your retail business may be located, it will take time to find your niche. As soon as you get a fix on your clientele, offer the customers you are targeting products they are likely to purchase, at a price they are prepared to pay.

If your business caters to people buying medium to higher price goods, do not display lower priced products. Some folks may walk in and out again because they are after low price items. Let them go in peace. You have not lost a sale. Your regular customer will get the wrong impression if they see merchandise normally associated with low-end stores.

In retail, one comes across “chronically unhappy” customers. If you try to please those who are difficult to serve, you'll be making an expensive, long-term mistake.

Customers typically fall into one of two categories: the right customer, your target group whom you are able to serve profitably, and the wrong customers, those on whom you lose money. The latter will hurt the morale of your employees and take up a disproportionate amount of your time. Such people are also likely to disparage your establishment to other potential customers. You do not want negative people coming back. You want the customer who will spread good will about your shop to his/her friends and relatives—customers that you are making money on.

You may decide to over price specific items in order to eliminate a certain type of customer. Your prime clientele will not be bothered by such small increases.

The opposite is also true. If you wish to attract folks who are more interested in price than well-spoken sales personnel and ankle-deep carpeting, your staff should be taught to go after volume and ignore the well dressed matron or classy gentleman who expect excessive service. In a high-volume establishment, you are not prepared to let staff spend their valuable time helping a rarefied lady or gentleman.

One thing you must not do is stock products simply because a browser asked for it. If you are in business long enough you'll know that this person usually has no intention of buying.

These days it is chic to buy cheap. Folks take pride in being knowledgeable shoppers. However, the average person is not accustomed to bargain, or to negotiate a better price. This applies to “blind items” in particular. These are big-ticket goods that a customer is unfamiliar with because they are purchased once or twice in a lifetime. They could be oriental rugs, diamonds, fine jewelry, antiques, art, exclusive wallpaper, crystal, good china and a myriad of specialty items and services.

Manny Drukier has been in business, from manufacturing to publishing, retail to real estate, stocks to stockpots for the past 60 years. He is the author of two books and resides in Toronto, Canada.