All Things Retail: 5 Ways to Grow Your Sales, Today!
Increase your Average Order Value (AOV) by 10% or More!
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5 Ways to Grow Your Sales, Today!
Let me guess. If you own, lead, manage or work at a retail business, the 3 words that are spoken more frequently than any others are “How are Sales?”. If this isn’t the case, it should be.
We all know that profits are the lifeblood of every business, but you cannot grow your profits without improving your sales. Yeah, I know that cost-cutting efforts can bump profits over the short-term, but that’s a finite tactic that cannot work forever. Sales must increase, week over week, month over month and year over year, for your retail business to thrive. Hence, the routine uses of the phrase “How are Sales?”
There are an infinite number of ways to improve your sales, from the classic “Right Item, Right Price, Right Time” to providing great customer service, utilizing effective marketing techniques, maintaining proper in-stock levels, integrating your physical & online shopping experience, providing new services like BOPIS, shipping, delivery, personal shopping…you get the idea. Each of these tactics are important and they all will work if you do them right, but most will take some to implement and produce results. If you are like me, you can be a bit impatient at times and you love immediate results. So, let’s give you some ways to increase your sales today!
Check out these stats:
“Over 90% of people who shop today make occasional impulse purchases that they didn’t intend to buy initially.”
“61% of consumers ages 18 to 29 routinely buy impulsively for themselves.”
“Over 40% of consumers spend more money than they had planned in stores, while 25% reported online impulse shopping.”
The common theme? Customers often buy on impulse and spend more than they intended. What drives this incremental spending? To a great degree, how your store is merchandised, how your product is displayed and how you use different pricing strategies. If you can leverage this impulse spending opportunity, you will (not “can”) see dramatic increases in your average sale per transaction, or average order value (AOV). How much will my AOV improve you ask? With a comprehensive “impulse merchandising initiative” in place, I have seen AOV increases that range from 10% to as high as 30% or more.
Meaningful? You bet. Some quick math in an example scenario at a conservative 10% AOV bump:
Current AOV: $20 >> 10% Increase in AOV: $2 >> New AOV: $22
Orders Per Day: 100 >> Old Sales $ Per Day (100 x $20 AOV): $2,000 >> New Sales $ Per Day (100 x $22 AOV): $2,200
Days Open Per Year: 360 >> Old Sales $ Per Year (360 x $2,000): $720,000 >> New Sales $ Per Year (360 x $2,200): $792,000
Sales $ Increase: $72,000 (at a 50% margin, $36,000 goes right to the bottom line without spending a dime)
So, let’s go! Here are 5 ways to grow your AOV and your overall sales, starting today!
Checkout Merchandising: Display a curated selection of relatively low-priced impulse products at and near where each guest checks out. Product can be displayed on the counter as well as “on the way” to the counter (in a checkout queue like Old Navy and Party City).
Test different products to see which sell better on impulse. Easy to understand / well-known items work best as they minimize decision-making. Ideally these items will be small and high in margin.
Keep selection somewhat limited. An impulse purchase needs to be a quick decision; too much browsing will slow down your checkout process and create lines (we hate lines).
Use bins for very small items for a grab & go effect.
Fill available space at or near the checkout without cluttering or infringing on the space for a guest to put down their purchases and pay easily. Most stores underutilize these great selling spaces.
Drive Aisle Merchandising: Most larger stores have “Drive Aisles”. In larger environments it may be a racetrack around the perimeter of the space while smaller shops might have a main front to back aisle. Regardless of the style, drive aisles are great for displaying impulse products. If your store does not have a drive aisle, move some stuff around and create one. If your drive aisle isn’t wide enough to fit display units without impeding shopper traffic, make it wider.
Item selection in drive aisles can be broader than in your checkout impulse area. Customers can take their time and browse through more items, read packages, etc. Price, however, should still be in the range that will encourage an impulse purchase ($20 or less in most stores works well but test, test, test and go with what works).
Display fixtures can be almost anything, so long as products are displayed at about waist height or above (without blocking sightlines into the store) and walkways on all sides still allow for comfortable shopper flow. Tables (with or without table covers), bakers racks, wooden crates, small ladders with wood shelves and even wheelbarrows (thanks Five Below) work well and are inexpensive if not free. Use your imagination.
Use signs on each display to catch the shopper’s attention and get them to stop. Sale, New Arrival, etc. all work.
Program Merchandising: Simply stated, “sell the outfit, not the item”. This, of course, does not only apply to apparel. When building promotional displays, regardless of where they are located, include all the items that “complete the outfit”. Tops, socks, jewelry with a jeans display. Fabric softener with detergent. Water bottles with backpacks. Pens, pencils, and bookmarks with journals. The list is endless, but the goal is to make the sale of that additional item(s). If you have a knack for it, photograph all of the elements together in use and turn that photo into a sign showing the “complete outfit” in use.
Multiple Pricing: 3 for $5; 4 for $9; 7 for $12; no shopper can easily figure out that they are paying per unit, but they always feel like they are getting a great value. Rarely will a guest buy in multiples lower than the stated price, which means that often, if you have an offering at 4 for $9, you will generate an additional $9 in sales. Best practices:
While multiple pricing will work for single item offerings, it’s most effective across a small selection of similar products. Socks, jewelry, coloring books, candy, nail polish, you name it.
When creating the price offering, use “hard to calculate” retails like 3 for $5 (quick, how much is the unit price??). Everyone can figure out 2 for $5 and 3 for $10. When there is a mystery to the per item price, the customer will ponder less and buy faster.
Multiple price offerings can go anywhere in the store, but they do work well in impulse areas, and they should always be clearly signed.
Suggestive Selling at Checkout: This one is a bit more challenging. It requires outgoing cashiers that are comfortable suggesting a specific item to each paying guest (think about how cashiers in supermarkets often ask for a donation to a charity). This also requires a broad appeal item at a relatively low, impulse price. The idea is simply to present the item, in a non-pushy way, to each person checking out. If you choose the right item and the right approach, you can convert about 8-10% of customers to buyers of this item as an incremental sale. Best practices:
Choose broad appeal items that might interest most customers checking out. A new flavor of lip balm, a doggie treat in a cool shape, a novelty unisex keychain, a brainteaser puzzle, etc. Keep the price under $10.
As guests begin to checkout, the cashier should pick up the item being suggested and say something like “check out this cool new item we just received. It’s cookie dough scented lip balm” and offer to hand the item to the guest to smell, try, feel, etc. If the guest shows an interest, the cashier should say “it’s only $4, would you like one?” and you will hopefully gain another sale.
Be sure to keep some selling stock at the point of sale, so if the customer decides to purchase one or more, the cashier has it right there to ring up and bag.
5 easy steps. 5 ways to impact your sales today. Go for it!
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