As we began the new year, I found myself thinking back on all the conversations I’ve had last year with manufacturers and retailers about the things that caused them the most lost sleep.
Without question, the conversation almost always quickly turned to inventory issues.
Whether you are a retailer or a manufacturer, virtually nothing can get you in trouble quicker than inventory. So, let’s spend a few minutes thinking about how to lower our risk. First and foremost, 2010 will be the year of price to value ratio if turns are important to you.
Certainly the luxury market will always be there, but let’s face it; most of us in this industry sell products to Middle America. And, Middle America has spoken very clearly that they are saving more, spending less and demanding more in terms of a value proposition for product than they ever have before.
Since that’s the way your customers are thinking, shouldn’t you be thinking that way as well? Maybe instead of walking into factories in China or showrooms at markets asking the question, “what is the price?,” maybe you should be asking the question “what is the value?”
To be sure, some of the best business people I’ve ever known in this industry have always done this. They don’t judge any item by what it costs before first asking themselves “what can I sell this for?”
Unfortunately, I’ve known far more people who’ve never taken that question seriously enough.
And, for 2010 at least, I firmly believe this way of judging product will be more important than it ever has been. Why do I feel that way?
From all of the hard evidence (economic data), and all of the soft evidence (asking friends and family), Americans seem to be making a sincere switch to spending less and making sure they get a great value. From all indications, this recession has forced our society to adapt from only expecting great value on sale items to demanding great value on everything.
“Value pricing” is now everywhere, and gaining in popularity. The key for 2010 will be to convince your customers (either through actual reality or great marketing), that your products are more than just fairly priced — they are outrageous values.
Along with this, proper merchandising will become more important than it has ever been before. Both stores and showrooms will have to step up their game to build their displays in such a way that assortments of product are so visually appealing it actually causes the customer to be willing to spend more. Really!
We all know the value of great packaging. There are companies in this industry who have virtually the same exact items. However, one company has the product in a brown box and the other company has department-store quality packaging. That company will ask for, and will receive, a higher price for their products.
Businesses that are successful in this industry in 2010 will execute on three different key points. They will lower their costs, and instead of getting greedy, they will pass those savings on to their customers in the form of sharper pricing. Next, they will visually present their offerings to their customer in a way that will add class and perceived value to the product, and the display it is a part of. Lastly, they will relentlessly watch their inventory levels to make sure they have excellent balance between the needs of their customers and the reality of their balance sheet.
The good news in all of this? Chaos always forces people to run a better business than they ever have before. If you consider all the things above, you will realize that at the end of the day, running our businesses to create more value for our customers is really what business is always supposed to be about anyway. The difference in this new world is that customers used to ask us to do this. Now they are demanding we do, or else … Good selling!
About the Author:
Randy Eller can be reached at firstname.lastname@example.org. This article first appeared in Home Accents Today and is reprinted with permission.