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Capitalizing on High-profit Retailing
By: Victoria L. Rayner
Posted: June 23, 2008, from the April 2006 issue of Skin Inc. magazine.
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Keep pricing appropriate. Determining product prices will depend on various aspects of your target market and operational costs—such as facility rent or mortgage, team members’ salaries, wholesale charges for retail items, shipping and taxes, and other fixed costs. When establishing retail prices, these fees must be subtracted from the expected revenue to calculate the profit margin. A “break-even” point offers an estimate of the total amount of products and services that must be sold at both high and low prices each month in order to cover the spa’s expenses. Clues for pricing individual lines, as well as fees for treatments and other rates, can be researched by studying price structures on related Web sites. Contacting businesses outside your region is another good way to gather information about fees and rates, and establish a basis for your fee structure.
Establish an inventory ordering system. The best way to avoid costly and unnecessary inventory expenditures is to track user status closely. Ordering products should be based on the rate of sale and the length of time between inventory counts. These checks can take place once a month, every week or even daily. Reorders for specific merchandise will depend on how quickly it takes, under normal conditions, to receive items from the manufacturer, as well as the amount of reserve stock necessary. Creating “never-out” lists ensures that staple merchandise will be on hand at all times. Most importantly, creating a solid compensation plan for slow sales periods, slow deliveries and inventory errors is essential and must be securely in place. Carefully research delivery times, guarantees and customer support before choosing a supplier.
Provide cutting-edge salesmanship. Successful salesmanship requires the appearance of remaining on the cutting edge—continually looking for revolutionary, clinically proven breakthroughs in skin repair or the use of essential nutrients that impact cellular activity. Clients look for spa professionals who possess an extensive understanding of the spa market. Higher revenues can be achieved by focusing on assisting clients to maintain their skin, and framing the purchase of products and treatments as being an investment. Remind clients of how much they already have contributed to the care of their complexions, and encourage them to remain diligent, so as not to diminish the results already achieved. When making a sales pitch, think in terms of providing information rather than selling.
Manage promotions effectively. Delegate the tasks of creating visual displays, attracting potential buyers, managing stock and handling cash at point-of-sale to outgoing personality types. Retail managers should have an outstanding sales record, exhibit a flair for displaying merchandise and be accountable for uncovering new trends. A professional with this type of background is an excellent candidate for handling creative promotions, based on their in-depth research.
Adopt tight security measures. Well-planned precautionary measures will help protect your merchandise and retail revenues. Ensure that security measures have been established for monitoring all facets of the operation. This can be accomplished with either computer software or carefully scrutinized inventory paperwork. Choose an individual who is capable of maintaining a system that tracks the rotation and loss of merchandise. The demands of this position require integrity, loyalty and problem-solving abilities, as well as an extensive history in retail-management services. Look for professionals with a strong accounting background and basic record keeping experience.