21 Ways to Increase Retail Sales
Every retailer wants to have larger share of their customer’s wallet, but how? Retailers that are making gains often don’t box themselves in a particular area. Instead they have an expanded view of what their relationship with their customers could be. Best Buy doesn’t see itself as just an electronics seller but also as a trusted advisor whose Geek Squad is available 24/7 to help you with any of your home electronic needs.
IKEA could have played only in home furnishings instead it made food part of its core offering. Or consider the salon services which a number of retailers from Ulta Beauty to DSW to JCPenney see as a path to increasing foot traffic. One thing is clear, sometimes a business has to step outside of its comfort zone to reach for a bigger vision. That is what has made Amazon so successful it is constantly changing its customers perspective on what kind of retailer it is.
Looking for ideas for how to increase your share of wallet and increase sales? Here are 21 ideas you should consider.
1. Loss leaders
Loss leaders are one of the oldest tricks in the book. Costco for example, sells commonly purchased items like rotisserie chicken or hotdogs at low prices to get you in the door. Costco’s hotdog combo is actually the same price it was in 1985. Speaking about this Bob Nelson, Senior Vice President of Financial Planning and Investor Relations at Costco said: Costco generates “very little money” on the combo deal, but “we get so much more mileage out of it than we would by raising the price to $1.60 and making a few more million dollars.” Because a customer believes they are getting an uncommon deal they are more likely to spend more.
2. Food offerings
Have you ever gone to IKEA and stopped in the food court to have a quick meal? If you have then you are among many people that have helped IKEA to become the world’s sixth largest food chain. With the popularity of its food offering IKEA started testing food delivery in Paris last year.
Serving food is a great way to increase frequency of visits and share of wallet. That’s one of the reasons Crate & Barrel is opening restaurants within its stores. Speaking about Crate & Barrel’s first restaurant which opened last summer in Chicago Neela Montgomery, CEO of Crate & Barrel said: “it was a win right out of the gate,” “It was profitable in the second month.” Crate & Barrel plans to open 15 in-store full service restaurants.
Don’t be fooled by the $1.50 hot dogs at Costco, they are a big business for the retailer. Costco sold 150 million hot dog and soda combos in 2017 and the food courts generate over $1 billion. Selling items such as hot dogs get customers into stores to have a quick, cheap and tasty meal. Then they go shopping afterwards.
3. Layaway
Layaway is back. But unlike the layaway model of the past where merchandise is held at a store until the customer is able to pay for it, the new model focuses on buy-now-pay later. Some of the retailers where customers can shop using this service include Urban Outfitters, Reformation Forever 21, Levi’s, Steve Madden, Warby Parker and Peloton. The companies that facilitate buy-now-pay later schemes include Afterpay, Affirm and Klarna.
The popularity of these programs is growing because customers see them as a low interest alternatives to credit cards. Customers with good credit can even qualify for zero interest programs where no interest is charged if the customer pays on time. Customers can apply for layaway during the checkout process online and are typically either accepted or declined on the spot.
4. Paid loyalty programs
Can you pay for someone’s loyalty? Apparently you can. In 2018 lululemon started testing a paid loyalty program that costs $128 per year. For that fee members receive a variety of benefits including clothing designated for the program, free expedited shipping for online orders and admission to sweat classes and exclusive events.
This type of program works well for a lifestyle brand like lululemon. People want to have a sense of community. It is not just about getting something. It is about being part of something. A program like this can provide a sense of belonging and increase word of mouth associated with the brand.
Speaking about the program on a third quarter 2019 earnings call lululemon CEO Calvin McDonald said: “the amount of new guests we're seeing through this program continues to be very strong and we over index on men relative” to our men’s business.
5. Advisory services
Best Buy launched a service April of 2018 called Total Tech Support. The service costs $199.99 per year and allows customers to receive unlimited Geek Squad support across several touch points including online, in-store, over the phone and through Best Buy’s app. Service is available 24/7.
Through this service Best Buy also provides support for all of the tech within a customer’s home even if the product was purchased outside of Best Buy. The service is popular with two million customers signed up for the service.
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6. Salon services
DSW began testing locating nail salons in two of its stores in Ohio in 2017. One of the goals of offering this service in-store is to attract a millennial shopper. 25% of DSW’s client base are millennials while 50% of the customers that use the retailer’s nail salons are millennials. DSW now has seven locations with nail salons. Customers using the nail salons can get a manicure or a pedicure and certain locations also provide waxing services and a place where customers can have a glass of wine as well as other beverages.
Ulta Beauty has also found offering salon services beneficial. Ulta Beauty’s salons are a driver of foot traffic with salon customers making twice as many trips to an Ulta Beauty store as those who do not use the service. Customers can get their hair, brows or nails done, have a facial, a bikini wax, get new eyelashes or have a make-up consultation all within one visit.
Even JCPenney is getting into the salon services business. It recently opened its first barbershop in its store of the future retail concept in its Hurst Texas location.
7. Subscription services
Nike is one of many brands to join the subscription services craze. Whether it be streaming, software, health apps, clothing, or meal kits, recurring revenue subscriptions are an increasingly popular business model due to their ability to generate predictable revenue streams as they lock in consumers.
Called “Nike Adventure Club”, Nike’s subscription model allows parents to order shoes for their children aged 2-10 on a monthly, bimonthly, or quarterly basis. These subscriptions cost $50/month, $30/month, or $20/month, respectively. Each of those subscriptions gives subscribers a new pair of Nike sneakers that cost approximately $50 or more once a month, once every two months or once every three months. This is a way of ensuring that customers spend with Nike starting at a very young age.
8. Paid classes
While a number of retailers offer customers classes for free, many retailers also charge customers to learn about a specific topic. For example, Williams Sonoma has paid classes on variety of topics from Knife Skills Essentials ($60 per person) to a class on Swoon Worthy Spiralizer Recipes ($60 per person).
In lululemon’s Lincoln Park, Chicago location it offers a number of fitness classes for $25 a piece. Customers can also get five classes for $118 or as many as 20 classes for $400.
REI also offers biking classes for kids, cross country skiing classes and wilderness medicine classes. For most retailers there is likely a relevant class that it can hold for existing customers or as a way to attract new customers.
9. Wardrobe styling services
In 2018 Amazon launched Personal Shopper by Prime Wardrobe. The service allows shoppers to receive a curated box of clothing and shoes based on their style and personal preferences. To get started with the service customers have to complete an online quiz that covers a range of topics including the customer’s budget, style, body type and measurements. Then based on that data Amazon’s stylists select up to 8 items of clothing and shoes for the customer. Amazon says that it uses: “a combination of technology innovation and a personalized human touch” to select a curated set of items for customers using the service.
To be eligible for the service customers must be Amazon prime members and it costs $4.99 per month.
10. Try before you buy programs
Many direct to consumer retailers offer what is known as try before you buy programs where customers are sent merchandise without having to pay for it upfront. For example, customers shopping with ThirdLove, an online bra and underwear retailer, start the try before you buy shopping process by taking a fit finder quiz. The quiz provides a bra recommendation in as little as 60 seconds. Based on the fit finder, customers can choose to have the recommended bra sent to them.
Customers pay a shipping free and once they receive the bra, ThirdLove says customers should: “Wear it. Wash it. Live in the bra for 30 days”. If a customer decides to keep the bra they are charged $68.00 and if not returns and exchanges are free.
Speaking about the program, ThirdLove Co-Founder Heidi Zak said: "we had an amazing product, but how would we get women to actually take that chance and try the first bra?. 75% of customers who tried the try before you buy program ended up becoming ThirdLove customers. Zak has also said: "[The program] allowed a woman to take a risk on a brand she hadn't heard of and that truly changed the course of our business. It made us profitable.”
Direct to consumer brand M.M.LaFleur also said that its try before you buy program was the one initiative that was central to turning its fortunes around in the early days of the company. Founder Sarah LaFleur says that after the service launched they went from being unable to pay for rent to tripling their revenue. Other eCommerce retailers including Amazon have similar programs.
11. Better store design
Store design plays a bigger role than you realize in getting your customers to buy more. Home many times have you found your shopping cart filled with miscellaneous items before you even arrived at the produce section in a store like Costco, the actual reason for your trip? Know that is by design. Costco purposely puts more essential shopping items like salad and milk at the back of the store so that you have to look at all of the discretionary items first. Often at the front of a Costco store are heavily discounted big-ticket items like electronics that often spur impulse buys. You really need that new 70 inch TV don’t you.
12. A “treasure hunt” shopping experience
A treasure hunt shopping experience is a shopping experience offered by successful off-price and discount retailers like T.J. Maxx, Ross Stores and Dollar General. If you go to a T.J.Maxx store on a Saturday it may look like a tornado ripped through it but customers love shopping at these stores. These retailers tap into basic human needs such as a craving for novelty and a fear of missing out.
The red dress you look at on Tuesday may not be there when you go back into the store on a Saturday to buy it. These retailers have mastered the art of getting customers to go back to their stores often by instilling the fear that if they do not come back soon they might miss out on buying an amazing pair of shoes at 60% off.
These retailers have mastered a formula that keeps customers coming back by institutionalizing novelty. Customers are assured there will almost always be new stock, enticing them to check back in frequently. Unlike the not so hot anymore store in your neighbourhood off-price stores always have hot merchandise that needs to be purchased before its gone.
While not every retailer wants to create a treasure hunt shopping experience the underlying components of having merchandise in limited quantities so there is a fear of missing out, frequently changing inventory so that customers have to come back frequently and offering deals to lure the customers in can be done by any retailer.
13. A best in class refund policy
Costco has a very liberal return policy where customers can return almost anything they have purchased at anytime. A customer once said that the reason she was returning a Christmas tree to Costco after Christmas was because: “it’s dead” and got her money back.
On Costco’s website it says: “we are committed to providing quality and value on the products we sell with a risk-free 100% satisfaction guarantee on both your membership and merchandise.” Having such a liberal return policy is a good way to entice customers to make purchases because if they know they can easily make a return there is less risk in making the purchase.
14. Low prices
Unlike McDonald’s secret sauce one of the keys to Trader Joe’s success is not a mystery. Trader Joe’s attracts customer looking for a bargain by selling items at a low prices like wine, peanut butter and humus which all retail for just $1.99. You can also get bananas at Trader Joe’s for only 19 cents. As Trader Joe’s writes on its website: “we understood then, as we do today, that maintaining our everyday focus on Value is vital, which is why we don’t have sales, loyalty programs, membership fees, or any other gimmicks.”
While increasing competition from online retailers is often cited as the reason middle tier retailers are suffering the main reason has to do with economics. In 1985 it took a male breadwinner 30 weeks to pay for critical expenditures like housing, healthcare, transportation and education. By 2018 it took 53 weeks.
Consumers have less money to buy many of the items retailers sell. And when they do make a purchase they are choosing lower priced retailers over middle tier retailers out of necessity. So if you are trying to sell more target price conscious customers with low priced items.
15. A fun and friendly shopping atmosphere
Maya Angelou once said: “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” How do your customers feel after they have left your store? If they don’t feel good or great you could be missing out on sales.
If you walked into a store and didn’t know it was a Trader Joe’s you would never guess that the store is part of a $13.7 billion grocery chain. Trader Joe’s feels like your neighborhood’s grocery store. Stores are small, fun and cheerful. While its stores do not have the most expensive design elements they are inviting, encouraging customers to go in and stay a while. Trader Joe’s also proves that you do not need the most beautifully designed or expensive store to attract the most customers. Both Walmart and Dollar General can attest to this strategy.
16. Excellent customer service
Like most companies known for providing excellent customer service, Trader Joe’s employees are empowered to do what it takes to ensure that customers are happy. Mark Gardiner, author of the book Build a Brand Like Trader Joe’s, took a job as an entry level employee at Trader Joe’s for a year to gain insight into why the retailer is so successful. Reflecting on his experience he said: “even as a new crew member (the lowest-level employee) I was empowered to do almost anything for a customer. Spend 15 minutes in the storeroom looking for a $5 item at a customer’s request? No problem. If I encountered a customer who seemed to be having a bad day, I could give her a bouquet of flowers on my own initiative. Any time a customer asked, “What are these like?” I could open a package and give them a free sample.”
Why not try an independent customer service audit today? You may be surprised by the results. Happy employees, equals happy customers which translates into more sales.
17. Leverage the scarcity principle
Adidas, more than almost any brand, understands how vital scarcity is to building and sustaining a brand. When Kanye West launched the Yeezy Boost 350 with Adidas he did so with a limited release drop. It is estimated that for many of West’s limited release drops only tens of thousands of shoes are available for sale which then sell out almost immediately. Author Robert Cialdini has written extensively about the scarcity principle. His teachings can be boiled down to the simple fact that: “people want more of those things they can have less of.”
Even Adidas CEO Kasper Rørsted confirmed what the brand’s secret sauce is when he said: “as we’re moving new Yeezy products into the market, we will do what we’ve done also in the past: create scarcity around the new products we are launching, make sure we have the hype, and, over a given period of time of course, drive volume into that market.”
But Adidas has suffered at times by moving away from its own strategy. "They put too many pairs [of Yeezys] in the market and nearly killed it off" said Matt Powell, Sports Industry Analyst for NPD Group. "It's kind of a conundrum. You have a shoe that is popular. People want it, but if it becomes widely available, they kind of lose interest."
18. Partner with another retailer to drive traffic
Last May Amazon launched a new service called Amazon Counter where customers can pick up their Amazon orders from other retailers’ brick and mortar locations. The hope for the partnering retailers is that when a customer arrives at their store to pick up their Amazon order they will stay awhile and buy other items.
19. Exclusive merchandise
Ulta Beauty prides itself on its many exclusive brand partnerships. For example, 25 of Ulta’s best selling items are not sold directly on Amazon. It also had an exclusive deal with Kylie Cosmetics when the brand start selling its products offline. These partnerships attract new customers and keep customers coming back for more because they can only get the merchandise at your store.
20. Allow other retailers to sell on your website
Walmart is also making a concerted effort to drive more traffic to its website by adding more third-party sellers. Since Walmart’s marketplace is not as crowded as Amazon’s individual sellers have a better chance at getting noticed. Between 2016 and 2017 Walmart went from having 10 million items on its website to having 50 million.
Walmart also added a Lord & Taylor store on its website in 2018. Walmart calls this a “premium destination” for shoppers. This is good move for Lord & Taylor which only had 2.2 million unique visitors in April of 2018 a much smaller amount than the 101 million visitors on walmart.com. Walmart benefits from allowing third party sellers to sell on its website in two ways. It receives commissions from those that sell on its website and it generates additional traffic from customers that may at first land on Walmart’s website to buy a product sold by another retailer then that customer may choose to stay on Walmart.com to buy additional items.
Even smaller retailers can benefit from this strategy by finding other retailers looking to increase their reach.
21. Paid events
For the adventurer in you outdoor and sporting goods retailer REI offers hiking and camping excursions. One of these events, called the Trans-Catalina Trail Expedition, takes place over four days. Participants hike 38.5 miles, camp along pristine beaches, eat fully catered meals and socialize with a group of up to 18 people that are also on the trip. To attend this event it costs $1,099 for members of the co-op. Non-members pay $1,119.
In 2017 goop launched In goop Health, a health and wellness summit that brings conversations about important health and wellness topics to life. Guests at In goop Health are treated to panel discussions with industry experts, kombucha, and healthy food. The event isn’t for those looking to maintain a tight budget with tickets ranging from $650 to $4,500. But the high price only adds to the cachet of the brand making attendees feel as if they are part of an exclusive community of people. This exclusivity has led to sold out events.
These types of events and other high touch in person services can be planned for now and implemented once the COVID-19 pandemic is over.