TDMonthly
Retailing Tips

Is there a Doctor in the House?
Retail Remedies for Main Street

Bob Phibbs

What picture springs to mind when you hear about an independent coffee house facing competition from a new Starbucks on the block? Most of us would hear “Taps” sounding on a lonely bugle. Not so for Bob Phibbs, aka “The Retail Doctor.” In 1994, when Polly’s Gourmet Coffee in Long Beach, Calif., faced this very dilemma, they turned to the good Doc for help. Within a year of Phibbs’ overhaul of the business, Polly’s had rebounded with a 50 percent increase in sales.

Acting as both a diagnostician and a quasi Lone Ranger riding to the rescue of the little guy, Phibbs has helped over 100 businesses, ranging from small retailers to independent hotels and restaurants, stand up to the local “big box” leviathan. His consulting service has been featured in the New York Times, Entrepreneur Magazine and on PBS’s Life and Times, and Phibbs has recently compiled some of his strategies in a new book, You Can Compete: Double Sales Without Discounting (Brixton Manor Publishing, 2003). TDmonthly talked to Phibbs about strategies for competing with the giants during the holidays.

Bob Phibbs, "The Retail Doctor"

TDmonthly: Given that the holiday shopping season can make or break even a seasoned retailer, can you give some examples of how a small toy or hobby store can create effective holiday marketing to compete with discount chains?

Bob Phibbs: First, you have to advertise. The August survey of TDmonthly readers found a shocking 42% responded that they would not be doing more/different advertising this year, that word of mouth was their best advertising. Kmart essentially said the same thing last fall when they cut their marketing buys for the fall—essentially disappearing from many shoppers’ radars.

Word of mouth is not part of marketing; it is a by-product. With the average family moving from town to town, the loyal ones are diminishing. Therefore, the independent retailer must always be in front of potential customers so that when they are prepared to buy, they think of you, regardless of whether they have been to your toy store or not.

You Can Compete: Double Sales Without Discounting

That means you need to first come up with a budget. I always advise 8-10 percent of your net sales as a good place to start. Second, find the right vehicle to advertise in. If you see another independent toy ad in your local delivered paper, you should be there the next time. If it is a community freebie with a focus on parenting, you should be there. If it is a homeowner newsletter in your area, you should be there. Third, you need to have a compelling message, one that is not price driven. Fourth, you need to repeat it on a regular basis. That means you may run the same ad for six weeks. Often, the retailer gets tired of the ad long before the reader does.

All of that said, I am a much bigger fan of rewarding previous customers using direct mail. If you don’t have a mailing list, now is the time to start. If you do, come up with an oversize postcard that has a great graphic or a four-color photo that grabs the reader’s attention as they sort through their mail. Put a reward on the back for bringing in the mailer – don’t do percent off. Don’t say you have lower prices – than who? Don’t say you have great service – a customer will determine that if they come in. Do offer free gift wrap, a free gift with purchases over $75, free shipping to the grandkids, whatever you can offer that says to the returning customer, “We’re different, and I’m glad you chose us.” That helps build word of mouth.

Finally, get your mind off the discount chains and big boxes – looking at them as the reason you aren’t doing better is a loser’s limp. Instead, concentrate on your own four walls. What can you do that will make it more convenient for your customers to shop? Many independents have hours convenient for them. With many people working two jobs, if you close at six and don’t open on Sundays, you’re driving people to the competition. Marketing is about your public face to your community. Don’t take it or your customers for granted, or you’ll be out of business and blaming the other guy when you didn’t care enough to compete.

TDM: Knowing that the lack of customer service is the Achilles heel of mass retailers, do you have some pointers for how a small retailer can make their holiday staff a selling point?

BP: Unfortunately, the Achilles heel is the same for every toy store, especially the independent. Every year I have a client offer a drawing [to win] a train set, held on Christmas Eve [in order] to build his mailing list for the next year. Two years in a row, I have gone to my local independent toy store in Lakewood to buy a Lionel train set. Both times, not a soul talked to me. No greeting, no features and benefits—nothing. It seemed the clerks were more concerned about being ripped off than selling.

That is the crux of the problem for many retailers: They forgot that the customer is who pays their salary. That means you need to have friendly people to begin with, not suspicious, shy or strange clerks who either ignore or annoy the customer. When you do have friendly people, you train them with my system: the “Five Parts to a Sale.” That means you greet the customer within 12 seconds with “Hi, welcome to our store. Feel free to look around; I’ll be right back.”

Second, [staff] need to spend time to get to know their customer using what I call the “Window of Contact”: finding something they both have in common. Third, they need to ask open-ended questions to help match up [the customer with] what products you carry. Fourth, they need to be able to tell the customer what specific feature the toy has and why that is important to the customer.

Example: “This toy has no small parts so you don’t have to worry about a choking hazard for your nephew.” Finally, they close the sale with an add-on, making sure the customer has the necessary batteries but also showing what accessories or other products would go well with the gift. If you don’t develop a sales team, you end up with clerks asking people what they need. During the holidays, it is all about getting the customer to open up about his wants. That only happens when you use the Five Parts to a sale. When you do, they’ll be comfortable enough to respond and give you their entire gift list to review, rather than one widget on sale. Your average sale will go up along with your total sales – regardless of how many bodies come through your door.

TDM: You’ve stressed that it’s important for small retailers to help each other—even the competition—in order to survive. Can you explain your reasoning?

BP: Think of the classic film Miracle on 42nd Street. When a customer chooses you for a gift and either you don’t have it or it’s sold out, they’ll thank you for the referral to someone who does [carry it]. I wanted to buy a copy of the kids’ book Stellaluna. I went to a children’s bookstore not far from my home. I walked up to the counter after searching fruitlessly and asked for it. There was no greeting or anything to initiate that they wanted to help me.

The response was, “We’re out of it; it’s a best-seller.” I asked if they knew when they’d get some more [copies] in. “Nope.” I asked where else I could get it. “Try Amazon or Barnes & Noble.” Would I go back? No. What she taught me was that only the bigger outlets would stock best sellers.

Imagine if she had recommended another children’s independent bookstore. Both her and the other [store] would have won. And if she had recommended it and called ahead for me, I’d be recommending her store instead of deriding it.

This scene is being played out across America as independent toy store owners are letting clerks determine their profitability. Again, what they need are sales teams, not people who can do little more than ring up the barcode on an item and make change.

TDM: You’ve mentioned that independent retailers need to adopt some of the practices of mass retailers in order to beat them. Can you give examples of areas where small retailers can learn from the giants?

BP: Go visit them. See how they display the hottest merchandise. See what colors they put together. See where they feature the most expensive and/or profitable items. What do they do for security and theft prevention? How many people do they have on the floor? What kind of wait time is there? Where are the impulse items? What services do they offer?

Then take your list back to your store and see how you stack up against them. In certain instances, you could just copy what they offer for additional services. In others, you may not carry the exact merchandise but you [can learn from] the principles they used to display them. Remember, these larger companies have spent millions on store design and merchandising; doesn’t it make sense to take advantage of their strengths and exploit their weaknesses?

TDM: According to your research, the “first third” of a store is the most important area. What can retailers do to maximize the potential of this area in regard to holiday merchandise and displays?

You never want a store that people can see through instantly; otherwise, they’ll enter, scan and leave. You need areas of discovery. The first third of a store is where your brightest and best wants should be, not the cheap stuff. High-end products that dads could impulsively buy are great here. Keep the sale stuff in the back. Move the items around every 2-3 weeks, so people who return will see new items. Get some featured lighting on a few items. Use a few professional signs to highlight special features.

Make sure people can feel comfortable [knowing] that what they need is right in your store. It takes great merchandising, great sales people and great marketing to compete—all things you can change with [what’s covered in] this article—not whether a competitor’s prices are lower.

For more information or to order Mr. Phibbs’ book click here