Between 2007 and 2015, 344 retail organisations went bust or into administration according to The Centre For Retail Research.
Affecting 26,835 retail stores that were forced to close or scale back operations.
Although some of those retail brands have come out of administration, their businesses remain precarious.
The good news is, the best retail brands will not only survive, they will succeed beyond their wildest imagination.
Despite what the pundits would like you to believe, the retail industry is on a growth trajectory.
Most Western economies have fully recovered from the last two economic downturns leaving consumer plenty of discretionary cash.
The 2015 National Retail Federation growth forecast was 4.1% for brick and mortar retail and between 7% and 10% for online retail.
Therefore, despite the challenges highlighted above, the retail industry as a whole is buoyant.
But many retail brands are failing to take advantage of the buoyancy because there are three types of retailers:
- Those riding the wave of change
- Those simply surviving
- Those on the brink of bankruptcy
The question I would like you to answer at the end of this article is, which one are you?
There are proven strategies and techniques for being one of those retail brands riding the waves of change.
Those strategies and techniques form the rest of this article.
Remove the Barriers to Sales
Have you heard the phrase ‘Threshold Resistance’.
Threshold resistance is a phrase coined by luxury retailing pioneer Alfred Taubman.
Mr. Taubman defined threshold resistance as “The physical and psychological barriers that stand between your shoppers and your merchandise…It’s the force that keeps your customer from opening your door and coming in over the threshold.”
Believe me, Alfred Taubman knows what he is talking about.
He is the guy who built many of the prestigious shopping malls in the United States.
He has been attracting customers to retail stores for over sixty years.
Retail store owners and senior executives struggling to increase store sales and increase profit do not realise that there are piles of threshold resistance preventing them from achieving their objectives.
The only threshold resistance most retailer store owners and senior executives know is price.
This is because they wrongly believe that price is the key determining factor in shoppers buying decision.
In some instances, price is a threshold resistance.
However, only 20-30% of people buy purely on the basis of price.
70-80% of people buy for factors that have absolutely nothing to do with price.
If most consumers were buying on the basis of price, Richer Sound will not have the highest sales per square foot in the world nor would Apple have the highest sales per square foot in the United States.
The Richer Sound Phenomenon
Richer Sounds do not sell the cheapest electronic products on the market.
In fact, Richer Sound is one of the most expensive electronic retail brand in the world.
Most of the products been sold in Richer Sounds could be bought online for a friction of the price it is sold for at Richer Sounds.
So, why do shoppers flock to Richer Sounds to cough out three times the price they could purchase similar products online?
Answer: Richer Sound has broken shoppers threshold resistance.
Richer Sounds do not just sell home entertainment as other electronic dealers such as Sony does, they sell the experience of shopping from Richer Sounds.
Here is a leaf from Richer Sounds play book (by the way please do not tell them I gave it to you):
“Our Philosophy
The words “Experience Better” sit under our logo. These are words everyone at Richer Sounds lives and breathes. We want to provide you with better:
• Knowledge and expertise
• Products and pricing
• Customer service
We’re convinced this leads to better music and movie experiences for you, our shoppers.”
I rest my case.
Richer Sounds do not sell the gadget, they sell the experience of buying the gadget.
But, here is the big but…
Richer Sounds do not just have those words on their website, they actually practice what they preach.
Richer Sounds has won the ‘Which?’ award for the most knowledgeable staff in the retail industry multiple years.
What do most people struggle with when it comes to purchasing electronic products?
Answer: the ability to choose the right product to suit their needs, secondly, the installation of the product.
Richer Sounds solve those two problems by providing their staff expert product knowledge and providing post sales installation services.
Having staff with expert product knowledge and providing post sales installation services enables Richer Sounds to provide exceptional customer service, which in turn break shopper threshold resistance.
Apple Free Prize
Apple has the highest sales per square foot in the US.
Just in case you need reminding, Apple is not a dollar store.
Apple sells the most expensive phones and computers.
Yet, Apple maintains the highest sales per square foot in the US.
Every functionality in an iPhone can be found in most smart phones.
Yet, an iPhone sells for four to five times the price of most smart phones.
Why are consumers willing to spend five times the amount they could spend for other smart phones on an iPhone?
Answer: when someone buys an iPhone, they do not buy a phone.
They buy membership into an exclusive club.
They pay for what author Seth Godin calls ‘Free Prize’.
They pay for Apple’s simplistic but elegant design, and easy to use functionalities.
They pay for the ‘free prize’ inside Apple phones.
Apple products are:
- Simple
- Elegant
- Functional
It is this idea of simplicity, elegance and functionality that consumers are willing to pay five times more for when they purchase an iPhone, iPad or Mac.
Lessons from Apple and Richer Sounds
What can other retail brands learn from Apple and Richer Sounds about increasing store sales, increasing in-store conversion and breaking threshold resistance?
The core lesson from the Apple and Richer Sounds case studies is this: price is never the key threshold resistance in shoppers buying decision.
Apple and Richer Sounds are the most expensive in their categories.
Yet, they have the highest sales per square foot in the world and in the United States.
Therefore, instead of shooting themselves in the foot by competing for the crown of the cheapest retail brand, retail brands need to research the real threshold resistance preventing shoppers from buying from them.
Price is a threshold resistance to only 20% - 30% of shoppers.
70% - 80% of shoppers buy on the basis value.
Finding what constitutes value to your prospective customers and selling that to them is the key to breaking their threshold resistance.
About the author
Romeo Richards
Romeo Richards is an experienced retail trainer and consultant with knowledge of retail marketing, store performance and retail loss prevention.
He has the ability to choreograph the customer journey, boost store conversion and enhance in-store experience using store design and visual merchandising. He is capable of increasing retail profit through shrinkage reduction.
He is the authored of 23 retail and marketing books including:
- How to Increase Retail Sales
- How to Make Profit In Retail
- Store Design Blueprint
- Visual Merchandising Display
Created five retail home study courses
Frequently presents webinars and workshops.
Featured in Professional Security Magazine, Retail Week & Retail Technology Magazine
Romeo is also a Cyber Security Expert, certified by CompTIA, EC-Council, Microsoft & CISCO.
