Compete With the Big Guys on Black Friday

National chains steal the headlines on Black Friday, one of the biggest shopping days of the year with door busters, loss leaders, and early store openings the day after Thanksgiving. To contend with the big box discounters on this year’s Black Friday, small businesses should learn from best strategies the chains use, leaving the stress, long lines and shoving to the superstores.
1. Leak your Black Friday ad to the media
Black Friday websites, bloggers and the mainstream media publish leaked Black Friday ad scans in November. These leaked ads are popular with consumers, who enjoy perusing the ads early, discussing the deals on forums, and setting their shopping plans for the big day.
While some retailers still threaten legal action against the sites leaking these scans, many of the largest merchants have now come to understand the value of free press. Walmart and Best Buy, two of the most popular Black Friday shopping destinations, both intentionally “leaked” their ads directly on their websites this season.
This year, identify which bloggers or local media sites might help you publicize your sales and send them your ad scan. While you’re at it, give them a news hook: ways shoppers can shop at local small businesses on Black Friday.
2. Offer door busters (even if you think you can’t afford it) 
It’s one of the oldest tricks in the book of big retail – offer an extremely limited supply of insanely discounted items on Black Friday to lure customers into the store. While your business might not want to participate in race-to-the-bottom pricing, consider slashing prices considerably on a few popular products. Remember that door busters are about marketing, not sales, so dip into your marketing budget to pay for the decreased profit margins on these items.
3. Open at a sane hour on Black Friday
Black Friday was firmly pushed into Thanksgiving in 2012 and store opening times continue to creep up this year, too. Kmart will open its doors at 6 a.m. on Thanksgiving. Toys R Us opens later that day at 5 p.m. that day, with Walmart and Best Buy opening an hour later.
While these big box retailers have received some backlash from consumers and store employees, their stores will likely be crowded on Thanksgiving day. This is a good thing for small businesses – big box retailers can receive the negative press and foot traffic on Thanksgiving, leaving the actual day of Black Friday wide open. Try and capture an audience of recovering Thanksgiving shoppers (considering offering free coffee in your shop) and locals unimpressed with the big box chains.
Don’t forget, too, that the real reason for Black Friday’s genesis – the fact that millions of Americans have the day off work the Friday after Thanksgiving and nothing else to do but shop – hasn’t changed. Offer noteworthy value and let the Black Friday brand do the marketing for you.

What You Need to Know About Managing Retail Inventory

In the fifth edition of his book Retail in Detail, retail business owner and consultant Ronald L. Bond offers small-business owners an updated, no-nonsense guide to the world of retailing. In this edited excerpt, the author explains what type of inventory system you should put in place and why.
One of the most time-consuming tasks you'll face in operating a retail store is keeping up with your stock. Unless you have a very narrow product mix, you'll spend a significant chunk of time tracking inventory. Although it requires work and discipline to maintain, a good inventory system will make it easier to meet the needs of your customers -- the key to growing a successful business.
Here are some advantages of a good inventory tracking system:

• Theft control. Without an inventory system, it's impossible to know if you're being ripped off by customers or employees until it's too late
• Customer service. You can avoid running out of stock and can determine if an item's in stock and locate it more readily if you keep track. You can also locate out-of-stock items, their prices, and manufacturers.
• Financial management. Inventory systems help you keep track of how you're doing. It makes little sense to go for an entire year without knowing the status of your stock.
• Product tracking. You can track specific items and weed out low sellers with sales or markdowns.

There are a number of computer software programs available for tracking inventory. Some are relatively inexpensive. Many allow you to print and read bar code labels, print invoices, and provide a complete array of reports and statistics.
One disadvantage of using a package inventory system is the inability to use stock numbers that relate an item to a specific product and vendor. You can always look up the information in the system, but it's not transparent from a stock number and you may not have the time to chase it down when you're waiting on customers.
You can also use a database program, such as Microsoft Access, to manage inventory. These programs can handle almost any kind of descriptive product code, but they'll require more computer skills to develop than a package system. You'll also have to develop your own reports and statistical analyses.

If you're not comfortable starting with inventory software, you can begin with a card system. You can purchase preprinted inventory cards from an office supply store that have spaces for the item code, description, supplier, cost, selling price, beginning stock, sales, and current balance.
When a new item arrives, you'll assign it a unique inventory code and enter a description, your cost, selling price, and the amount of your beginning stock on the card. A simple coding system is to use alphanumeric codes, with the first few digits being an abbreviation of the vendor's name, followed by an item number. For example, items from a company called Homespun Cottage could be coded HC-1, HC-2, and so on.
When you sell an item, put the inventory code on the sales ticket. At the end of the day, update the inventory cards from the sales tickets.
Even if you use a computer system, you can still use the same sales tickets, merchandise coding, daily posting, and pricing systems. The only difference is, you'll enter the daily sales and receipts on a computer-generated printout, which you then input into the computer weekly or monthly. Each month, update the inventory and generate a new printout for the succeeding month.
Now that you understand the mechanics of inventory systems, you'll need to establish some policies for managing inventory. Obtaining knowledge about inventory is useless unless you use it to improve your store's sales and profitability. Watch for these indicators:
Items that are selling well and have low stock balances. With this type of item, you'll find it helpful to establish and indicate on the inventory card or computer sheet a desirable reorder point.
Slow sellers that have been in inventory a long time. Unless these are seasonal items, which will sell later, you should consider putting them on sale to move them out so you can put your money into faster-moving items.
Hot sellers for which sales have increased. For these items, you should increase your order quantities or put in a special order to take advantage of the selling surge.
The final inventory activity is the annual physical inventory. This is essential to the prudent financial management of your store and shouldn't be skipped. You must do this at the end of your tax year, which is almost always the calendar year.
To get started, make lists from your inventory system before the physical count and use these to make your count. These lists should include the item code, cost per item, and inventory quantity shown on the records, along with a space for the actual count and a space for the total value of that item in stock.
After the count, calculate the value by multiplying the cost times the actual count. Then total this column for all items to get the total inventory value. With a manual system, you do this by hand, but a computerized inventory system can calculate the values, along with differences between actual and recorded inventories. By comparing these inventories, you'll have an idea of the loss of goods through theft or disappearance.

What You Need to Know About Managing Retail Inventory

In the fifth edition of his book Retail in Detail, retail business owner and consultant Ronald L. Bond offers small-business owners an updated, no-nonsense guide to the world of retailing. In this edited excerpt, the author explains what type of inventory system you should put in place and why.
One of the most time-consuming tasks you'll face in operating a retail store is keeping up with your stock. Unless you have a very narrow product mix, you'll spend a significant chunk of time tracking inventory. Although it requires work and discipline to maintain, a good inventory system will make it easier to meet the needs of your customers -- the key to growing a successful business.
Here are some advantages of a good inventory tracking system:

• Theft control. Without an inventory system, it's impossible to know if you're being ripped off by customers or employees until it's too late
• Customer service. You can avoid running out of stock and can determine if an item's in stock and locate it more readily if you keep track. You can also locate out-of-stock items, their prices, and manufacturers.
• Financial management. Inventory systems help you keep track of how you're doing. It makes little sense to go for an entire year without knowing the status of your stock.
• Product tracking. You can track specific items and weed out low sellers with sales or markdowns.

There are a number of computer software programs available for tracking inventory. Some are relatively inexpensive. Many allow you to print and read bar code labels, print invoices, and provide a complete array of reports and statistics.
One disadvantage of using a package inventory system is the inability to use stock numbers that relate an item to a specific product and vendor. You can always look up the information in the system, but it's not transparent from a stock number and you may not have the time to chase it down when you're waiting on customers.
You can also use a database program, such as Microsoft Access, to manage inventory. These programs can handle almost any kind of descriptive product code, but they'll require more computer skills to develop than a package system. You'll also have to develop your own reports and statistical analyses.
If you're not comfortable starting with inventory software, you can begin with a card system. You can purchase preprinted inventory cards from an office supply store that have spaces for the item code, description, supplier, cost, selling price, beginning stock, sales, and current balance.
When a new item arrives, you'll assign it a unique inventory code and enter a description, your cost, selling price, and the amount of your beginning stock on the card. A simple coding system is to use alphanumeric codes, with the first few digits being an abbreviation of the vendor's name, followed by an item number. For example, items from a company called Homespun Cottage could be coded HC-1, HC-2, and so on.
When you sell an item, put the inventory code on the sales ticket. At the end of the day, update the inventory cards from the sales tickets.
Even if you use a computer system, you can still use the same sales tickets, merchandise coding, daily posting, and pricing systems. The only difference is, you'll enter the daily sales and receipts on a computer-generated printout, which you then input into the computer weekly or monthly. Each month, update the inventory and generate a new printout for the succeeding month.
Now that you understand the mechanics of inventory systems, you'll need to establish some policies for managing inventory. Obtaining knowledge about inventory is useless unless you use it to improve your store's sales and profitability. Watch for these indicators:
Items that are selling well and have low stock balances. With this type of item, you'll find it helpful to establish and indicate on the inventory card or computer sheet a desirable reorder point.
Slow sellers that have been in inventory a long time. Unless these are seasonal items, which will sell later, you should consider putting them on sale to move them out so you can put your money into faster-moving items.
Hot sellers for which sales have increased. For these items, you should increase your order quantities or put in a special order to take advantage of the selling surge.
The final inventory activity is the annual physical inventory. This is essential to the prudent financial management of your store and shouldn't be skipped. You must do this at the end of your tax year, which is almost always the calendar year.
To get started, make lists from your inventory system before the physical count and use these to make your count. These lists should include the item code, cost per item, and inventory quantity shown on the records, along with a space for the actual count and a space for the total value of that item in stock.
After the count, calculate the value by multiplying the cost times the actual count. Then total this column for all items to get the total inventory value. With a manual system, you do this by hand, but a computerized inventory system can calculate the values, along with differences between actual and recorded inventories. By comparing these inventories, you'll have an idea of the loss of goods through theft or disappearance.

Affordable Custom Made Suits? It's No Longer an Oxymoron

In 2009, when Richard Hall and McGregor Madden were working in Shanghai--Hall for the Canadian trade office; Madden for Groupon--the two friends didn't aspire to dress like GQ models. That is, until they fell in with a crew of stylish Swedes who introduced them to the world of low-cost custom clothing. As the two upped their sartorial smarts, others took notice. "When we'd go home for Christmas to Oregon and Indiana, all our friends would comment on how nice our clothes were," Hall says.
In 2011, after Hall lost his job and Madden decided he was ready to move on, they leveraged their knowledge of Chinese manufacturing and trade, technology and the Mandarin language to create Proper Suit, a company that sells high-quality, Chinese-made, custom laser-cut suits online. In just two years, Proper Suit reached $1 million in sales, and its founders, now based in Chicago, have launched a second, potentially more lucrative business called Hall&Madden, a subscription dress-shirt service.

In recent years, the menswear arm of e-commerce has become big business. Dozens of companies, including Indochino, Black Lapel and Arden Reed have ignited a bespoke tailoring revolution. "I think what drives a service like this comes from people in places with a strong high-tech drive," says Joseph Rosenfeld, a personal-image consultant in Silicon Valley. "It's popular with people who are tech-oriented and sit in front of a computer all day. They have a proclivity to do what comes naturally."
Hall and Madden, however, believe their particular service has an edge over the competition because it is not entirely digital. They realized almost as soon as they began that to be effective, the tailoring process required face time with their clientele. In the beginning, Proper Suit trusted consumers to take their own measurements--but some weren't getting the fit they expected.
So the partners, along with two other fit specialists, began crisscrossing the country, scheduling tailoring appointments every three to eight weeks in major cities such as Atlanta, New York, Los Angeles, Chicago, Seattle, San Francisco and Washington, D.C. After an hourlong fitting, customers could place orders via Proper Suit's website, which charges between $850 and $1,400 per suit, depending on the fabric.

 A cult-like following ensued. "It's not uncommon for guys to drive four to five hours for a fitting," Hall says. "We had one guy from Singapore who was in New York and delayed his return trip to take a bus to D.C. just to do a fitting."
An observation from all that time spent with customers turned into the duo's latest venture, Hall&Madden dress shirts. They saw that even though men were willing to shell out for a custom suit, they were holding on to their dress shirts for far too long, some showing up to fittings with stained and frayed shirts. "These business guys love their shirts, but they're tired of spending $140 or $150 a pop on them," Hall says.
Hall&Madden aims to help men build their wardrobes through a subscription service that ships three high-quality dress shirts every three, four or six months, for $150 per delivery. The first order includes basics such as white, blue and striped shirts; subsequent deliveries build on the collection with plaids and seasonal fabrics.
The shirts aren't custom-cut like the offerings from Proper Suits, but they do feature more sizing points than off-the-rack designs. Hall&Madden signed up more than 1,000 subscribers in less than a year and has closed in on $500,000 in sales.
Vertical integration and lack of overhead--no retail shops, warehouses or sales staff to maintain--contributes to Hall&Madden's competitive pricing. And the founders' intimate knowledge of China's garment industry keeps styling ahead of the fashion curve. "Patterns are usually designed by in-house people at the manufacturers," Hall explains. "We're able to study the market and work with the cotton mills. We look through what they have and collaborate directly."
As they edge closer to their four-year goal of 8,000 subscribers, Hall believes he and his partner will increase profit margins. "Once you're dealing with 150,000 meters of cotton fabric, that's big-boy status," he says. "That's where you have incredible buying power."
While pushing the growth of the shirt service, Hall says he and Madden are content to keep their original company, Proper Suit, relatively small. "There are natural limitations in a field like this. Fortunately, it's a passion project and a great business," he says, pointing out that finding people who can do fittings is very difficult, and something they won't skimp on. "Quality and fit is everything in a suit. What we do is very technical, but at the same time it's very artistic. It takes a unique person to fit a suit the way we do."

The Psychology of Discounts and Deals (Motiongraphic)

Everybody loves a bargain -- it’s business, but it’s also psychological.

The human ability to count is hardwired into several parts of our brains, according to this motiongraphic from eBay Deals. Even before we are able to count, infants develop expectations for what should be the result of an addition or subtraction equation. When the brain perceives larger quantities, then the specific numbers fade away and infants only understand the proportion between two numbers.

And so it is with customers and their knee jerk reaction to getting a deal. Customers will be further incentivized by larger-percentage discounts.

Learn more about the psychology of discounts in the motiongraphic below.

Why Wait Until Saturday? Small Businesses Seek Black Friday Buzz

Predictions for Black Friday and 2013 holiday sales range from tentative to lackluster, thanks partly to a drop in consumer confidence following the government shutdown. But one thing is certain – major retailers aren’t taking chances. That means stores opening at 8 p.m. on Thanksgiving, holiday ads before Halloween and aggressive layaway programs and discounts through Cyber Monday.

With Black Friday turning into Black Weekend, there’s some fear that Small Business Saturday – a nationwide campaign launched by American Express in 2010 – may get lost in the blitz, along with the small businesses that can’t afford to slash prices.

But there’s a unique opportunity for small businesses, according to Ronald C. Goodstein, Associate Professor of Marketing at Georgetown University’s McDonough School of Business, who specializes in retail and consumer behavior.

“With consumer confidence down this year, people will give fewer gifts but more meaningful ones,” he said. “The competitive advantage for small businesses is the ability to provide personalized service. They can help customers pick that thoughtful, relevant gift in a way that Macy’s, Walmart or Target can’t.”

The best way for small businesses to win customers, he adds, is to join forces.

Thinking little and local

Power in unity is what drove Betsy Cross and Will Cervarich to launch Little Boxes, a two-day post-Thanksgiving shopping event in Portland, Ore., that rewards consumers who shop the city's local retailers.

Little Boxes was born in 2011, after Cross saw a Black Friday ad for a big-box store opening on Thanksgiving night.

“It struck me that you never think about small shops on Black Friday. I thought, ‘There has to be a way we can band together and be more powerful,’” said Cross, who co-owns the Portland boutique betsy & iya with Cervarich, her husband.

The campaign now unites over 170 businesses, which offer discounts and raffle prizes to customers. It’s also boosted bottom lines, with some store owners reporting as much of a 50% increase in Black Friday sales since joining Little Boxes.

Cervarich adds that the goal isn’t to compete with Black Friday or Small Business Saturday, but rather harness existing buzz. “There's no question that AmEx’s Small Business Saturday has helped focus the spotlight on small businesses. But one of the reasons we started Little Boxes was because it didn't seem right that shopping locally should come only after you've shopped big boxes.”

There are a number of similar initiatives brewing nationwide, including Seattle’s Gift Local Pledge and Dallas/Ft. Worth’s Spend and Win campaign. But even smaller communities are getting big benefits from building their own shop-local holiday campaigns.

The city and Chamber of Commerce in Fallon, Nev., created the Live Local Fallon campaign this summer to encourage residents to spend locally, rather than driving to nearby Reno. They’ve recruited 155 businesses to participate in a campaign where shoppers get stamps in a “passport” that makes them eligible for raffle prizes for every $15 spent. There’s a special push around Black Friday, during which incentives for shoppers will be tripled.

“We’ve been very concerned about the leakage of dollars getting spent outside Fallon,” said Rick Gray, executive director of the Fallon Convention and Tourism Authority. “We tried educational campaigns and ads. But until we came up with this tangible way to reward residents, we didn't feel the message was hitting home.”

But other non-retail small businesses prefer to avoid one of the busiest shopping days of the year. Visit Myrtle Beach is launching Travel Saturday this year. For 24 hours after Black Friday, gift-givers and deal-seekers can book discounted travel, lodging and entertainment for 2014 at participating small businesses in the South Carolina beach community. The idea is to spotlight a travel-centric economy on a day when consumers are likely to be at home, online and less occupied with retail deals.

According to Goodstein, this is the kind of creative thinking and unity that small businesses need to compete.

“Black Friday used to delight consumers and offer real deals. Now big companies buy in order to sell at sale price. They compete on lower margins, which means less quality,” he said. “Small businesses need to work together to lower prices [but keep quality high]. Offer consumers service and something special in a tough economy at a discounted price – you can’t beat that.”