The BOLD Show | Episode 08 | Creating a Retail Strategy
Selling retail can be challenging for any business, but in this episode of the MINDBODY BOLD Show, guest Terri Fry of The Hot Yoga Factory in Chelmsford, Massachusetts shares her expert advice with host Mike Arce on how to sell retail in any business.
(Mike) In this episode, I’m here with Terri Fry, one of the speakers of the 2017 MINDBODY BOLD Conference. Terri has 10 years of experience in the sales and marketing industry, mostly with retail. She gave a very popular talk at this conference called, “Happiness On a Hanger,” where she showed some incredible strategies on how she sells more retail at her fitness studio. And today, we’re going to dive into all those strategies with you.
Growing a small business isn’t easy, and to be successful we know three things for sure: You have to work hard. You have to be bold. And you must constantly learn. We’re gathering some of the best minds in the business world to share their ideas and strategies with you, so you can grow your business easier, be more profitable, and have a lot more fun being a business owner. We are on a mission to connect the world of wellness and this is The MINDBODY BOLD Show.
What’s up, everybody! I’m Mike Arce and welcome to another episode of The BOLD Show. Terri, are you ready to be BOLD?
(Terri) I am absolutely ready to be BOLD!
(Mike) Alright, when you say you can pay your rent in retail sales, what does that mean?
(Terri) Basically, what it means, is that I’ve put together with my experience, how to—and I have a very small studio, Mike. It’s like, I have 100 square feet of space devoted to retail, that’s it. So, a lot of times, I hear people say, “Oh, I don’t have a lot of space to do retail.” Well, you don’t need a lot of space. You have walls. If you have walls, you can do retail.
So, basically, how I pay my rent in retail sales is I establish what my rent is. So, I set a goal. This is what my total rent is for the year. So ideally, I like to sell enough to pay for that. And how do I do that? By breaking it down to manageable chunks. I have a weekly goal, a monthly goal, and then an annual goal. In order for me to actually get to the point that I have built it to be, where I am paying my rent in retail. Now in 2016, I did achieve that.
(Mike) OK, so tell me about that.
(Terri) So, I did 14.56% of my total gross sales, and that’s a report I ran in MINDBODY. You just go to total sales—super simple to do. And I just looked at the bottom line. And then, it breaks out. You have your categories set up. All of my retail categories are set up. I had like five retail categories set up, did the simple math, and I just add it up. And it came to 14.56%. Well, then my actual percentage of rent to gross sales is 12.2%.
(Mike) So you beat it. And rent is usually the biggest stress, right. You got that out of the way.
(Terri) After paying employees, yes. The single biggest expense is always employees. And they are your biggest asset, as well, obviously. And after that, rent is a big one.
(Mike) Now you said you don’t need a lot of space. So how are you able to work with 100 square feet to—actually, let’s take a step back. What do you sell?
(Terri) I sell predominantly—I am a hot yoga and hot Pilates studio—so I sell apparel that is appropriate for hot Pilates and hot yoga. So basically, I sell crop tops, shorts, capris, leggings, and tank tops. And I sell yoga mats specifically for hot Pilates and hot yoga. Oh yeah, and I sell a lot of beverages. In addition to water, I sell coconut water. I sell sparkling water. And let me tell you, those $1 and $2 sales, they add up to thousands of dollars. They are great margins, up to thousands of dollars. It’s amazing what you can do by going beyond bottled water.
(Mike) Now, with all those things that you sell, in 100 square feet, how did you learn to structure everything to fit and still be able to be attractive and comfortable to buy?
(Terri) Excellent question. So, the biggest thing is if you have walls you can do this. There is a product out there in retail, it’s called Slatwall. You can google it. There are lots of places to buy it. You can get it in lots of different colors and a lot of different ways. Basically, it’s a piece of plywood, and it has slats in it so you can put your hooks in it. So, they typically come in like 4x8 sheets. And in my talk yesterday, I gave everyone a budget of what you can do for $200. How you can set up a retail space for $200. That’s all it takes.
(Mike) Really? Now in order to do that, you have to have some good vendors that allow you to have good costs for your products. Right. So, how do you find good vendors? Where do you go for that?
(Terri) Again, a very good question. I’m fortunate that it was very easy for me to find good vendors because I already had relationships with some of the vendors through my previous experience. But the vendors I partner with—and again, I talked about this in my talk yesterday—I look for several strategic things with a retail partner. One is that—and I prefer to work with retail, boutique manufacturers. I’m a boutique studio. I’m not doing millions of dollars a year. I’m a small, entrepreneurial business, which is the backbone of this country. And so, I like to do business with small, entrepreneurial manufacturers. And that’s what I have. This is what I choose to do. I’m not saying big manufacturers are bad. It’s just what I choose to do. So, within that, I look for manufacturers that don’t require big minimums. Because I like to buy smaller amounts of product frequently. It helps with the cash flow, and also because I have no back stock. Everything that I buy goes up on the wall. So if I run out of something, I don’t want to wait three or four weeks to buy. I replenish all the time. You have to be having all these orders in the pipeline. Because if you walk into a store and they are out of stuff, you get frustrated. You want to make sure you have that.
So, I want to have the ability to buy small orders—$300-$500. I know that can sound like a lot to those who are struggling for cash flow, but I gave them some strategies to know how to do that. What we call “work your float.” And then, where every piece counts. Because if you are going to make the decision to go into retail, you need to be in retail. You can’t just have five or six items hanging on a rack. You need to look like you have a full store. That’s why if you have a lot of space, I recommend focusing it in one area. And make it highly visible. Highly visible. Don’t put it in a back corner of the studio. Put it somewhere where people are going to walk by all the time.
Like in my studio, I have two walls now, of this slatwall. When you are in the studio—I have French doors, one of them faces the class. So when they are in class, they can see that wall. And I intentionally mix that product up almost weekly. And I kid you not, people say, “I have been staring at that wall all class. I’ve got to get that top.” I strategically do that. I put outfits up, and they are like, “Oh God, I’ve got to have that.” I should also say, that in addition to other clothes, I do sell a lot of logoed apparel, like this MINDBODY shirt here. I have things with my name on it. Or things like, “You’re so lucky I went to Yoga today.” So, things like that are part of athleisure. It’s a huge segment. It’s a $270 billion industry, and it’s expected to grow another 20% by 2020.
(Mike) You obviously have a great background with sales and marketing and the whole retail game. But somebody that doesn’t have it, and most Yoga instructors probably don’t have it, where can they go to learn it? Where can they learn how and where to structure your retail space? Are there books? Are there influencers, and are there videos? How can somebody, from scratch, learn how to set things up?
(Terri) There are really a lot of online retail resources out there. And just ask. Go to MINDBODY One, the community forum. Find me there. Ask other people. What are you doing? Because it’s going to be dependent upon your space. But, first and foremost, we’ve got to get the product in there. And this is the other thing. If you are going to do it, you have to wear the product. If you want to actually make the sale, that’s a simple thing you can do to sell your product without even opening your mouth. Wear it. And then they are going to say—and some of my students say: “Oh, did you see what Terri was wearing today? I have got to get that.” So, wear what you sell. Encourage your teachers too, also. Give them a good discount. Right? So that they wear what you sell.
(Mike) That’s like at the Apple Store. They are all wearing the Apple watch or they are all using iPhones.
(Terri) Exactly, it’s like, oh, I want to get that thing. And that’s also one of the other key things, going back to retail partners, is not only low minimums but the ability to return merchandise. Because maybe it doesn’t work. As I said in my presentation yesterday, maybe a print that is really popular in LA or Florida—I’m right outside of Boston. I’m in New England. So maybe it doesn’t work there. So, I want to have the ability if it doesn’t work, then I can send it back and get something else that will work. As I said yesterday, I do not do a sale of discounted merchandise because I’m sitting on a bunch of inventory that I haven’t been able to move. I make a sale because it’s a strategic decision. I’m having a sale for a specific purpose. And when I do, I always have a goal.
(Mike) What would be an example of a purpose?
(Terri) I did a cross-marketing promotion last November. I had an open house. I had the open house to get people to come in. I had some things on sale that day, including packages. Class packages. I did a discount on a yearly unlimited. And if they bought that, they got a mat to go with it. I gave them the mat. But here is the thing: that is an annual membership. That means they are going to come a lot. Guess what? One mat is not going to cut it, particularly in the hot yoga world. You have to wash it all the time. Most of those people end up coming back and buying another mat. Some of them have three mats because you are creating that customer. You are creating that loop—they need the merchandise, you have it there to sell it. So, with just a little bit of work, you can start getting your customers trained to buy that stuff from you. Because I do believe that people want to buy from their studios.
(Mike) Well, they are going to buy it anyway.
(Terri) Yeah, they are going to buy it anyway.
(Mike) They are not going to go to yoga in jeans and fleece.
(Terri) Exactly, so why not from you? And if you say, I cannot compete with so and so, don’t try.
(Mike) Let’s talk about that for a second. I think a lot of small businesses, in general, they have a hard time up-selling. They feel guilty. They do, because they feel like, now I’m getting greedy. I already got this business. So, how do you get the business? Meaning, do you let people know about new stuff you have going on? Do you bring it up? Do you ask them if they need anything?
(Terri) Oh, yeah.
(Mike) Or, do you just wait for it to happen?
(Terri) No, no, no, no.
(Mike) So, tell me about how you make that happen.
(Terri) So, anytime we get prints or new stuff in, I put it on Facebook. Just take a picture of it—new prints in from so and so. And that sparks interest.
(Mike) What about at the register?
(Terri) At the register?
(Mike) Or as people are checking in.
(Terri) I’ll say something like, “Look at the new tops we just got in. Isn’t that so cute? Did you see the new T-shirts we just got in? Oh my gosh, you have to have one of these. Are you going to get one?” They want to buy from you.
(Mike) Especially if they have already bought one thing from you. Because here’s the thing a lot of people don’t realize: It’s fun to buy! Everybody listening and watching could probably relate to this. When you go into a store, you see a jacket or a shirt, and you go, man, that looks really nice. You look at the price and you go, I don’t know if I really need this. But you go through with it anyway. You are nervous the whole way through. You get to the cash register. She tells you the total. You are like, oh, I didn’t even think about tax. You give her the credit card. She swipes it. You are like, oh, it’s done. And then you get your bag, you get the receipt. You are walking out, and you can’t wait to put the thing on. You feel great. So what happens is, now that they got that feeling from you, it’s easier to sell them because they want to keep buying that feeling. Not this feeling. Because this is the most recent feeling.
(Terri) Exactly. And I talked about this yesterday as well—they feel good in it. And this is why I do this. It’s not being greedy. Ariana talked about it yesterday. Rick and Russell talked about it yesterday. We are in a wellness revolution. People want to feel good about themselves. We are giving them a way to make themselves feel good. And trust me, people feel good when they put on that jacket. I’ve seen this with women. It transforms them. They start feeling good about their bodies. Let’s face it, 98% of my customers are women. They are me. Middle-aged. And I’m in an urban studio, right. 35-plus. A couple of kids, maybe a little pooch here, maybe the arms are getting a little saggy. Whatever it is, they start feeling good about how they look. Maybe they don’t make huge changes in their body. But here’s the thing, they start accepting their body in the mirror. And they feel good about that. Maybe I can wear that crop top. Maybe I can wear those shorts. And then they start seeing this, oh, I like this. They feel good about how they look, simply because they bought a pair of hot pink shorts and a wicked, cool top. Guess what happens? They work harder. They feel better. When they feel better, they live better. And all of a sudden, all because they spent $100 on a top and a pair of shorts, they like that feeling. But it’s more than just what they are buying from me—they feel better about themselves.
(Mike) Every time they wear it.
(Terri) Yes, every time they wear it.
(Mike) And they feel better wearing it around you.
(Terri) I have a student. She’s 65. She’s a grandmother. You know she’s got a woman’s body. She’s had kids. She’s got stretch marks, cellulite. But let me tell you, she is rocking side-string shorts and tube tops, at 65, and feels fabulous in it.
(Mike) That’s awesome.
(Terri) And the Mastercard commercials say, “Oh, we call that priceless.”
(Mike) So now, what about people who say they just don’t have enough time to focus on the retail part of the business?
(Terri) I calculated it out. Really, it’s about two hours a week, give or take. Some weeks it’s more, some weeks it’s less. But if I looked at it overall in a month, it’s about a couple hours a week.
(Mike) And that’s nothing when you consider it’s paying your rent.
(Terri) Yeah. The biggest chunk of time—obviously, there is the up front. Getting everything set up, and in MINDBODY, getting everything set up. But that’s a one-time, up-front setup. You sit down, grab a glass of wine, do it some night. Just do it. Get it done. And when that’s done, you are just maintaining that, and it’s not so bad after that. It just takes time.
So, once that’s established, then probably the biggest amount of time you are going to spend is ordering and receiving merchandise. So when I order, I do it at the studio, usually between classes. Because I like to look at what I have on the racks. I like to create outfits.
One of the things about selling is, my goal is always to sell at least two items. Whether it’s two pairs of shorts—and shorts do sell like two to one—so, two pairs of shorts. Or maybe it’s one pair of shorts and a top. This top is going to go with these shorts, go try them on. You just tell them. They trust you. I now have women that say—and, get to know your customers—I now have people that come in and say, “Terri, I forgot my yoga clothes. Can you pick out an outfit for me?”
(Mike) Now, you are the stylist.
(Terri) Exactly! So, that’s the fun part. And then, receiving the merchandise. And here’s a tip I gave the room yesterday. I went to pick up an order at the post office, a product. And I got back to the studio and I was starting to unpack it. And I looked at the clock, and said, “Oh shoot. I’ve got to open the studio in five minutes.” So, the box was open, I put it to the side. People started coming in. This woman came in and said, “Is that the order?” Because people ask me when I’m going to order next. She said, “Can I look?” And I said, “Sure.”
(Mike) So, it hadn’t even come out of the box yet.
(Terri) Yeah, the box is open. It’s enticing. And so she says, “Oh, is that the new stuff? Can I look?” I sold half the order before hanging it up.
(Mike) That’s pretty awesome.
(Terri) I mean $500 in 20 minutes, I kid you not.
(Mike) So, a tip is leave the box out front while people are waiting to order.
(Terri) Tip is find out when your busy classes are. Like, who’s your most popular teacher. And I strategically do this now. I know when my busy classes are. And I will have the box there and it will be kind of opened, and maybe I’ll have something on the counter as I’m putting the labels on. And then someone walks by and I’ll say, “Suzi, look at this. I just got this in. It’s going to look fabulous on you. I’ve only got one of them. Go try it on.”
(Mike) Right. Guys, so just so you know, too. Remember when you upsell and when you do add-ons, it’s not only additional revenue right there, but like Terri said here, that person just spends $100 on an outfit that’s branded to you. If she leaves your studio—she’s not going to go to the other yoga studio down the road wearing that $100 outfit that’s branded to your studio, because that’s an awkward feeling. But, she’s also not going to not wear that $100 outfit she just bought. So, the best way to be able to get her in is giving her all her best yoga clothes. All her best yoga clothes are your yoga clothes.
Retail not only gets you more business right there, but it also allows you to continuously get that member to be bought into your brand and your company. Retain people, get people to come back, refer people, and even spread the message. Because you know, people wear yoga clothes when they go to the grocery store, as well.
(Terri) And particularly the logo T-shirts. That is priceless to have when you are out in the community—oh look, they are wearing my logo tee.
And then the other thing I was going to say about when they buy the purchases, here’s another tip I said to people: During the intro months, most of us have some type of intro package, right? So, during my intro month, which is $30 for 30 days, I know that if someone buys a yoga mat, usually they will start with a yoga mat, or maybe a pair of shorts. My chances of now getting them to get a membership just escalated. Because now they’ve got some skin in the game. More than just the $30. Now they’ve invested $68 or whatever. So it’s like, oh, I’m going to come back and see if this works.
So, that’s another strategy. Now within my welcome packet that they get after they take their first class, I give them a 20% discount off their first retail item if they buy it in the first 30 days.
And then the other thing that is cool is that I’ve partnered with Perkville, the rewards program. Every time a student buys something, for every dollar spent they get one Perkville point. And then, so they earn those. Katie Phillips from MINDBODY has created a nice feedback loop; I’ve decided to call it a revenue loop. So, every time they buy something they earn points. Then, when they accrue so many points, they can redeem that for a 10% coupon to come back and buy more retail.
(Mike) It keeps it going. And your margins are higher than 10% so it’s still a win.
(Terri) Absolutely. It’s still a win.
(Mike) So, for everybody that was listening and watching today, get involved with MINDBODY One, so you can get closer to people like Terri. And I’m sure there are other people that can share a bunch of other tips in there as well. Really understand all the different opportunities you have within your business to grow it.
Terri, thank you so much for sharing all this today and giving more people get more insight as to how to grow their business with retail.
(Terri) It’s super fun. Have some fun. I love it.
(Mike) Thank you guys for watching. Thank you all for listening. We will see you next week.
Thank you so much for joining us today. If you like this episode, then subscribe to our podcast on iTunes, Google Play, or Stitcher, and to our YouTube channel to never miss an episode. You can get all the links by going to BOLDSHOW.com. Thanks, and see you next time.
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