Some regional appliance and electronics retailers are flourishing despite intense competition from national chains, thanks in part to a retro retail concept: commissioned sales staff, trained to explain increasingly complex televisions and washing machines to customers.

These smaller retailers such as publicly traded hhgregg Inc. of Indianapolis and Conn’s Inc. of Beaumont, Texas, as well as closely held P.C. Richard & Son of Farmingdale, N.Y., are pursuing ambitious store expansion plans. They are aiming to capitalize on the slumping commercial real estate market and the collapse this spring of Circuit City Stores Inc., once the nation’s second-largest specialty electronics chain after Best Buy Co.

Though large retailers such as Best Buy, Wal-Mart Stores Inc. and Amazon.com Inc. are widely viewed as the biggest beneficiaries of Circuit City’s liquidation, analysts said that regional chains stand to make sizable gains. Deutsche Bank has estimated that Circuit City had $11.1 billion in annual revenue that is now up for grabs.

Customers such as Enora Tucker, 79 years old, said they prefer a knowledgeable staff. She visited a Houston Conn’s store Tuesday to make a monthly payment on her refrigerator. “I like the fact that I can go in there and talk to someone who knows what they’re talking about,” she said.

Hhgregg, which operates 111 stores mostly in the Midwest, opened 20 stores in its fiscal year ended March 31, up from the 15 to 18 it had originally forecast. It is accelerating previous plans to reach 400 stores in the next decade, said Chief Operating Officer Dennis May, who is set to take over as CEO in August

Mr. May said hhgregg’s commissioned sales staff is an advantage over national chains with young, lower-paid hourly workers that tend to stay for shorter periods. “We have sales people that have been with us 10 to 20 years, and customers who come in and ask for them by name,” Mr. May said.

Hhgregg reports fourth-quarter earnings June 2, but said based on preliminary results, it expects earnings between 39 cents and 42 cents a share, up from 32 cents a year ago, on a 13% sales increase. By contrast Best Buy reported a 23% earnings drop to $570 million for its quarter ended Feb. 28, on a 9.7% sales gain.

Best Buy and Wal-Mart dismissed the suggestion that the regional firms have a sales edge. “Our employees are exceptional at demystifying complex technology,” spokeswoman Kelly Groehler said.

“With electronics data so readily available online today, many customers come to us looking for a particular brand or item, knowledge in hand, and may not want or feel comfortable shopping with a salesperson,” said Wal-Mart spokeswoman Melissa O’Brien.

Hhgregg has successfully expanded outside its Midwest base into states such as Florida and Georgia by blitzing new markets with numerous stores, instead of tiptoeing in with one or two. “In a lot of these markets, there is room for a second consumer electronics retailer beyond Best Buy,” said William Blair & Co. analyst Jack Murphy.

Conn’s, which operates 75 stores in Texas, Louisiana and Oklahoma, has opened seven since February 2008, and has hired former Circuit City managers. The retailer said it has navigated the recession better than some rivals because it owns its financing business. It has been extending credit to customers cut off elsewhere when larger chains tightened requirements.

“When credit gets a little bit tougher, like it is now, it is an advantage,” said Timothy L. Frank, who takes over as the chain’s chief executive next month, replacing his father, Thomas J. Frank.

Conn’s said earlier this month that sales for its quarter ended April 30 rose 2.6% from the year before, to $200.1 million. Mr. Frank said the gain was aided by a 35% April increase in television unit sales.

Sales clerks who earn commissions have an incentive to understand products, he said. “Is your mother going to want to buy a washing machine from a 19-year-old with a pierced eyebrow?” asked William C. Nylin Jr., the chain’s executive vice chairman.

P.C. Richard, which began in 1909 as a hardware store in Brooklyn, doesn’t release its financial results, but President Gregg Richard said it was taking advantage of commercial real estate vacancies to expand. It has acquired six former Circuit City sites in the New York City region, bringing it to a total of 56 stores.

Write to Miguel Bustillo at miguel.bustillo@wsj.com

Printed in The Wall Street Journal, page B1

TJ

A: I love this quote from the late, great Paul Harvey: “In times like these, it is good to know . . . that there have always been times like these!”

Sure, we have all heard that this Great Recession is the worst economy in 50 years, and it is, but that does not mean that there have not been equally bad times to be in business, because there have.

And what works in times like these? You bet, discounting.

Consider 1974 if you will. That year, new president Gerald Ford had to deal with an ongoing, expensive conflict in Vietnam, a quadrupling of oil prices, a huge drop in the stock market, and 11% inflation combined with stagnant growth – or “stagflation”. 

With the economy in such bad shape, it hardly seemed like a time to start a new business, but that is exactly what Dennis Brown did, and he succeeded because he tapped into the economics and mood of the time and created a business that offered low, low prices.

Specifically, Brown opened a new motel in Aberdeen, South Dakota and set prices at a mere $8.88 a night. By 1979, he had more than 70 hotels in his chain, and today, Super 8 Motels is one of the world’s largest discount motel chains with more than 2,000 locations.

So yes, low prices can work, and work big time. Many businesses in fact tie their brand to low prices and succeed as a result:

• Wal-Mart
• McDonald’s
• Amazon.com

So the question is not whether lowering your prices can work, sure it can, instead, the question is whether lowering prices can work for your business.

Lowering prices does not work for every business, and the one time that cutting your fees usually does not help much is when you have a high-end brand. BMW could gain little by suddenly selling their cars for a lot less because its brand is based, at least in part, on expensive luxury. Discounting would cannibalize its brand.

That said, the low price strategy often works for plenty of small businesses, especially in this type of economy. People are shopping right now. They want a bargain. If you are not willing to give them one, then they just might take their business elsewhere.

I have often said that one key to business is to ask people what they want and then give them what they want. I bet if you asked your customers what they want, today, many would say lower prices. So you better consider giving them that.

And as you do, you do have to be careful how you do it, and how much you do it. Lowering prices will bring in more people, yes, but it will also eat into your margins. Crunch some numbers before diving in.

One good way to start is to choose a loss leader. That is, pick a product or service that you think would be more popular if you put it on sale, and then put it on sale. The idea is to attract attention and entice customers and clients to your business with a great deal. The loss of profit on that item should hopefully lead to more sales of other things, hence ‘loss leader.’

Aside from the loss leader, discounting prices can take many other forms:

• It might be a regular sale
• It can mean bidding on projects lower than you normally would
• You might even start offering discount coupons

Whatever tack you take, be sure that you let your actual and potential customers know that you are in fact giving them a deal. Mention it in your advertising or when you are chatting them up.

Low prices are a big selling point today, and if you do it, take full advantage of it.

Today’s Tip: On Wednesday, May 20, at 11:00 a.m. eastern, Capital One is hosting a free webinar on how to survive and thrive in this economy. I spoke last week with Todd Kennedy, the  Vice President of Capital One Small Business, and he told me that the one-hour webinar is intended to help small business with information on getting credit, tips for motivating employees, and also ideas for succeeding online and with social media.

Says Kennedy: “We want to give small business owners practical tips on how to succeed in a tough economy.” It’s a great service of which any small business should take advantage. You can watch it live, or a recording of it later. Steve says check it out, here.

With e-retailers expected to buy less holiday season merchandise this year because of the economic downturn, they need to sharpen their strategies in coordinating pricing promotions with available inventory, says Paula Rosenblum, managing director at research and advisory firm Retail Systems Research LLC.

“Plan a pricing strategy, plan your inventory strategy, and make sure the two are in synch,” Rosenblum says.

She adds that retailers this year, worried about overbuying merchandise in an off economic year, may experience unusually high levels of inventory out-of-stock. If that turns out to be the case, it will be even more important for retailers to take several steps to increase gross margins on merchandise sales to help compensate for the loss of revenue, Rosenblum says.

Retailers working with lean inventory levels should take a harder at free-shipping offers and how they’ll affect product sales, for instance, and work with merchandise suppliers to apply the steepest promotional price discounts to products that will be available in the highest volume.

“Work with merchandise vendors to figure out what your sacrificial lambs will be and how you can work together to maximize order fill rates,” Rosenblum advises retailers. She adds that arranging for some suppliers to ship heavily promoted products directly to customers could be a good option for maximizing both order fill rates and gross margins.

“We know there’s a lot retailers cannot plan, and we don’t know what the economy is going to really look like,” Rosenblum says. “But we can plan for all kinds of contingencies. A retailer winner will do that now to have a better holiday season.”

http://www.internetretailer.com/dailyNews.asp?id=30433

Wholesalers had cut inventories by 1.5 percent from the previous month’s levels in February, more than double of what Wall Street experts predicted. Since lower holiday sales led to more leftover goods than expected, cutting such excess inventory over the past few months became a necessary step toward economic recovery.

“It’s easy to see this reduction as an assurance that the contraction is continuing,” said Frank Ahrens, Washington Post analyst, in his column. “However, the sooner wholesalers adjust their inventories to match diminished demand, the closer they come to resuming profitability.”

Wholesale sales also increased by 0.6 percent to $319.7 billion – the first uptick seen since June 2008, and quite a recovery from January’s 2.4 percent sales decline. Coupled with the drop in wholesale inventories, this further indicates a slight resurgence in production as wholesalers began to seek new goods.

Steps taken by retailers to keep inventories lean are showing a bit of progress to accommodate to declining demand, as recent reports of early 2009 wholesale trade reveal.

As retail stores start sourcing their spring and summer merchandise, the National Retail Federation still expects a 5.3 percent rise in March retail container traffic from last month, a total of 1.07 million 20-foot-equivalent units (TEU).

At the same time however, such levels still fall below that of March 2008 by 7.4 percent – a trend that the trade group predicts to observe throughout the first half of 2009.

“This year’s numbers are going to remain well below last year because sales are still slow and most economists aren’t seeing a recovery before the second half of the year at the earliest,” said Jonathan Gold, vice president for supply chain and customs policy, in a statement released Friday. “Careful inventory management is a key to survival for retailers in the economic times we’re going through.”

And while retailers in some industries are still trying to shave off surplus inventory, rapidly declining sales have not made that task any easier to fulfill. A report released yesterday by the U.S. Census Bureau showed that in January, wholesale sales dropped more than four times faster than inventories.

Still, slightly declining wholesale inventory-to-sale ratios in a few categories – including apparel and miscellaneous non-durable goods – demonstrate that efforts made by retailers are still paying off, despite weak demand.

The 0.7 percent month-to-month decline in wholesale inventories also surprised economists. Seeking Alpha analysts had predicted a 1 percent decline in inventories, which now signals to them “either weaker consumption or stronger wholesale buying,” plus potentially good news later to be seen of retail sales.

Let’s be really honest; there are plenty of steps involved with the purchase and receipt of any online product from the release of a credit card number to final delivery – and potential customers will worry about every single one of these areas when it comes to making a purchase from a business they have not used in the past.

About Branding

There is a lot of competition in online sales out there, and some of it is from well-recognized companies that have their own names to create the kind of trust you need from your visitors.

So that is your first step to establishing that trust with customers on your site; build yourself an identity. This step is more popularly known today as branding, and it extends to everything your business does, from the site layout to slogans to a nice looking logo.

Everything you put out needs to look professional and great, or your first impression on a visitor might be the last.

Guard Your Reputation

Next, you have to make sure that you know what is being said about you. Business can be dirty business sometimes, and with the amount of online competition there is no guarantee that yours will play fair.

It is easy enough to go into consumer forums and make false posts about businesses, so make sure that you are doing your own search engine inquiries about your business to have a look at what’s being said.

If you do encounter negative feedback, defend your business honestly and don’t jump to conclusions; try to track down the source of the complaint on your end and remedy the situation, and then post that you have done so.

Social Media Concerns

In the Web 2.0 World, you also have to be very careful about the way you present yourself when on a message board, posting a video to YouTube, on Facebook, and so on.

Most of us are using social media to extend awareness of our businesses, but people can get the wrong impression according to how you conduct yourself. If they don’t like how they see you as a person, odds are that you won’t have their trust, and you even run the risk of them discouraging others from using your business.

Finally, the best way to establish trust with your online customers is to provide them with honest, prompt service and delivery. No customer should ever have to contact you about the delivery of a product.

Instead, be proactive and contact them to inquire about whether or not they have received what they bought, the condition it was in, and so on. This is a great way not only to gain repeat business but to gain testimonials, which are another important tool when it comes to gaining the trust of online customers.

Predicting the Future
How can you know when the peak sales are going to drop off? You can’t predict the future can you? Of course we can’t predict the future, but we can learn from our past.

Retailers keep track of what happened previous years to know how to effectively sell this year. Managers order enough calculators not only to get them through the back-to-school sale, but also the first few weeks of school. They know how to plan for this because of what happened last year.

The same is true with eBay. If you could see what happened last year with calculator sales, you could know when sales are going to start to drop-off.

With a market research tool like HammerTap, you can know what happened last year. With information like that, you can in a sense predict the future.

I used HammerTap to research calculator sales last year. I researched calculator sales for four weeks starting on August 23, 2006.

Below are the results by-week. Pay attention to how the Listing Success Rate (LSR) and Average Sales Price (ASP) change during the four weeks of sales.

The Dropping-Off Point
So when do sales drop off? Sales during Week 2, August 31 thru September 6 were the highest in both LSR and ASP. During this week, you can sell the most calculators for the highest price possible.

After September 6, the Average Sales Price drops rapidly. In one week you go from $66.85 to $53.95, a difference of $12.90. This is a huge drop in profit. While sales are steady at 77%, you are not making nearly as much per calculator.

Depending on your cost of the product, September 6 is your drop-off point. Even though sales are still high (that’s your Listing Success Rate) you may not be making enough money on each sale to cover your costs.

What’s your strategy then? Try to sell all of your calculators during Week 2 above to increase both your success rate and selling price. Selling during this week is going to maximize your profits for this product during the back-to-school season.

However, each product is different, and this is just one example. In order to maximize the sales of your products during seasonal and holiday trends like this one, you really have two options: 1) Try and guess when the optimal time to sell is or 2) Use a research tool like HammerTap.

There are several ways to get your store’s space working for you. The first is your store’s actual building or room. Think of what you can do to make your store’s inner shell more inviting. For instance, if the walls are white and your lighting consists solely of florescent bulbs, then think of using some warm-colored paint along with bulbs that are less stark. The less your store looks like a warehouse, the better! And, use the theme of your products to your advantage. If you sell toys , then get whimsical in your decorations – maybe a blue ceiling with painted clouds, big, framed pictures of close-up toy pictures on the walls, etc. Get creative in your surroundings – they are meant to delight your customers!

Next, it’s important to group your products logically and display them together. If you sell both inflatable boats and electric pumps, then they should be displayed near each other – otherwise you could be missing out on an obvious up-sell sale.

Once you have your product groupings figured out, it’s time to display them using tables, shelves, furniture, etc. The key is to get as many of your most intriguing items between waist to eye level. Even the most charming of products will go unnoticed if they’re sitting on a bottom shelf – save that space for additional stock. First, lay out your display furniture (you may want to use paper cut-outs until you get the arrangement figured out) to get just the right flow – making sure that aisles are wide and that the arrangement gives customers a natural walking path through your store. Now it’s time to arrange your products. Newest arrivals should always be in the most eye-catching of spaces – that way repeat customers will see that your store is always changing. The way your products are displayed will depend on the type of store you have. If you sell decorations for the home, you might want your displays to mimic rooms of a house. If you sell children’s products, you may want to have products both in and out of the box, as parents typically like to read all the product information that the manufacturer prints on the retail packaging as well as see and test the product up close.

Another important point to remember is that whether or not you’re continually getting in new merchandise, it’s always good to change things up once in a while. Move products around, change displays, etc. Give customers a reason to keep coming back – changing the inside scenery gives the impression that new products are always coming in and that there’s always something new to see. Some examples to consider:

* Seasonal or holiday-themed displays
* Displays for upcoming special events (i.e. the Super Bowl, the Oscars, or even local events)
* New product lines, brands, or designers

Creativity and attractiveness are the keys when designing your retail displays . If you have an artistic flair, then this is your time to have fun and boost your sales at the same time!

Last year American’s spent nearly 2.5 billion to celebrate the 4th of July. This year, the weakened economy and soaring gas prices will take the air out of those revenue sales. According to the NRF 2008 Independence Day Consumer Intentions and Actions Survey , while two-thirds of Americans will still celebrate the holiday, many will be doing so at home.

So what can you do to help cash conscientious consumers enjoy their Independence Day this year?

Offer promotions, consider doing a PRE holiday sale and there’s no better way to attract customers than giving away FREE STUFF! Like gas for example…?

The following is a great excerpt from an article on Forbes.com . It highlights some strategies retailers can use to help get themselves and their customers through the economic storm:

"In the short-term, retailers need to continue providing sales incentives, discounts and promotions that demonstrate value to the consumer. Incentive packages can be offered for cost-saving items such as fuel-efficient cars or energy-saving light bulbs. Innovative ideas to help consumers spend "extra" money will be critical. We have seen this happen already in the travel industry where some resorts are providing gas cards for guests driving to the destination.

Retailers with a strong, customer-oriented Internet presence are well positioned to take advantage of the momentum in Internet sales carried over from the 2007 holiday season. Retailers should explore new payment options for customers for online sales, including prepaid gift cards, which would have the added benefit of capitalizing on the increase of customers buying gift cards. Ultimately, e-commerce will help consumers save gas money while having the associated benefit of lower operating costs for the retailer.

Looking ahead to long-term positioning, retailers can improve return on investment for their stores by taking advantage of lower retail space costs for new store openings. With companies halting store expansion and announcing store closings, certain regions have experienced an excess of retail space. The industry should capitalize on better lease terms than we have seen in recent periods.

As mid-range and long-term strategies, retailers will need to focus on properly managing the mix and quantity of inventory held in their stores and distribution centers. In conjunction with maintaining inventory, retailers should seek alternative channels, such as the use of distributors or value-added resellers in lieu of a retailers’ clearance center approach.

Retailers will also be forced to reassess their suppliers and transportation, as well as storage and handling costs, as product costs from overseas, particularly China, continue to increase.

In the end, the U.S. economy is built on both consumer spending power and retail success. If retailers remain determined to help consumers weather this difficult time while bracing themselves accordingly, we can all hope to emerge strong in 2009."

Happy Memorial Day Weekend!