These days, an indoor tanning salon is much more than a place for customers to tan—in fact, it can be a great place to shop. The new trend is the boutique salon, which offers clients a chance to pick up cute apparel (such as swimwear) and accessories. When deciding whether to add retail items to your salon, consider the following:
The Customer: Make sure you are considering apparel that meets your customers’ desires, not just your own taste. Do you know their spending habits? Where do they shop for casual clothing? Where do they vacation and how often? What do they wear into your place of business? What kind of vehicle do they drive? Don’t fall into the age-old trap of buying only what you would wear. Remember, the more you know about your customers’ lifestyles and tastes, the more able you will be to provide apparel that meets their needs. In addition, it’s important to budget the retail items you sell in several price categories. The key is to give customers as many options as possible without overextending yourself.
The Competition: Do you really know who your competition is? Where are your customers shopping for activewear, resortwear and other casual attire needs? Visit the major outlet malls to find out what they are offering in apparel and what their price-points are.
The Vendors: Purchasing retail items from a manufacturer is not the same as buying products from your tanning supply distributor. Many big retail companies have high purchase minimums, which means you would have to buy in quantity before testing the waters regarding a item’s selling success. Before jumping in, look for those manufacturers that will sell to you below the normal minimums. Hint: When paging through Looking Fit, keep an eye out for the manufacturers and industry distributors that advertise and receive occasional editorial coverage. These companies usually have geared themselves toward the tanning industry and will be a good business partner for your salon.
Retail Inventory
Be aware that, while boutiques order four to five months in advance of the season, you do not need to do that. Experts recommend that you order your requirement in 30-day increments because it gives you a better turnover and minimizes your capital outlay for inventory.
Also look at garments that are “one-size-fits most” or sized S, M and L. This will minimize your inventory requirements and eliminate the necessity of a dressing room. Of course, certain types of clothing—such as swimwear—can be hard to find in one-size-fits-all, which means you will need multiple sizes in each style. One way that salon owners get around this is to stock a small amount of swimwear in the salon, and make a catalog available to customers for specific orders. This offers customers a tangible item to see and feel, while also allowing them to customize an order to a specific size and style preference—and keeps you from having to keep a ton of merchandise on-hand.
Finally, don’t make purchases too close to the end of the season—when it come to clothing and accessories, what’s in fashion now may not last. Forexample, if you decide to offer swimwear but overestimate how well it will sell, you can get stuck with excess inventory that will be so-last-season by the time next summer rolls around.
Advertising
It seems obvious, but it’s worth the reminder—you have to let your clients know that you carry or plan to carry retail in the future if you expect your venture to be successful. Hang posters or other signage in the windows, and create an eye-catching display to showcase the retail items. Consumers absorb information in three ways—visually (what they see), auditorily (what they hear) and kinesthetically (what they feel). Because consumers make purchases based on whichever methods dominate their behavior, it is vital to design displays that appeal to all three.
Merchandising
Merchandising is a comprehensive function including market research, development of new products, and the coordination of manufacturing, marketing, effective advertising and selling.
Market research includes knowing your customers (their buying habits and needs) and competition (what are the customers buying, where they are buying and at what price). The new product portion of merchandising is a result of your understanding of your customers and ability to find unique products to meet their needs. The marketing, advertising and selling parts of the definition reflect how you position your salon in the customer’s mind and actually how you close the sales with your customers. They key to success for your business is differentiation. Your customers need to perceive your salon as a different experience from competitive salons.
Pricing
This is the most important aspect of merchandising. You can have all the facets of merchandising perfected; however, an error in pricing will not allow you to get the sale. Pricing is an art not a science. As stated earlier, you must know your customers and competition to determine what market prices are in your area. As a starting point, recognize that consumers buy on a value equation that includes:
1. Fabric
2. Style
3. Price
4. Savings
What kind of fabrics are your customers wearing? Most garments are made of cotton and poly-cotton, and care details are important to consumers. When you consider style, this may be one of the prime methods of achieving differentiation. You know what the department stores and discounters are carrying. Find a supplier that can provide you with styles not found in competitive stores. This is a key step in satisfying a customer’s desire and in keeping your profits where you want them.
In the value equation, numbers 3 and 4 above could be considered in the same light but they are distinctive in themselves. Your vendors have conditioned you to “keystone” or double the cost to determine retail prices. This is much simpler with a $6 bottle of lotion than a garment that cost you $25, because people do not want to buy at retail cost. Part of the value equation is “what are my savings?” Let’s use the example of a bikini with a $50 cost that has beading to make it different from what is available in local retailers. How do we price this garment to sell and make a profit? First look at market price. What are similar swimsuits sold for locally? Try pricing the garment as such:
$59 (manufacturer’s suggested retail price)
-$15 (-25 percent savings)
=$44 (selling price)
=$25 (cost of goods sold)
_________________
=$19 (gross margin)
This strategy is an example of pricing tactics used by major department stores and discounters. You need to look at the dollar contribution of $19 and the fact that you have a 43-percent margin. You did not keystone, but instead satisfied a customer and yielded a $19 gross profit. If an item does not move in 30 days, mark it down further to move it.
