Retail Items

What kind of fabrics are your customers wearing? Most of the 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 may cost you $25. Whether we like to admit it, people do not want to buy at retail. Part of the value equation is "what are my savings?"

Let’s use the example of a 50/50 poly-cotton pant set with a $50 cost that has appliquès and other work 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 garments are perceived similar, though they are not the same, sold for locally? Try pricing the garment as such:

Manufacturer’s suggested retail price $59

-25 percent savings $15

Selling price $44

Cost of goods sold $25

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Gross margin $19

This pricing strategy is an example of tactics used by major department stores and the discounters. You need to look at the dollar contribution of $19 and that you do 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. You will make mistakes from time to time but just mark it down and know your judgment will be better next time.

The above pricing scenario establishes a value line on the garment to your customer at $59—a savings of $15 and a net selling price of $44. This is the psychology of selling today. If you have a niche market for a product that allows higher margins that is great, but you must keep in mind the customer has alternatives to your salon and the products you are selling. For some this is a bitter pill to swallow but it is an economic fact. Your vendor will be very important in your ability to meet your customers’ needs and fulfill the value equation.

Find a vendor that can supply you with unique garments and be assured that the supplier has the garments in stock during the season. 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.

You should 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. You should look for no-minimum vendors that provide same- or next-day shipping. Also look for vendors that introduce new styles during the season, so that as you run out you can still order an item that has been hot or any new items as well.