Editor’s note: The news has not been good lately, but some companies have managed to thrive under difficult economic conditions. The Business Journal presents a series of profiles on area businesses that are doing well, and explore how they are navigating a tough business environment. The profiles are presented on Pages 6, 8 and 9.
Empty storefronts tell a grim tale of retail demise, with “for lease” signs cropping up on buildings countywide.
Retailers accustomed to earning 40 percent of annual sales during the holiday season noticed a 4.4 percent decline nationwide last year, according to ShopperTrak, a privately held Chicago firm that follows retail activity.
Those losses have pushed many , Circuit City, Mervyns and Linens ‘N Things , to call it quits.
Although the economic turmoil has hit many brick-and-mortar businesses like a jackhammer, some businesses are thriving, and expect to weather the same storm that has prompted others to shutter their shops.
Just what sets them apart from the throng?
It may not come as a surprise that the successful ones maintain an up-to-date Internet presence, offer better discounts than their peers and generally maintain their existing customer relationships.
“The ones really, really doing well are conveying a strong sense of value to their customers,” said Bruce McVey, research analyst with Retail Intelligence Group based in Tampa, Fla.
Other successful retail outlets were able to lure customers who typically pay slightly higher prices. Some Target shoppers switched to Wal-Mart Stores, while teenage specialty stores such as Aeropostale and The Buckle noticed a surge in customers who typically flock to American Eagle Outfitters and Abercrombie & Fitch. Aeropostale produced a 12 percent increase in December sales at a time when others reported drastic declines.
Taking Advantage
Some of the most profitable businesses took advantage of consumers seeking deep discounts and bulk purchases last year, according to George Whalin of Carlsbad-based Retail Management Consultants.
Dollar stores and warehouse retail chains such as Costco and Sam’s Club (a unit of Wal-Mart Stores) performed well in the cash-crunched environment because consumers flocked to them to stock up on supplies.
“They figure they get the most of their value going to these discount clubs,” Whalin said.
Other businesses lured bargain-seeking customers this holiday season with an interactive advertising approach.
Sephora, for instance, attracted cosmetics-seeking customers to its Web site by pairing with Taaz.com, a virtual makeover site based in San Diego.
Customers could upload photographs of themselves, apply different makeup and hairstyles using a wide palette of colors and send their results to friends and family. In return, they received a free gift with purchase.
The so-called “mistletoe makeover” was widely popular, according to San Diego Internet marketing consultant Holly Berkley, who helped promote it.
Berkley said it de & #173;mon & #173;strates the new direction in Internet marketing. In less than a month, she said the site attracted more than 50,000 unique visits.
“It really took advantage of the viral marketing aspect,” she said.
Search engine optimization tools such as British-based Wordtracker.com help retailers up their Internet ante by appearing higher in search results. For example, Berkley said a Mexican restaurant might take advantage of using “Oceanside happy hour” in its search terms instead of broader language to distinguish itself from its competitors.
One tactic Whalin said he tends to discourage is overloading e-mail boxes with offers to lure existing or potential new customers in stores and online. The method, he said, tends to create apathy among shoppers who typically receive multiple offers in a day. Instead, he lauds retailers that keep customers clued in to future product releases or events through periodic newsletters.
“It’s all about relationship building,” he said.
