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INDEPENDENT RETAILER magazine is now the official news outlet for Wholesale Central visitors. Each monthly issue is packed with new product ideas, supplier profiles, retailing news, and business strategies to help you succeed.

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Building Customer Loyalty

Feb 1, 2008
by Rob Kole

Retailing is a demanding business, especially when your top price is one dollar. And yet, many dollar store retailers manage to thrive and grow, in good times and bad, by maintaining great customer loyalty. Loyalty is important, considering that in 2006, 65% of American households shopped in a dollar store, and the average American household makes 12 trips a year to dollar stores.

I've talked to several retailers, both small and large format, to get their views on customer loyalty. What emerges is not so much a secret formula, but instead a checklist of simple common sense rules that keep the customers coming back to buy more, and telling their friends about your store.

To start with the basics, experienced store managers know that when a customer samples a store, they'll be back. The bargains are simply too appealing to resist. The hard part is getting them to try the store. Many first time customers have the idea that dollar stores offer inferior merchandise or that the selection is limited. Of course, nothing could be farther from the truth, but let's talk about getting the customer to sample your store.

First, dollar stores are the domain of female shoppers, generally blue collar workers with household incomes of less than $30,000. For these shoppers, perception is vital.

They are attracted to stores that look clean and inviting, but NOT those that look like they have spent a lot of money on furnishings. Shoppers feel they won't be saving money if the store can afford to splurge on fancy fixtures and decorations. So keep it friendly but not too flashy. No-frills merchandising really does work. This applies to the outside of your store as well. Make sure it is obvious to people passing by that it is a dollar store, but keep your signage friendly, clean and simple.

Friendly also means working hard to impress the customer with how good your customer service is. Make it a point to greet every customer at the door, like Wal-Mart does, and train your people to smile and make eye contact. Nothing impresses a new customer more than a friendly store, and good management can control how the customer perceives your staff. From the time you interview them for the job, if your employees understand that being friendly to customers is a big part of the work they do, you will have a friendly sales staff and happier customers who come to your store more often.

Another thing that keeps customers coming back is inventory turnover. The most successful chains know that customers enjoy shopping for impulse items, the element of finding unexpected bargains, so make sure those items are turned frequently. Shopper frequency at dollar stores averaged 12 times in 2006, so that indicates a monthly turn of impulse items is about right. At Kole Imports, we know the importance of offering a wide variety of impulse items, many of which are in attractive display packs.

So far, we've been talking about convenience. The other half of the customer loyalty equation is price, and the only way to consistently assure your customers of the best prices is to buy from reputable suppliers who have a history of delivering merchandise on time, with no surprises.

Remember that your supplier is also your partner: suppliers hear about new product breakthroughs before anyone else does, and it's their business to know the market. By doing your homework and working with the best suppliers, you can guarantee your customers the best value for their money.

And that will keep them coming back for years to come.

Rob Kole, President
Kole Imports
24600 South Main Street
Carson, CA 90745
Tel.: 800-874-7766 or 310-834-0004
Website: www.koleimports.com

Topic: Business Strategies

Related Articles: Customer Loyalty 

Article ID: 502

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