Join us in these
(If you like this article and wish to pass it along to someone else, please use our on-line form)
How Stores Niche
An Itch for a Niche
The word is "niche". And, it has been one of the buzz words within retailing for several years. One of the ways it can be defined is with an illustration of a store which has decided to have an area of products, or services, in which they have a much broader selection than most other stores.
Creating a niche has become necessary in today's market because there are so many new players. There are big box retailers who now have a sales floor display of lighting fixtures, lamps and bulbs which rival in size the entire store of a specialty shop.
The niche can be as simple as deciding to carry a price range of products which is above that of the competition. However, what we often see is the specialty shop which has decided to totally abandon the lower price ranges in the face of the competition. While you may justify that position by explaining that you cannot exist on lower margins, our concern is for the first time customer walking in your store. An example is a simple question of, "What is your least expensive lamp?" In our example store, there is going to be a wide discrepancy when compared to the competition.
Sure, there is a difference. But what are your chances of that customer letting you explain? If the higher quality lamp is to be where we create our niche, how does the customer understand the difference in the two lamps if we cannot show them both lamps?
The same type of situation appears when we are looking at bulbs. Your store may carry more than three dozen different fluorescent bulbs, but the first way a customer is going to size you up is by your 3 or 4 pack of 60 watt incandescent and the traditional 4 foot cool white fluorescent.
Past these confrontational niche areas, you will probably want to examine in which other areas to create a niche. There are several preliminary questions you need to ask yourself. The first is how much money am I willing to invest? The second is how much square feet of my sales floor and warehouse will this take up? How much margin are you expecting from this area? After all, because you will have a unique product or service area, shouldn't you expect a larger than usual margin for the new niche? And lastly, does this area need, and who will it be, a person with additional knowledge about this niche?
The first two questions are unique to each and every store owner, manager, or buyer reading Home Lighting & Accessories. To get to the answer, you will probably want to talk with the sales representative of the lines you are considering to add. Ask the rep for the names of others stores who have tried this niche, and contact them. If possible, visit their store or at least ask for photos to see how they have displayed and stored the merchandise.
As for the question about margins, why would you want to add a product or service niche that made less money than the rest of your store? If you can justify a lower than usual margin by the increased traffic in your store, that is one thing. But otherwise, if you are unique then you have no competition. With no competition, you can not be considered the high priced store, because you are the only store with a price.
Your unique niche may be with a display of finials, table lamps, or track lighting. Selecting the niche needs to address the concerns of not duplicating another store in town in selection or price, as well as being a niche where you and your sales staff can excel with your extensive product knowledge. This writer was fascinated, and made several purchases, of lighthouse finials in a shop where the sales person knew the location and a brief history of each of the lighthouses represented.
In addition to their lighthouse collection, there was another eight or nine collections providing a total selection in excess of 100 finials. The attractive display was near the register to maximize that last minute add on sale, and took only a few square feet. The only thing the retailer missed out on, was to put some of the finials on lamps around the store. And the margin he was getting, allowed him to get a gross profit on a finial that was larger than that on an inexpensive table lamp.
The last question we had about niche marketing was whether this was an area that required unique talents. Like the unique products, a unique service is another opportunity to have an increased margin. You may already be the store that offers lamp repair, but could you offer an in-home repair service, or to repair office lighting?
If your added niche is a service, a letter to your insurance company is in order to see whether you need a rider for your current liability policy. Again, surveying the market to see if anyone else is offering the service, can provide you with information about where to price your services.
There is another advantage that having a niche can bring to your store; you gain an opportunity of exposing your business to a new customer. They come into your store, or you visit their home or office, and from there you can show them all of the other products and services you offer. Got an itch for some new customers?
Get a niche!
This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.