For retailers, the fourth quarter is the most profitable, but also the most pressured-packed.
“The last two months of the year can be 25 to 40 percent profitability, so it’s very important to retailers.” said Burt Flickinger III, a retail analyst and managing director of Strategic Resource Group in New York City.
So while Macy’s and Walmart dole out millions for multifaceted, national advertising campaigns, small local retailers without deep pockets turn to other ways to steer some of the money-making traffic their way.
“As a small business, you need to have a strong showing in the fourth quarter to get you through when things aren’t so good,” said Dan Gagliardo, owner of D’Avolio, which sells culinary olive oils and vinegars at five area locations.
For Gagliardo, the 30 to 40 percent of his profits are made during this time.
In addition to boosting profits, the holidays also are a time to win over new customers, said Maria Westman, owner of Monarch, high-end gift shops located in Williamsville and the Buffalo Niagara International Airport.
“The fourth quarter is crucial because you can increase your clientele,” she said. “You often get new shoppers at this time, and that allows you to widen your customer base.”
Mom-and-pop operations employ a variety of tools to get their share of the holiday shopping pie, from social media to an emphasis on personalized customer service to freebies.
“It’s like a cauldron, almost, of different efforts, and you’re constantly mixing it and seeing how it tastes,” said John S. Kavulich II, president of Niagara Hobby & Craft Mart in Cheektowaga.
During this time of year, Niagara Hobby & Craft’s advertising budget swells by 300 percent.
“For us, it’s all about selling the experience; we tremendously increase our marketing expenditure in the fourth quarter, specifically October, November December,” Kavulich said. “So we’ll be on radio – seven stations – billboards, at the airport, and in local newspapers.”
Over the years the business, located on Union Road in the intimidating shadow of Walden Galleria, has attracted customers with a host of free offerings and activities. The store offers a year-round free layaway program, craft classes and use of its slot car tracks. And during the holidays, Santa and live reindeer make weekend appearances, and visits and pictures are no charge. There’s also a drawing for a free breakfast with Santa for a family of four.
“When we say free, we mean free, and customers over the years have come to appreciate that,” Kavulich said.
The secrets of ordering
With so much at stake, retailers take the risk of buying extra inventory in advance for the holiday season with the hope they’ll sell. They generally double of triple quantities, especially on the weekends, Kavulich said.
“When we might place orders from manufacturers and distributors once a week, during the fourth quarter, those orders are placed twice a week and then, in the two weeks before 25 December, orders are placed daily and often twice daily,” he said.
“But it’s hard to know what’s going to sell and I don’t want to be overstocked,” said Debbie Sidel, owner of Half & Half Trading Co., a clothing store on Elmwood Avenue. “It was a weak fall shopping season and we’ve been lucky to move a lot of what we bought.”
Gagliardo said trying to determine inventory and select products can be tricky. “You never want to have too much on the shelf and not enough money in the bank,” Gagliardo said.
Product performance can be tested with smaller quantities during the first three quarters of the year, and inventory of items that do well are then increased for the holidays, Kavulich said.
“There are always some products that don’t sell as planned, so those are discounted after the holidays, he said. “But, the more frequent challenge is a product or category does not move during the first nine months of the year, then, sell rapidly – so rapidly that there are shortages – so, a lost revenue opportunity.”
The bottom line: purchasing remains risky and a challenge. For some small retailers, it’s the secret sauce.
“Trying to guess can be stressful,” Kavulich said. “You do the best that you can and hope that customers appreciate that they can walk through our doors and view and touch and perhaps test a product. And, most importantly, ask questions. That does not happen with the Internet.”
Smaller, independent stores also joined the Black Friday sale blitz, which jump-started the shopping season.
“You don’t have to be drowned out by the big guys if you have the ability to captivate your audience,” Sidel said.
Getting a jump
Flickinger said Small Business Saturday, an effort, promoted by American Express, to encourage shoppers to patronize mom-and-pop businesses after Thanksgiving, gives smaller retailers a good start to the holiday shopping season.
Even on a well-established district like Elmwood and in business for almost 40 years, Sidel said Small Business Saturday brought in customers to her boutique.
“It was really nice attention,” she said.
Additionally, through effective use of email and social media, small retailers can keep in constant contact with customers, Flickinger said.
Gagliardo operates a Facebook page and Twitter and blog accounts, updating them on a daily basis, he said.
“We have a tremendous following on social media,” he said.
Other businessowners have also heeded the advice and established an online presence. Niagara Hobby & Craft’s weekly email newsletter is now sent to 14,000 subscribers. At Half & Half, creative window displays are still used to attract customers’ attention as well as its Facebook page, which is now offering 10 percent off holiday dresses to its fans.
“It’s a mix of the old and new; I use the old-fashioned way with the window display and the new technology online,” said Sidel.