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Business Best Practices: Taking stock

Posted By Administration, Friday, December 28, 2012
By Brooke Nico, Kirkwood Knittery

Note: The Kirkwood Knittery team, which includes co-owners Brooke Nico and Robyn Schrager, as well as marketing consultant Catherine Collett and sales team members Nadine Sokol, Franni Goette and Rachel Bowler, were recognized at the June 2012 NeedleArts Trade Show as a TNNA Needlearts Business Innovation Awards winner. The program is a joint project of TNNA and Hart Business Research.

Since its opening in November 2006, Kirkwood Knittery has been known as the go-to shop in St. Louis for interesting fibers and textures, hand-dyes, and other exclusive fibers. We stocked the staples (worsted weight wool, cottons and assorted options for scarves and baby items), but did not focus on those in our store display or customer communication.

In recent years, though, we were seeing our primary customers—upper middle-class Baby Boomers—have less disposable income, as portfolios decreased and early retirement was encouraged. We began to feel the need to expand our brand, so that Kirkwood Knittery was approachable for knitters and crocheters of all skill and income levels.

At the same time, we did not want to abandon the concept of a fashion-forward boutique. This decision not only was reflected in inventory choices, but in communications with our customers, events offered at Kirkwood Knittery, and alternative purchasing solutions.

What follows are seven facets of our basic strategy for achieving both goals:

1. Practical picks

We noticed that the project choices of our customers changed—from indulgent accessories and garments, to more utilitarian baby items, afghans, and charity projects, as well as one- or two-skein accessory items.

Working with our vendors, we sought out options for washable wools and high-quality acrylics. We wanted less-expensive, unusual yarns from our existing vendors; we were specifically looking for yarn with a high-yardage, low-cost ratio.

2. Optimized layout

Once we had identified new inventory items to bring in, we began to rearrange our store layout. Flying in the face of accepted retail merchandising practices, we now place much of our lower-priced inventory in the front of the store. We want to ensure that all customers know as soon as they walk in that there is yarn available for purchase here for less than $5 per ball.

We also focus our shop models on simple projects that use yarn of all price points. Several models feature ways to incorporate one splurge skein into a staple yarn.

We even offer destination areas within the store layout. The entire sales floor is grounded by a large center table, for example. Again, bucking tradition, we encourage all knitters and crocheters to sit and stay, regardless of whose yarn they are using. Our experience is, that level of hospitality encourages positive word-of-mouth exposure.

3. Customer first

Of course, it was important to communicate to all our existing and new customers that we were aware of the challenges they were facing, and that we were on their side. We trained our sales team to incorporate the question "What is the budget on this project?” in their interaction with customers.

Wording it in this manner, rather than "How much do you want to spend?” eliminates an apologetic response from the customer, and lets them see that we understand budgets are a part of everyday life, and we're prepared to meet their budgetary needs.

We also encouraged customers to bring in their stash, and worked with them to find options to turn that idle yarn into working yarn.

4. New policy

The most important change we made was in our teaching policy. Previously, we had a fee scale for all learning opportunities, from $5 for a help session to $30/hour for a lesson. We found that customers felt that we were "nickel and diming them to death.” One of the great strengths that Kirkwood Knittery has is the incredible skill and talent of all our staff, and our ability to teach and empower our customers. By allowing all stitchers in the St. Louis area to take advantage of this, we expanded our customer base and eliminated that negative image we had gained.

It was decided that we no longer would charge to help people with their knitting or crocheting, regardless of where they had purchased the yarn. Our policy is now as follows:

· We will help you with any problem you have for no fee.

· We ask that you understand that as a retail store, our time together may be interrupted as we help shopping customers.

· If you would prefer to have one-on-one assistance, with no interruptions, we will happily schedule a private lesson at $30/hour.

5. Marketing plans

Initially, we tried in-house to increase our presence through Ravelry, Facebook, e-mail, and our redesigned website. While this was effective, we soon discovered that our expertise was better utilized in working with yarn and design! We made the decision to hire a marketing consultant to coordinate our customer and community outreach efforts. Each month, we work with our consultant on updating our marketing plan—and try to schedule at least three months out.

When Groupon approached us about offering a deal, we saw this as an opportunity to expand our customer base further. Taking into consideration the experiences of other yarn shop owners with Groupon, we chose to offer a service rather than a product. By offering the Groupon for "Beginning Knit Classes” only, we ensured that the majority of purchasers would be new customers.

Our first Groupon sold 250 beginning knit classes, with a gain of $2,500 for the store. In addition, most of the students purchased yarn and needles at the store, with an average

sale of $13. At press time, we are running our second Groupon—with expected total sales of 350 students.

6. Main attractions

In the past, we had held sporadic events at Kirkwood Knittery. Our new goal was to hold at least one event per month. We also made a concerted effort to ensure that these events were not focused on sales.

To that end, we held several meet-and-greets with assorted members of the fiber community, including Kara Gott Warner, editor of Creative Knitting magazine, and Ron and Theresa Miskin with Buffalo Wool Co. These events averaged between 20 and 30 customers.

Our most successful events have been our Networking Nights. These events came about as a result of the conversations that occurred around our knitting table. We noticed that often, customers would make connections while sitting at our table, and opportunities developed. We decided to create an evening to take advantage of these connections. At Networking Night, customers are encouraged to come by, bring their own resumes, small business brochures, recommendations (handyman, babysitter, etc.) and network. We make it explicitly clear that the cash register is closed: This evening is about our customer.

During the Happy Hour portion of Networking Night, we have time to browse the literature on the table during drinks and nibbles. We then move to tables arranged throughout the store, with one staff member seated at each to facilitate conversation. Several times throughout the evening, we encourage people to switch tables in order to expand their networks. In addition, we keep the resumes, business cards and other materials in the shop for 30 days after the event. We have learned that several of our customers found employment through these events.

7. Alternative purchasing options

Last, but certainly not least, is the topic of customer cash flow. We were finding that customers could come up with an extra $20 to splurge, but not $120. This meant that they were limited to accessory projects.

We began offering a layaway program to allow our customers the opportunity to access larger projects. The terms are fairly simple:

· We will hold your yarn for up to 90 days.

· You will purchase at least one skein every 14 days.

Because our return policy allows for 90 days, this in reality had no additional negative impact on our inventory. At press time, we have gained $700 in sales because of layaway.

We also offer a gift registry, allowing customers the opportunity to request splurge items as gifts, and allowing significant others to enter the store with confidence.

Positive results

Since implementing this plan about 18 months ago, our average number of sales per month has increased by 10 percent. Our average ticket sale amount has decreased, but as our inventory costs have also decreased, our net profitability is the same.

In addition, our mailing list has increased by 100 subscribers, indicating an increase in customers who plan repeat visits.

Our enhanced reputation, visibility and networking has led to several unique editorial and advertising opportunities. Most recently, we were quoted in two issues of Yarn Market News, and were the featured inspirational yarn shop in the Early Fall 2012 Vogue Knitting. Because of this exposure, we often have out-of-town customers who were referred to us by their LYS.

Overall, the changes we made have created a welcoming, accepting environment at Kirkwood Knittery for stitchers of all skill levels and economic conditions. We frequently hear from new and returning customers how improved their shopping experience with us was. We plan to keep that momentum going in 2013.

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Tags:  Business Innovation Awards  Hart Business Research  Kirkwood  knitting  LYS  Nico  retail  The National NeedleArts Association  TNNA  yarn 

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