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Business Best Practices: ‘Third Place’ concept reaps rewards

Posted By Administration, Thursday, February 28, 2013
By Steven Berg, StevenBe

Note: Steven Berg, owner of StevenBe, Minneapolis, was a finalist in the 2012 TNNA Needlearts Business Innovation Awards program. The program is a joint project of TNNA and Hart Business Research.

"Third Place” refers to where people spend their time — home being the first and work being the second. When we opened StevenBe three years ago, we realized the importance of creating a "Third Place” for our clients. This would cause them to spend more time in our shop and see it as a rallying point for fiber arts, creative community, and social events. What follows are the components of this initiative that have, in combination, made StevenBe a destination not only in Minneapolis, but on the national stage:

• Fiber Luncheon Lounges/Urban Knitters: Our schedule was modified to accommodate the addition of two weekly luncheon events. These luncheons are held every third Thursday and every Sunday in our shop and serve as a major outlet to engage our clients and the community. Seating is reserved in our "inner circle” of knitting space for those in attendance. Guests receive a catered lunch — thus promoting a local, featured restaurant — during the three-hour event. It provides a captive audience of knit and crochet enthusiasts ready to hear about our newest yarns and hottest projects. Attendees are encouraged to "show and tell” what they are working on or finished projects. The creative collaboration can be infectious: It is not uncommon to see multiple clients leaving a luncheon lounge with a new project inspired by what they have seen and heard about during the event.

• National and International Instructors: StevenBe has quickly become the go-to place for nationally recognized classes. We are booking week-long events that are jam packed with acclaimed teachers, book signings, and knit and crochet celebrities. Bringing these recognized instructors to our local arena brings a massive influx of new business, materials purchases, and residual benefits to our shop. Our focus on big weeklong events is best represented in our upcoming Fourth Annual Fantastic Fiber Fest. In 2012, we created a diverse offering of classes that coincided with and supplemented the YarnOver event held by the Minnesota Knitters Guild, giving local and visiting participants even more choices for acclaimed instruction and exposure to our store. Multiple classes were offered for public registration from each of these teachers, along with parties, door prize drawings, and package pricing complete with a swag bag filled with yarn and notions donated by our long list of vendors far and wide.

Trunk Shows: Our trunk shows are often complimented by a Luncheon Lounge or or gourmet evening delights to capture attention and promote the StevenBe experience. We have set the goal of adding at least two local trunk shows to our schedule every month. These serve multiple purposes — not the least of which are exposure for the visiting artist and attracting new business to our location. Company trunk shows involving new knit and crochet samples from our celebrated list of vendors are constantly rotated and highlighted in the shop every month. Trunk shows are advertised via email, Facebook, Twitter, our blog, and homepages to drive traffic into the shop and inspire new project purchases. Our "Third Place” strategy takes these a step further by creating "mini-events” around each trunk show, resulting in customers spending more time with the product — and more time with us.

Samples: Having swatches of yarn is not enough. With our initiative, we aren't just selling yarn; we are selling an experience and projects. Samples are crucial to this strategy. A visit to StevenBe has become a "dress-up party” for most. We are now recognized as the premier shop for customers wanting to find the perfect project thanks to our extensive sample collection. We encourage our guests to try on everything in the store, and consult on the perfect combination of yarn to recreate their favorites for themselves. We determine seasonally the best-selling projects and yarns, and innovate with our sample knitters and staff to quickly produce samples that our customers can experience. It's no mystery that when it's "made up,” you "sell out”; with our "Third Place” strategy, this goes a step further — giving visitors multiple options and inspiration, driving return visits and purchases.

Merchandising for Sales: StevenBe is stocked with more than 1,900 different yarns and a full assortment of fiber for spinners and felters. Our unique space filled with color can be a bit overwhelming for some. As part of our strategy, we use this to our advantage. There is no question when entering StevenBe that it is a creative space. We planned our capital improvements over the last year to organize our vast assortment, but maintained the feel or a treasure hunt or exploration. We revamped the shop to highlight new merchandise within the "inner circle,” or the store. This is the social center of the shop, and places our Luncheon Lounge attendees and casual visitors directly around our new and featured products. A vintage 1950s bar was added to our store for yarn tastings, as well as StevenBe exclusives. It currently hosts a boutique-style feature of the newest knitting bags. We also created a corner room for close-out yarns that we call the Value Vault. Our stage area was reworked to create a fiber gallery of sorts, catering to our spinning, weaving and felting clientele. All movement in the store is planned and relates directly to our "Third Place” strategy. Customers recognize the ever-changing freshness of the store, and most visit weekly to see what's new.

Exclusive Products: Offering exclusive products that can only be purchased at StevenBe drives traffic and additional sales to our store. Leveraging our relationships with indie dyers, local artists and vendors, we added many exclusive products to our inventory in the past year to establish our strategy of becoming the must-visit destination. Having yarns and accessories only available at our location creates a "buzz” with visitors and an urgency to purchase "while supplies last.”

Extended Hours: "After-work” hours were added to give potential customers access to our space and classes on a schedule that works for them. Shop hours continue to be modified and flexible to meet demand. As the "Third Place,” it is important to be available when our customers need us.

Community Outreach: Becoming a "Third Place” choice for our community was also important to our strategy. We have partnered with the neighborhood, local organizations, and businesses to be that creative hub not just for those already involved with knit or crochet, but for anyone who shares an interest in the arts. As mentioned previously, we work with restaurants in a 10-block radius of our store to provide catering for our Fiber Luncheons. This has produced an influx of referrals for all parties, and our clientele has put more than $13,000 into the tills of local restaurant owners since we began. In addition, businesses in our corridor have used StevenBe as a meeting place and rallying point for many of the projects occurring in the community. We are recognized as an oasis in a changing neighborhood, and an anchor for those who live and work here. Local business partnerships have extended our strategy to involve more of those that would not usually visit a LYS.

The StevenBe Creative Community Foundation: As a growing hub of charitable and community activity, is was decided that a non-profit arm should be created to handle the many programs being supported through our retail business. Working hand in hand with our local partners and our retail business, StevenBe is now an epicenter for charity knitting groups, yarn and needle donations, and educational programs. Our newest project, enthusiastically called the "Fiber Sprawl,” has dominated our Spring 2013 calendar.

POS System Upgrade: Merging our inventory and customer files with the flagship store, Yarn Garage, was no easy task — but it’s now an invaluable tool on a daily basis. New products and pricing are immediately available from time of check-in to us and our customers. Customer records allow us to track orders, and analyze buying history to reach out when new product arrives. Ultimately, we plan to utilize this program and its data to market better to individual groups of customers, providing a concierge-like experience in the store and via email.

HD Large Screen TV: As customers spend more time in the store for classes and events, visual presentations are key to holding their attention. An extra large-screen TV was installed on the shop floor. This allows visiting instructors and presenters a tool to share their vision. We have used this new addition for everything from product videos and fashion slide shows to group video chats with designers across the globe. Continuing our "Third Place” strategy, we have been known to host a matinee or the occasional sports game as well. Visitors feel at home in this fiber "living room” scenario, resulting in longer visits and larger purchases.

Online Registration: Booking all of these new events was a start; now we had to handle the processing of registrations and payments for the influx of new students and attendees. Working with our webmaster and current email marketing host, we set the goal of all recurring and special events being available for online registration. This allowed us to reach and capture customers outside of the store. Online registration, coupled with email marketing, created an urgency to sign up for special events and classes. Giving customers 24/7 accesses to our offerings and the ability to register from home has put them in control of planning their time at StevenBe — and given us a way to customize their in-store experience.

Online Marketing Strategies: We carefully chose two Groupon offers:One advertised $30 worth of product for $15, and the other for a three-session series of knitting classes for $60. The offers reached more than 5,000 new customers — and more than 1,700 units were purchased in the three-day period. This risky endeavor brought us business in slow spring periods as the weather became nicer and the days were getting longer — overall, a great success.

Impact on Business

Measuring the impact of this multi-tiered initiative is not an easy task. All of the metrics and opinions involved continue to shape our strategies.

• More than 45% of our annual sales volume is consistently generated by the sales during events. These large multi-day events "buffer” the slower traffic and sales days, and provide the working capital to add needed inventory, book talent, and improve our infrastructure.

• The addition of events boosted us to a net sales increase more than double of the previous year. Even with additional costs associated with our initiative, profitability was achieved on a rolling annual basis.

• 10% of our annual rolling sales volume is residual from in-house events where students or attendees are purchasing a follow-up project from a class, remaining trunk show features, or exclusive offerings.

• Average spend per customer on an average retail day is $48; average spend per customer during an event increases to over $80.

• An average customer visits our store three times per month, compared with once per month a year ago

• Walk-in, referral and new customer visits accounted for 40% of our traffic in the last 6 months, with an average transaction increase of 5 per day.

• Our website saw an increase of 20,000 visitors in the last 6 months, with a majority registering for classes and events, and becoming in-store visitors.

• Our client database grew by more than 900 in the last six months, with more than 90% opting in to receive email marketing and announcements from us.

• Our email marketing now reaches more than 6,000 interested parties.

• Our diverse database includes customers from all 50 states, and extends to more than nine international locations.

Because of this initiative, I’ve personally been able to become more involved in industry shows around the country. We’ve also been able to make building improvements, such as a new backlit building sign, knitters' patio, and landscaping to enhance our draw to drive-by and walking traffic; as well as fixture updates to handle inventory and technology upgrades to enhance our customer experience and compete more directly with online retailers. We’ve also added staff to support our growing customer base and provide more educational options.

The word "staycation” has become a staple of modern life. Working with this trend, our focus on being a hub of fiber arts and an event center, our strategy has created the "knitcation” for many a group. Travelers make a day at StevenBe part of their vacation plans, whether they are attending a luncheon, workshop, or shopping for something they've never seen before. As our "Third Place” experience gains attention, we continue to capitalize on the trend of people visiting from near and far, wanting to experience something creative and different.

Tags:  Berg  business  Hart Business Research  India Woods  knitting  marketing needlearts  merchandising  Minneapolis  retail  StevenBe  The National NeedleArts Association  TNNA  winner 

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