Small Retailers are Strategizing After a Tough Holiday Season

A disappointing holiday shopping season has small and independent retailers thinking about how to get customers interested in shopping in 2016.

After holiday sales fell 25 percent compared to a year earlier at Standout Style Boutique, a women's clothing store in Chicago, owner Tamika Maria Price is making plans for a brighter year.

To double her Facebook advertising to establish more of an emotional connection with shoppers. She's also planning events like networking sessions and style and makeup lessons at the store that she hopes will turn attendees into long-term customers.

Price felt she needed to do more than simply slash prices because she more than doubled her discounts on some items during the holiday season, more than she expected. That contributed to her drop in revenue.

"That tears a whole in your bottom line when you're already reasonably priced," she says.

January is the time for retailers to evaluate every aspect of their business and start making changes to improve sales, says Bob Phibbs, CEO of The Retail Doctor, a consulting company based in Coxsackie, New York. The type of merchandise they sell, the appearance of their stores, their marketing programs and staff training should all be re-examined, he says.

Strategizing is particularly important after a tough holiday season. Sales fell short of expectations across the retail industry; the National Retail Federation estimated sales rose 3 percent to about $626 billion, below the trade group's 3.7 percent forecast. Unusually warm weather cut into demand for merchandise like sweaters and coats, but revenue was also hurt by stores' need to discount to compete with other retailers.

A slow holiday season can be particularly difficult for small and independent retailers who don't have the sales volume and financial resources to compete with the huge discounts offered by big national chains. Small retailers' profit margins tend to be thinner than the big players, giving them less wiggle room on discounts.

Business has been especially disappointing for retailers in parts of the country where the economy is weaker. The plunging price of oil has led to the layoffs of thousands of energy workers in states like Texas and North Dakota. Retailer Cynthia Sutton-Stolle felt the impact during the holidays, when customers shopped more conservatively at her home decor and gift shop, The Silver Barn, in Columbus, Texas.

"They will still come in and buy, but maybe not as often or buy a smaller piece," Sutton-Stolle says. She estimates her fourth-quarter revenue was down 10 percent from a year earlier.

To boost her sales this year, Sutton-Stolle plans to focus more on the gift side of her business, which has been more lucrative than home decor. She also plans to create an online store.

"It will give us a chance to not be so regionally connected and be a bit more national in scope," she says.

Some retailers figured out their strategy during the season when sales weren't as strong as expected. Although Rod Brown had events like bourbon tastings in his men's clothing store, The Shirt Box, he had to do much more reaching-out as the season progressed to get shoppers to come in.

After mailing a discount coupon to customers, Brown and his four staffers called hundreds of people to remind them to take advantage of the promotion for $25 off a $100 purchase. Many did come in, and The Shirt Box's sales for the season ultimately turned out as Brown expected.

"This was not a year of setting records, but maintaining where we were," says Brown, whose store is located in Farmington Hills, Michigan, outside of Detroit.

Customers appreciated the personal contact with Brown and his staff, who know their best customers' tastes and sizes. So he plans to continue staying in close contact with them this year.

"We've learned that it's the least costly and most effective way to be in touch with customers," Brown says.