Can't do doorbusters or sweeping discounts? Brooklyn Industries's Lexy Funk explains small-retail's tricks for profiting big this shopping season.
This year's Black Friday and Cyber Monday shopping weekend was a significant boost for U.S. retailers, raking in around $53 billion nationwide. That's a number that far surpassed most projections. But while big box stores head into the rest of the holiday shopping season armed with slashed prices and seemingly endless inventories, small retailers have what can be a daunting task of trying to compete.
"It's a game we have to play—but we play by different rules," says Lexy Funk, CEO and co-founder of Brooklyn Industries, a clothing retailer that boasts 14 stores in cities including New York, Portland, and Chicago. "If we discounted 70 percent off of everything for the whole month of December, like a big chain would, we'd be out of business."
After 11 years running a small-but-growing retail business, Funk has learned how to maximize holiday transactions, which make up about 23 percent of Brooklyn Industries's annual sales figures. Here, she shares some lessons from the front lines.
Tune in to your best customers. Not every customer wants what the mass market offers. Instead, focus on personality, personalization, or one-of-a-kind items. Funk says this year Brooklyn Industries is offering a line of handmade leather bags. "While we charge more for this item; it is unique to us. It's what our customer comes to us for," she says. Her team chose to promote these bags as holiday gift items, and, so far, the bags are bestsellers. "People are willing to pay more for something that is special to them and can be special to someone else," she adds.
Promote "light" doorbusters. While her stores can't afford to give massive discounts, Funk says this Black Friday, Brooklyn Industries found it profitable to use what's called a "light" promotion. "We did 25 percent off before noon," she says. "And we debated that for weeks, asking whether our customer would even want this. But we took the risk and it worked. We did see the best Black Friday sales we've ever had."
Prepare, prepare, prepare. For Funk, preparing for the holidays begins in July. She says that's due to how much time her team needs to gage inventory. Several years ago, she says she also realized another holiday hurdle: operations. "For example, a typical store that does $7,000 of business in a day, might do $30,000 on a Black Friday," she says. "Managing a store during that kind of surge is insane. Do you have gift boxes? Enough [of the] sweaters that you promoted? Do you have enough people operating the registers? It's the little things you don't think of that now we try to think of in advance."
Consolidate your holiday campaign. This year, Funk says Brooklyn Industries let the design team take over photographing and staging merchandise for the catalogs, promotions, and the website—as well as designing the window displays. "Our set creators made these wonderful recycled polar bears that were used in the shoots," she says. "Once that was done, those same props went to the stores to be featured in the windows. It really saved us time, money, and made our message stand out across the board."
Forget about January...for now. Funk says she's learned to avoid focusing too much on preparing for January sales during the holiday shopping weeks. "Basically, I learned it's better to keep your people focused on the holiday until its over. We get quite a rush of last-minute shoppers. You can't have staff trying to prepare for something else and serve the current rush," she adds.
Hold a post mortem. Lastly, Funk advises other small retailers to have a quick meeting with your team after the holidays to discuss what worked and what didn't. "Even for the best planners, there will always be something that comes up you weren't ready for—like bad weather or transit strikes," she says. "The only way to move forward is to learn from them, and add them to your notes for next year."
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