One of the first things you have to learn as an independent retailer is that sales and profits are not the same thing. If you’re selling more merchandise but not seeing an increase in your bottom line, you need to concentrate on increasing your profit margins. Luckily, there are several ways to do that.

Give ’em the shopping experience they crave

When everything about your store comes together to provide a great customer shopping experience, you’re already on your way to greater profitability. Besides providing must-have merchandise, your store should be easy, welcoming and interesting to shoppers. Customers think it’s all about them, so make it that way. Do so, and they’ll keep coming back. 

Loyal customers increase your profitability in another important way. They serve as brand advocates, sharing their wonderful experiences with friends, in-person and online. That brings in new customers you can then transform them into new loyalists.

When you offer a consistent, excellent shopping experience, you don’t have to rely on discounting to attract and retain customers. This is crucial, because “training” customers to expect (or wait for) rock-bottom pricing is a profitability-killer. You need customers who spend, willingly. 

Think personalization

Customers expect an independent retailer to know who they are. If your store is small enough to greet people by name, do it. Above all, focus on adding value for each customer. Getting to know your clientele helps you understand what is most meaningful to them.

Unless it’s your annual storewide blow-out sale, gear promotions toward specific segments of your customer base. Who are they? Create a promotion or offer exclusively for repeat or long-time customers.

Profitability boosters

Treating people well so they return is critical, but you should also:

• Encourage customers to return more often, and
• Encourage customers to buy more each time they shop 

Have you ever actually computed the lifetime value of your average customer – and your best customers? You may be shocked at how high this number is, and you’ll certainly be motivated to double efforts to build customer loyalty. Zero-in on what makes that most valuable customer tick – what they want from your store, and how they want to interact with you. That way, you can target this “persona” most effectively when you’re marketing to current and prospective shoppers. 

Develop a rewards program focused on purchases of your most profitable items, not just volume. Offer special rewards for your very best customers. 

Finally, study your sales data. Be ruthless in jettisoning items or product lines that aren’t performers. Sharpen your focus on your best merchandise and your best customers, and you’ll be a more profitable independent retailer.