TK's MORNING BUZZ: If Your Store Is Failing, the Reason Is In Your Mirror30 Jan, 2001 By: Thomas K. Arnold
One of the best packages of advice comes from Tom Hannah of Video Quest in Joliet, Ill., a regular reader/critic and one of the few indies I know of whose business is consistently up.
With his permission, I'm reprinting some of the tips he sent me this morning, in the hopes that it may help other retail readers of T.K.'s Morning Buzz:
1. UNDERCUT BLOCKBUSTER/HOLLYWOOD STORE PRICES. When I was in the gas station business I was amazed that people would drive down the street to save a penny. The chain store down the street probably has a better location and more copies. They also have higher overhead. If you have set your store up right (keeping expenses down) you should have no problem renting videos cheaper.
2. GO WHERE THEY AIN'T. Stock things the big chains don't...shock tapes like Banned in America. If you do adult, bring in more new releases and sell off those dust collectors.
3. ADVERTISE. Every day you lose customers. Some move, some go to another store, some lose interest in renting videos and some even die. You better have a plan to attract new customers or your business will die too. At my store I reinvest 5% of gross revenues in advertising. The most cost-efficient advertising for small video stores to reach new customers is coupons on the back of register tapes at the grocery stores down the street.
4. GET OUT OF DEBT. If you want to survive you must keep overhead low. If you are paying interest on loans you are working for the banker's house and not yours. Being capital-strong pays huge returns. I buy adult tapes in lots of 1,000 units or more. I am able to sell tapes to my customers at the same price the guy down the street pays wholesale.
5. KEEP THE CUSTOMERS YOU HAVE. How many stores make the customer pay his entire late fee before he can rent another tape? If you do there is a good chance you will never see him or that late fee. I allow customers to pay part of their late fees and continue renting.
6. GET THE CUSTOMERS BLOCKBUSTER SENDS YOU. The Blockbuster up the street requires a major credit card to rent; all we require is a driver's license. Do we have more videos stolen? No doubt. But we also makes thousands every month on the customers Blockbuster has sent us. Ask yourself how much are used tapes really worth?
7. INVEST IN TECHNOLOGY. If you use a computer to rent tapes you must use a bar code scanner. They reduce errors and payroll. If you don't use a computer why not just shut your doors now.
8. DVD. DVD is the future, so get aggressive. This is another example of how being capital-strong puts you in a position to succeed.
9. LOOK FOR HIDDEN REVENUE SOURCES. We put a Pepsi cooler in our store. It makes us enough money to pay our electric bill.
10. TRY NEW THINGS. Don't be afraid to try new things. If you try 10 new things and just one works out you are better off than not doing anything.
Most time the things that don't work out as well as planned still work well enough to pay the expenses of trying them. Whenever I'm in another town I go into other video stores to see if they have any good ideas I can steal. Don't steal ideas from the guy down the street...they probably won't work as well, plus he has a head start on you. You can also get good idea from retailers that are not in the video business.
The biggest threats to most stores are internal. It's easy to blame the studios or the big chains. If your store is failing most likely the reason is in your mirror.
Comments? Contact TK directly at:TKArnold@aol.com