Surviving a Sales Slump

Take a multipronged approach to prevent slowdowns from hurting your retail business

One problem that most retail small businesses experience over the course of their lifetime is a drop in sales volume. In some instances, it's something you can control, such as a lack of consumer interest. In other cases, larger economic issues, such as a recession, are to blame for the slowdown. 

Regardless of the underlying cause, taking a proactive approach can go a long way toward combating a sales slump.

Streamline and focus sales processes
A dip in sales provides a good excuse to revamp your sales strategy. Use the opportunity to fine tune — or overhaul — the way your sales process works. Collaborate with your sales team to develop a targeted sales effort. More importantly, identify existing bottlenecks that inhibit sales performance, whether it's product offerings or the shopper's experience, and find solutions to eliminate them. 

On a more tactical level, it's important to get your sales team to change their approach to selling. Salespeople may need to focus more on upselling, for instance. Upselling attempts to get customers to buy related products or services for a product they purchase. Persuading a customer that those leather boots they're buying will need water-repellent polish is an example of upselling. A paint store will want to make sure their salespeople ask whether a customer has all the brushes and tape and tarps needed for the project.

Concentrate on customers
Treating customers well is one way to dig out of a trough. Make sure your salespeople focus on building relationships with customers to create repeat buyers. It's always cheaper than trying to acquire new ones.

Pay attention to loyal buyers with a simple rewards program such as discounts on their birthdays, or a cash reward for each new customer they send your way. A $5 or $10 gift card to a coffee shop is a gesture that will pay dividends. Demonstrating that you value their business can create a loyal following.

You should also make sure you connect with your clientele regularly. Put new and regular customers on an e-mail list and keep them informed of upcoming sales promotions and events. Free samples and other promotional programs can help forge a relationship.

If you have an online retail operation, promote it to let customers know they can reach you without having to come to your store. 

Developing trust with customers and responding to their needs and demands has the added bonus of expanding your base through word-of-mouth marketing. Along with attentive customer service, it can help create a pleasurable shopping experience, which customers will appreciate.

Take inventory seriously
It may seem obvious, but managing your costs can go a long way toward helping you outlast a sales slump. One way to do that is by monitoring inventory.

According to a white paper produced by consulting firm Grant Thornton regarding retail strategies, improving inventory management can help cash flow, increase profitability and prevent stock outs. Although perfecting the management of inventory can be tricky, even minor improvements can keep you abreast of customer demand and minimize the losses that come with having to discount unpopular merchandise. By refining your product offerings, you can make it easier for customers to shop. Sometimes, too many choices can be a hindrance. 

Along with better inventory management, financial management is essential for staying profitable during a sales slump. Make sure you're tracking every dollar and that you're regularly reassessing your pricing strategy. Aim for competitive prices that don't compromise profit or scare away customers. 

Market yourself
Contrary to conventional thinking, it's essential to advertise more, not less, during a sales slump. The trick is to use cheaper channels more effectively for greater visibility. If you can't afford newspaper or magazine ads, look into newsletter marketing, or less conventional approaches such as hosting special events at your retail space.

Finally, it's important to grab every opportunity to generate buzz about your business. Whenever anything noteworthy happens — such as a local community event — get involved and extract any publicity you can from it.

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