Planning for Success
How To Operate a Niche Retail Business
By Steven Pollack
Mar 13, 2006, 09:43

The narrow Niche Versus the Generalist

The small retailer who sells merchandise has two main business models to choose from.  One is to be a generalist who carries a little bit of everything in the store’s merchandise category.  When I had my small jewelry store I used this philosophy.  I carried a small selection of diamond hoop earrings, huggy hoop earrings, and gold earrings.  I also carried a similar small selection of engagement rings; some with round centers, some with princess cuts; some in platinum and some in gold; some solitaires and some with side stones. 

As you can probably imagine the combinations of these attributes were endless and it seemed that even with $100,000 in inventory I never had a big selection of any particular item compared to larger competitors.  I was still able to compete with the big guys, not by having a superior inventory, but by offering superior service as a custom goldsmith.  What I lacked in inventory I made up for in the ability to craft a new piece to the customer’s needs based on my inventory.

My current business is the importation of bathroom fixtures from China and selling on my website, my eBay store, and to contractors via print marketing. In this business I take the opposite approach to the generalist. 

Instead of trying to be everything to everybody I only carry 3-8 styles of each of several categories: vanities, faucets, vessels, mirrors, and shelves.

Let your customers choose your inventory

Each time I order from the vendor I drop one or two items that were slow sellers and pick up a new item or two based on what I perceive are the common denominators of what sold well. Then I dump the losers.

Don’t give your customers too many choices

I don’t subscribe to the need for category killer inventory, at least in my area. Too many choices confuse customers. I think it is easier for the majority to pick an item from 3 choices than from 100.

Of course people don’t expect as much variety from bathroom fixtures than from jewelry. Selling jewelry is like selling art, people expect to find one unique gem that fits their personality perfectly. But the way you present the item can help this. Instead of photographing the items and presenting them in a vacuum, try buying lifestyle pictures from istockphoto.com and create an ad style presentation. Then instead of forcing the customer to know what they like and pick it out from among 100 choices, you can become more suggestive that they should like this particular one.

Proactive selling versus lazy selling

When I had the jewelry store I sold this one pair of huggy hoop earrings 10 to 1 over all others because I named them the Wendy hoops. When they asked why they were the Wendy hoops I told them that out of every pair I liked these best and gave a pair to my wife Wendy. If it was good enough for the jeweler’s wife it was good enough for them. They were nice but they probably would not have outsold the others without this spiel. That is the power of suggestion.