Local First Arizona organization is a real winner

This local organization should be duplicated in every state and province. As i get the email updates from this organization, I am always amazed at what they are doing in their communities. Take a look at this page from their site and see what a great promotion they have going:

Local First Arizona Promotion

The governor of Arizona has endorsed it. Notice that there is a ‘golden ticket’ to give participants an extra enticement to shop with participating businesses, and I very much like the idea of asking local dignitaries to tell you of their favorite places to do business.

Lehigh Valley’s ‘Think Independent’ campaign

While we don’t have a sample to include in the blog to show you, I would suggest that you click on the first link below to see a very create local promotion. This type of print promotion would work well in conjunction with a community utilizing the National Independent Retailers Week event that we created. National Independent Retailers Week is held in July of each year.

Here is a link to their page of sample posters:

Samples of Lehigh Valley’s Think Independent Posters

Here is a link to the front page of their website:

Sustainable Business Network of Lehigh Valley, PA

Tom Shay’s Comments on the Boston area businesses purchasing their energy together

This concept of a group of small businesses to pool together to purchase their energy needs could work in many communities. To start it, a Main Street program, Chamber of Commerce, merchants association, or small business development council could perform as the central point of coordination.

Plan to let businesses pool energy purchases - The Boston Globe

Plan to let businesses pool energy purchases
By John C. Drake
Globe Staff / June 27, 2008

Small businesses in Boston, which have seen their profits eroded by escalating energy costs, could save between 20 percent and 40 percent through a plan city officials proposed yesterday to pool natural gas and electricity purchases.

At least 200 small businesses would have to sign up for the energy pool before the city could start the process of buying energy in bulk at a reduced cost, said Evelyn Friedman, director of the Department of Neighborhood Development.

“Energy costs are rising at the same time many other costs are rising for small businesses,” said Friedman. “We’re just the city, but we want to do whatever we can to support small businesses in our community.”

The Massachusetts Health and Educational Facilities Authority has a similar energy-buying program that helps nonprofits obtain low-cost fuel, but an energy efficiency advocate said she is not aware of a municipality taking on the task.

“For a large city, it’s a good idea,” said Susan Coakley, executive director of Northeast Energy Efficiency Partnerships, a nonprofit public policy organization in Lexington. “There’s little we can do to control energy prices. At least we can help them buy and lock in rates through longer-term contracts. It will at least reduce the risk, so they’ll know what their cost is over time.”

It is the second time in three years that Mayor Thomas M. Menino has proposed harnessing the city’s buying power to reduce energy costs. In 2005, Menino proposed establishing a citywide electricity co-op to reduce energy costs for residents. After several months of study, city officials determined the idea was not practical because a co-op would be costly to run and would not significantly reduce costs for individual residents.

Friedman said the small-business energy pool is based on a program she used to reduce energy costs at rental properties when she was executive director of Nuestra Comunidad, a Roxbury community development agency. Most large businesses already pay reduced energy costs through bulk purchasing, but smaller businesses do not have the same leverage, city officials and advocates said.

Small businesses who sign up for the program would still pay their gas and electricity bills to National Grid and NStar, whose charges for the delivery of energy would remain unchanged. But the amount the businesses pay for the energy itself would be lower, because the partnership would negotiate lower prices directly through the market, using a broker, according to the Department of Neighborhood Development.

The city would not pay anything on an ongoing basis to run the energy-buying program. Instead, the city plans to enlist an energy broker who would collect fees from businesses for negotiating lower prices.

Assuming the city signs up 200 businesses, the program should be up and running within two months, Friedman said.

The city floated the idea to a group of restaurant owners last month, who are among the small businesses that use the most energy, and determined there was enough interest to launch the plan, Friedman said.

John C. Drake can be reached at jdrake@globe.com.
© Copyright 2008 Globe Newspaper Company.

Tom Shay’s thoughts on the Sharper Image bankruptcy

As you read this article, notice two things: It is no surprise that Sharper Image has this problem. I don’t think they have had a “sharper” item in several years. At their store in Fashion Square in Las Vegas, the statue of Superman has been in the window display for years - how boring.

Read further and see how Brookstone is capitalizing on this. And as Brookstone redeems the gift cards to gain customers, they can resell them on the secondary market if Sharper Image pulls it out of the bankruptcy. If Sharper Image doesn’t pull it out, then Brookstone has one less direct competitor.

NEW YORK (AP) — You know that Sharper Image gift card you
got for Christmas? Right now, it’s worthless. And other gift cards in
your wallet could lose their value, too.

A customer-service representative said shoppers would eventually be able to use Sharper Image gift cards.

As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year.

“If I knew this was going to happen, I would have used them right away,” said Jon Tapper, a public relations executive from Boston who received two Sharper Image cards as business gifts just a few weeks ago. Their total face value is $50.

“I love gift cards, but now this makes me think twice.”

The Sharper Image announced late last month that it was suspending the acceptance of gift cards, at least temporarily. It urged shoppers to check the company Web site later this month for an update. That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.

For many shoppers, it’s a harsh lesson about the risks of gift cards. Consumers spent an estimated $26.3 billion in gift cards at retailers alone last holiday season, compared with $24.8 billion in 2006 and $18.48 billion in 2005, according to the National Retail Federation.

C. Britt Beemer, chairman of America’s Research Group, says “you will see a lot of frustration among customers. You basically stole (money) out of the customers’ pocket. They will never forgive you.”

The number of retail bankruptcies or liquidations this year is expected to reach the highest levels since the 1991 recession.

Brian Riley, senior analyst at The Tower Group, estimates that shoppers could lose more than $75 million just from stores and restaurant closings in 2008.

Tower Group’s figure doesn’t include mom-and-pop services like the local nail salon. Riley said such small operations, which are most vulnerable to economic downturns, pose the
biggest risks to gift card holders.

The gift-card problem provides more ammunition to consumer-advocacy groups that have lashed out against expiration dates and burdensome fees imposed if cards are
not used within a certain time frame. More than 20 states have passed regulations loosening restrictions on the use of gift cards.

“Consumers need to buy gift cards with their eyes wide open,” said Jack Gillis, a spokesman for the Consumer Federation of America.

Bankrupt businesses also face the risk that card holders left in the cold could defect to other stores just when struggling merchants need their customers the most.

Even if bankrupt retailers want to honor the gift cards, they may not be able to, according to Howard Kleinberg, director of the bankruptcy practice at Meyer, Suozzi, English & Klein.

Either they can’t afford it or their creditors’ committee or the bankruptcy court may not allow it. Gift cards amount to debt, and therefore holders are not necessarily going
to get paid, Kleinberg said.

Sharper Image officials did not immediately return phone calls but a customer-service representative told a reporter that shoppers would eventually be able to use the gift
cards. She declined to say when.

Gift card holders fall in the class of unsecured creditors, which is “low in the pecking order,” Kleinberg said. Those at the top of the list are secured creditors — with debts backed by assets such as real estate or accounts receivable.

Of course, if a company is purchased through a Chapter 11 bankruptcy process, the new buyer could honor gift cards.

That appears to be the case with Fortunoff, the jewelry and home furnishings chain that agreed last month to sell to an affiliate of NRDC Equity Partners LLC, which owns Lord & Taylor department stores and plans to expand the Fortunoff chain. A Fortunoff spokeswoman said the company is honoring gift cards.

Riley, of The Tower Group, estimated that the retailer did about $32 million in business last year from gift cards.

Sharper Image’s rival, Merrimack, New Hampshire-based Brookstone Inc.,
is capitalizing on the situation. It announced last week that it would
exchange Sharper Image gift cards for 25 percent off any purchase.

“We thought it would be a great way of acquiring new customers,” said Brookstone spokesman Robert Padgett. “We are here for the long haul, and thought it would be good to let them know.”

Ricki Gard, a manager of the Saks Fifth Avenue’s Premier salon in New York, said it
has been able to attract new clients from high-end spa Georgette Klinger, which abruptly closed its locations around the country a week before Christmas, leaving gift card holders in a lurch.

The Saks salon, leased to an outside company, has been offering 30 percent
discounts on first-time services for Georgette Klinger gift card holders, though that was little comfort to many who had thousands of dollars stored on their prepaid cards.

Carol Ann Razza, a Long Beach, New York, resident and Georgette Klinger customer for 18 years, lost several hundred dollars when the salon closed its doors.

“You really feel like you were robbed,” said Razza, who had a prepaid credit stored on the spa’s computer.

Experts say shoppers should never assume that if a retailer files for bankruptcy but remains in business, that their gift cards will be redeemable. Sharper Image, for example, plans to close 90 of its 184 stores soon after selling their inventory.

On the other hand, aggressive store closings can give some consumers the impression that
the company is gone for good, and their gift cards are worthless.

Lonnie Miller thought her $50 gift card from KB Toys Inc. wasn’t valid. The Wayne, New Jersey, resident thought the toy retailer went out of business after watching a few stores in her area shut down. Upon learning that KB toys is in still business, she said she will use her card online.

As for her $25 Fortunoff card — a gift from her aunt — she went out Friday to spend it immediately.

“With the uncertainty today, I didn’t want my aunt’s gift to be only a card,” Miller said.

Copyright 2008 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

response to Julya

Julya is correct in her comment. So we are making changes to the “if I lower my prices” calculator so that it will answer the question from two standpoints. The first will be making the comparison of the two retail prices and determining how many you have to sell to make the same gross sales dollars. The second calculation will compare the gross profit dollars resulting from the two prices and how many you have to sell at the lower price to create the same gross profit dollars.

Thanks to Julya for her help in making our website better!

question from a reader of the e-retailer

We received this question recently:

In the Internet tip of the month section, you ask the question how many more will I need to sell to make the same gross profit if I lower the price.  Unfortunately, your calculator tells me only how many I need to sell to make the same sales dollar not the same profit. 

I used the following information for my calculation. Twenty items at $16 each with a cost of $4.   This gives me a gross profit of $240.  If I lower the price to $10, I would need to sell 40 of the item to make the same gross profit.  The calculator tells me that I would need to sell 32 to make the same sales dollar amount.  Of course, this is correct.  It just doesn’t match what the article says unless I’m doing something wrong.

Have an amazing day!

Julya Myers
The Amazing Art Studio, Inc

Getting the gift cards out

We will probably talk about this in the monthly e-retailer but for those that read the conversations, here is a head start. If you sold gift cards or gift certificates during the holiday season, now is the time you want to invite customers to redeem them. Logic would state otherwise; you have the customer’s money and the merchandise while the customer has this piece of plastic or paper.  What could be better?

Actually, you do want customers to redeem them as it will make your financial statement look better.  When done properly, you do not have a ’sale’ until the card or certificate is redeemed. What you have is a ‘deferred liability’ - you are holding onto someone else’s money until they decide to use it. I know this sounds weird, but this is how it is done in accounting.

Vendor issues

A vendor’s sales representative can be one of your most valuable assets. Better yet, they are not on the payroll. The best merchants I have known are those that have learned to team up with the sales representatives to improve their business.

“Can I help you?” sales techniques

A salesperson that is knowledgeable and utilizes great sales skills is a joy to be around. And, they also increase your sales a lot. This category is where we will discuss techniques of improving our sales skills. I thought you would enjoy this photo of your friendly Wal-Mart manager. Notice the signs over his shoulders.

Merchandising ideas

Do you like manufacturer’s displays? How have you placed merchandise in your business to increase sales? What ideas can you share with others to help them better merchandise their business? And, do you have any questions about how to increase sales by changing the way you display merchandise? (Hope your store doesn’t look like this one)