With all this competition in the market, independent uniform retailers have very little margin for error, so the use of a top uniform store POS system and inventory management software is critical.. In this article we look at five strategies that independent uniform retailers can pursue to survive in this competitive and fluid market.
As an independent uniform retailer, you have many different types of competitors – other local scrub stores, regional or national retail scrub store chains and mass market retailers. You also compete against uniform-centric ecommerce sites, ranging from the simple websites of local scrub stores, online-only scrubs businesses, and large retailers selling through ecommerce marketplaces such as Amazon. The lines between uniform vendors and the independent retailers that sell their products are also blurring. Today, most uniform manufacturers operate some sort of ecommerce site that sells to consumers (such as Cherokee/Allheart) while also distributing their products to independent scrubs retailers. Landau/Kindthread takes this a step further and operates its own chain of retail stores (Scrubs & Beyond). Any finally, there are uniform manufacturers that completely bypass distributing products through the traditional retail sales channel, and exclusively pursue a direct-to-consumer strategy (such as FIGS Scrubs).
#1 – Only Sell Products that Generate Sufficient Margins
Given the direct costs and overhead (rent, utilities, salaries, benefits, etc.) to operate a retail store, its critical to sell products that generate sufficient margin to cover costs and provide a return on investment. A general rule of thumb in the uniform retail market is that items should generate a gross margin of at least 50% to adequately cover the store’s costs.
You are starting at a financial disadvantage if you stock items that generate gross margins below 50%. If you are going to go through the effort to order, stock and sell items, you might as well make some money.
Subpar margins can occur from a variety of factors. First, be sure to set up a pricing formula that provide a sufficient return. Do not default to MAP or a MSRP-based pricing formula unless you take the time to analyze the gross margins that result from these price-based pricing formulas. If you use a cost-based formula, provide enough mark up to hit your targeted margins. Subpar margins can also result from having too many promotional sales or too aggressive discounting strategies.
If you find yourself constantly price matching or cutting prices to match external prices from mass market retailers selling on Amazon or their own websites using your unform store pos system, perhaps you are carrying the wrong types of items. Selling only standard scrub styles available from any major online retailer will force you to compete on price, leading to depressed margins. When deciding which items to carry, be sure to consider the impact of the item on your margins and carry only items that meet your minimum margin requirements. Your uniform store POS system should contain reports that will allow you to analyze the margins on your products.
#2 – Sell Products That Cannot be Bought Online from Mass Retailers
One challenge that all types of retailers have is how to sell effectively against the online giants. Given the ubiquity of mobile phones, it’s very easy for your customers to come to your store, browse items in person and then quickly compare your store price of an item sold to the price available online. A store customer simply types a style number or scans a barcode into a mobile shopping app, and the user can instantly see the prices of the product at various online retailers such as Amazon. A couple clicks more, and they can order the item while still in your store.
So how can independent retailers protect their margin against this type of behavior?
One way is to sell items that are not available for purchase from the mass market retailers and popular ecommerce marketplaces.
To address the concerns of independent retailers, several of the large uniform manufactures have started offering scrub styles that are not available outside of the independent retailer channel. Referred to as ‘Protected Brands’, these are generally good quality garments with style numbers and brands that are not made available by the manufacturer to mass market retailers and online businesses. The items are of the similar quality and design of the standard styles, but with minor design differences and a name/brand and style/UPC number that cannot be directly compared with styles sold through mass market retailers. Protected Brands allow independent retail stores to sell items at higher margins as they can be sold without the pressure to price match. Some of these protected brands include:
| Protected Brands | |
| Vendor | Brand/Style |
| Cherokee | |
| Barco | |
| Ava Theresa | Avante |
| Maevn | Momentum |
Another option is private brands. Like Costco’s Kirkland private brand, several large scrubs retailers (such as Scrubs & Beyond and Uniform Advantage) sell their own private brands at their stores and online. These retailers work with contract garment manufacturers to design and manufacture lines of uniforms to their exact specs. Contract manufactures generally have access to the same types of fabrics and designs as the tradition vendors, so the products are like the standard styles. In fact, some of these contract manufactures make scrubs for the traditional brands at these very same facilities.
Private brands offer many of the same advantages as the protected brands, such as unique design, high quality and differentiation. Private brand products that can be exclusive or unique to your store in your local market – and are difficult or impossible to comparison shop online. Because private brands disintermediate the traditional uniform brand/distributors, private label brands can offer lower costs and higher margins to the retailer in comparison to reselling scrubs purchased via the wholesale channel from the large uniform brands/manufacturers.
Don’t have the scale to do come up with your own designs and manage the manufacturing of your own private brands? You do have some options. Once option is to partner with a couple friends in the retail scrubs market to launch your own private brand. Another option is to join an existing buying group. Once such group is a trade group named Independent Retail Group or IRG. This is a group of about 40 or so independent scrubs retailers that have formed an association to assist and support each other. According to IRG’s website, it offers several lines of private label scrubs that were designed based on feedback from its member retailers. These scrubs are sold under the IRG brand. The IRG private label scrubs are reportedly available to the group’s members at lower costs and generate higher margins than scrubs sold to retailers by the traditional uniform manufacturers.
#3 – Merchandise Your Store to Influence Customer Behavior
Merchandizing strategy is often overlooked by retailers busy with other daily tasks. Merchandising is more than making sure that your racks are filled with items. It’s how to strategically use your store and marketing assets to maximize profits. Here are some key points to maximize return on merchandising activities:
- The floor space in your store is very valuable. Be sure to place your most profitable styles in your highest profile and highest traffic areas. It makes no economic sense placing your most unique and profitable items in the back corner of the store. Instead have them displayed right where customers walk into the store. For maximum benefit, display these higher margin items on a special table or rack with appropriate signage to attract attention.
- If you sell protected styles or private brands, be sure to promote them. Your customers will initially not be familiar with these items, so you need to proactively educate them on the advantages of these styles vs. more recognizable brands/styles. Offer incentives to get you customers hooked on these protected brands. Be sure your employees have talking points on why these protected products are superior to the highest selling mass market products.
- Do not let manufactures or their reps dictate what is sold in your store. You should decide which items to carry. Manufacturer sales reps may have priorities that are not necessarily aligned with your priorities. Sales reps may be pushing items that pay them higher commissions, or items that the manufacturer is incentivizing them to sell (such as overstocked styles, unpopular colors or discontinued items). Remember that vendors are motivated to sell you items that help their profitability, and not necessarily yours.
- Have your employees showcase the items that you want to sell the most. If your employees wear scrubs, make sure that they are modeling the styles that generate the best margins. They should not wear shabby items, low margin scrubs or worse, scrubs that you do not carry in stock. If you have a new line or protected brands that you want to showcase, order some extra items so that your employees can wear them. This will help start product discussions and lead to more sales of the items.
- Do not create perception that you are competing just on price. You can maintain better pricing leverage if your customers visit your store primarily for convenience, selection and service. Customers shopping only for price will not be loyal and will switch without remorse to another source if it saves them a few dollars. Use the reports available in your uniform POS system can help you analyze pricing and profitability trends.
#4 – Offer Value Added Services that Mass Market Retailers Cannot Offer by Using your Uniform Store POS System
Mass market and online retailers generally sell on price and not overall value. This creates an opportunity to protect your margins and develop customer loyalty by offering value added services that are difficult to sell and support through the telephone call centers of mass market retailers. For example, embroidery, alterations, and other embellishments/customizations. These value-added services are most effectively offered face-to-face where the details can be discussed, documented and supported – and are hard to offer remotely by inexperienced support reps.
Be sure to maintain detailed customer files so that reorders with embroidery and embellishments can be handled efficiently by referencing prior orders and the customer profile. Allow customers to bring in items previously purchased or bought elsewhere for repairs, alterations and embellishments. Offer delivery services on larger orders. All of these value-added services can differentiate you from larger mass market and online competitors.
#5 – Use Group Sales to Drive Recurring Revenue
For years, small businesses of all types have effectively competed against national chains by developing close relationships with fellow business owners and other local market purchase decision makers. For example, local pharmacists compete by fostering relationship with doctors at local medical facilities who recommend their patients to the local pharmacy. Independent building supply stores focus on serving the needs of local contractors and developers. These local businesses are happy paying a small price premium for superior customer support, high quality products and reliable deliver and custom services.
Think of your scrubs store in the same way. Capitalize on your local market presence by developing personal relationships with decision makers at hospitals, clinics, doctor offices and medical facilities. There are multiple ways to offer a compelling service offering: special prices to group members, value added services such as embroidery and embellishments, payment services such as payroll deductions, employee allowances and charges to employer credit accounts. These programs can be managed through your scrub store POS or uniform store POS system.
Another great way to generate business is to offer custom ecommerce sites accessible to only the group employees. These password-protected microsites can sell a curated set of items for specific medical groups, with the group manager choosing which styles and colors are made available to its employees. These microsites can also offer special pricing available only to the group’s employees. Any scrub store ecommerce site should integrate with your uniform store POS system.
About MicroBiz POS – and its Uniform Store POS System
MicroBiz is a leading POS software developer of retail management software for small businesses, including uniform store POS. The MicroBiz Uniform POS system includes many features required for uniform retailers, including uniform catalog integrations, special orders, inventory management, credit accounts and matrix products. For more information, see www.microbiz.com.