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Accessories: A Key to Unlocking Higher Profit Margins

January 13, 2020

Between the looming threat of tariffs and whispers of a possible economic slowdown, retailers certainly have a lot to worry about and plenty of pressure on their bottom lines. It’s easy, then, to lose focus of the hidden opportunities that can help improve sales.

As retailers, we tend to worry about the decreasing profit margins of our large-ticket items and develop a level of consternation on how to counter this downward trend. We turn to the usual suspects, such as special financing, protection plans and package pricing. And while all of these are great choices, we often overlook another opportunity that is right in front of us: accessories.

Accessories can offer an effective way to increase margins and help boost your bottom line, and they are an easy add-on to any purchase. The customer that is buying a living room, bedroom or dining group is going to want to make it their own. They’re going to want to showcase special touches that reflect their unique style. So why not have them buy the accessories that can help personalize that furniture group from you while they’re already in your store? Remember the old saying, “The easiest customer to sell is the one that you have already sold.”

When you offer a room package that has the rug, lamps and tabletop included, you’re not just increasing the dollar amount of the ticket. You’re also improving the overall customer shopping experience. Many consumers simply do not have the ability to think outside the box when it comes to putting their personal stamp on their home’s appearance. That’s where an extensive accessories package can come in, giving you an opportunity to project expertise and build a deeper level of trust with the customer.

Integrating accessories into the showroom should be seamless. Rug racks and pillow displays are great, but don’t limit the selection to just that. Instead, create a designated accessory area that also includes artwork, floral arrangements, pictures and seasonal gifts. Not only are you helping the customer, but by offering these kinds of options, you can also bring a breath of fresh air into your store. This, in turn, has the potential to increase the frequency of foot traffic and turn one-off customers into regular visitors. Many national chain retail stores are very successful simply because they have taken this strategy to heart.

The biggest benefit to accessories, though, is their ability to help drive a higher profit margin. With lots of higher-priced items located throughout your store and plenty of ambiguity around accessory pricing, you can mark accessories up four or five times over cost, and then run specials to give the impression of steep discounts. In fact, it’s common to see accessory promotions of 25-50% that are, actually, everyday specials. And delivery isn’t a concern when it comes to these items because the consumer is likely to take their purchase with them immediately. Aside from saving on the cost of shipping, this also eliminates issues such as damage during delivery.

One main reason why retailers tend to shy away from accessories is SKU management. Some stores are lucky enough to have designers employed at the store, but many others will have the task fall onto the sales staff or managers. This should not be a drawback. Retailers are constantly changing largeticket items on the floor and keeping their showrooms tidy. Adding accessories to this routine should be a simple task. Taking a little more time to accessorize your store and increase focus on that category now will reap tremendous benefits in the long run.

This article was first published in the December 2019 issue of The Retail Observer.

 

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