Profitability from Innovative Retailing
Chuck's in Buckhead, Atlanta, GA
By Carolyn Allen
Word of mouth is a powerful force--especially among birders. We all know that. In Atlanta, friends are referred to Chuck's in Buckhead to find the best selection of high-end birding optics. But when birders walk into Chuck's they are shocked that they are standing in a gun store!
The high end look and feel of the store and the low key approach by the sales staff quickly put them at ease. And when they see the optics case loaded with not just one or two -- but ALL brands of high end binoculars they've been drooling over -- their comfort level quickly returns.
"Our secret is that we sell nothing that I'm not comfortable with myself," explains Jack Lesher, owner of Chuck's Firearms -- or "Chuck's in Buckhead" as it is called in the Yellow Pages. "That way there are no apologies; the customer is happy; and we gain a long term customer. And birders don't realize that upland game hunters are some of the strongest conservationists and naturalists -- they love to observe the flora and fauna, too.
"We carry select models by Leica (and it's Minox division), Swarovski, Zeiss, Canon and Kowa. Birders are glad to see all these major brands in one location, and they appreciate the extra service approach we take. Many times they will bring in clippings or computer printouts with technical details of the models they want to see. Our approach is to say, 'We only carry the best quality--it doesn't matter which one of the optics you choose from our case -- we know you're getting the best quality in the world. The only choice is which one feels best in your hands.' We put it in their hands, suggest they go outside and get the feel of it. We don't compete with customers on knowledge. You can't argue with a well-informed consumer ---- they prove you wrong by not buying it!"
Chuck's policy is to accept exchanges the next day of any product that is purchased. And customer service goes beyond that. Because product quality is the highest, there are very few returns -- satisfaction is high, and repeat business is high. "If a customer should have a mechanical problem, we tell them to come to us -- we handle all the details of getting it fixed.
"We believe the hands on experience and customer service drives word of mouth referrals -- and repeat business, so we choose intelligent employees, train them well in customer service, and stand behind our customers. And that works for us," he explained simply.
The reasoning behind a high-end approach to product selections has several sides to it:
- Competition for high end products is low. Most retailers seek the lowest common denominator in sales: cheap and volume.
- We've found that it takes the same amount of time to sell a $100 product with a 20% margin as it takes to sell a $1000 product with the same margin. And I like the difference between $20 and $200 in profit margin!
- Higher end products have fewer returns, and more customer satisfaction -- so more word of mouth referrals and less time spent on problem solving.
- Less volume means fewer customers -- and that means less competition. And in the end, more return on our actual investment of money and time.
- Providing the best quality selection means it doesn't matter which product a customer chooses -- they win and we win no matter WHAT they buy.
- We feel relaxed and comfortable with our customers because we know we offer an absolute guarantee of quality.
- We deal only with companies that offer firm MAP (Manufacturer's Advertised Price) pricing guides. This is the best deal for our customers and for us. No price wars and no cutting corners.
The best way to sell quality is to put it in the customers' hands.
"Make the product accessible to the purchaser," he encourages. "Discount stores don't have much selection. They don't have customer support. They don't let the purchaser lift and test and compare the products to see which is best for them. We do. We find that a hands-on situation is very important when the buying choice involves more than a thousand dollars. And that's our advantage. We don't do a lot of fancy display merchandising -- our strength is quality and selection. We treat all the models the same so that the customer's personal preferences are emphasized.
We lose some sales to the Internet discounters, but my hope is that the government will wipe out some of the mail order and Internet advantage when they fix the sales tax discrepency (up to 7% in some places). We also think that many people value the hands-on approach, the ability to compare so many quality products in one place, and our people -- who make it easy and comfortable to work with.
"Most birders are in the middle or upper income brackets and they don't have a problem paying $500-1,000 on their passion," Jack observes.
How do we sell? "We have fifteen or more products from the very best manufacturers in the display case at one time. It doesn't matter which model they buy -- these are the best optics in the world. So we lay one on the counter and invite them to walk around with it to see which one feels most comfortable for them.
"Some suppliers limit the number of retailers in a geographical territory -- usually high-end manufacturers. There seems to be stiff competition these days, so I think this could be a good time to get into the high-end optics market -- especially if you don't have a lot of high-end competition in your area. One company has a new rebate program, indicating that the market is flattening." Jack observes.
"Some companies stand pretty firm on their MAP pricing, and I appreciate that. It means that discounters can't undercut the small retailer. Most offer a standard discount of 20-24% with additional high volume discounts of an extra 6%, and some offer a year-end rebate of up to 5%.
He sums up his take on the profit potential of this niche, "those extra discounts add up if you have a volume of $30,000 or more a year!"
Published in Birding Business magazine, the leading trade magazine for the backyard naure products niche. Carolyn Allen was the founding editor for this successful trade magazine.