As if worries about the economy weren’t enough, at Metuchen’s Forum Theatre on the morning of July 16, 2009, speaker Joseph Getz, founder of business consultants JGSC Group, made a startling announcement to a 50-member strong audience composed of local business owners and community leaders.

“We are going into a time when shopping malls were once restricted to national chains, but in the future they will have doctors’ and dentists’ offices, and barbershops,” Getz said. “Most retail mall developers are now suffering, and what retail malls want to do is to re-identify the mall as the center of the community. I am sorry about alarming you of the economy and the prospects of a bad economy, but if you want to have something to worry about, you should worry about this. We need to find a way to do things better and more efficiently in the future.”

Bringing with him 25 years of experience helping retail developers become successful, Getz had been invited to speak as part of a free workshop organized by Metuchen Savings Bank in collaboration with the Metuchen Area Chamber of Commerce. Bank Vice President Lorraine Mulligan and Chamber President David Glasofer were instrumental in organizing the workshop.

Prior to forming JGSC group in 1997, Getz held executive positions at leading advertising agencies in the Philadelphia area where he created marketing campaigns and strategic plans for shopping malls, retailers, real estate developers, and consumer products companies.

The principal theme of his presentation was that Metuchen’s Main Street business community had to work together to survive the downturn. Getz advised his audience to not consider Menlo Park Mall (wiki) or even the future District at Metuchen as competitors, instead saying that their main competitor was “the changing attitude on shopping malls and what they will look like in the future.”

“The worst of this recession may still be ahead of us,” Getz continued. “The fact is everyone is struggling. The impact of this economic depression or recession has crossed all levels of retailers. Everyone from Walmart to Saks to Tiffany and Co. to others have seen a decrease in sales. Many of these retailers have either closed stores or are no longer with us. For example, Ritz Camera and Eddie Bauer are gone.”

Ritz Camera Centers (wiki) filed for Chapter 11 bankruptcy protection in February, while clothing store chain Eddie Bauer (wiki) filed for bankruptcy in June.

“Traditionally fourth quarter represents 20 percent of annual sales,” Getz said. “But we are concerned that consumer spending for the fourth quarter will not be very good. There is no evidence that things are going to get better in the short term. At this point the only consistent performers seem to be dollar stores, but only those that are well-merchandised. Consumers are saying they want to buy goods they need but want to pay less money for them. They are not saying they want to buy junk or to throw good money at bad merchandise.”

Getz said that the key to surviving the downturn is to increase foot traffic in downtown retailers’ stores, not just to cut costs.

Getz said that retailers have five main tasks in front of them: creating their business, attracting shoppers, offering desirable merchandise, conducting sales transactions, and giving shoppers a reason to come back, such as by providing solid customer service. The remainder of his presentation was devoted to specific strategies retailers can use to master these objectives.

Increasing Foot Traffic on Metuchen’s Main Street

According to Getz, foot traffic is the lifeblood of retail. A typical shopping mall averages 3,500 shoppers a day, with the average customer visiting 3.5 to 4 shops. In a typical downtown, however, the average customer visits 1.1 shops due to far less pedestrian traffic. As such, an individual retailer cannot by themselves put foot traffic in the streets, and this is where cooperative marketing strategies come in.

• Downtown-wide clearance sales. By marketing together, shops can drive their sales and cut the costs of marketing to survive a downturn. For example, some communities routinely do sidewalk sales. Getz said that his firm, JGSC Group, takes this to another level by running town-wide clearance sales. He said that because such sales are a little more unusual, they tend to bring people to the downtown. The point of a downtown clearance inventory sale is that shop owners can sell, at a discount, merchandise that is out-dated and which is just taking up shelf space. Such a sale allows that inventory to be cleared out, infusing shop owners with cash. Getz recommended that Metuchen try borough-wide inventory sales two to three times a year where all stores participate. Inventory clearance sales work no matter what the product, though it can be difficult for service-based businesses.

• Common store hours for all Main Street businesses, similar to a shopping mall. Why is a shopping mall open 10 a.m. – 10 p.m.? Because it is in their lease, or they get fined, Getz said. He recommended Main Street businesses have common store hours so as to drive more pedestrian traffic to the strip. Common hours encourage greater foot traffic in the downtown and create a feeling of “safety in numbers” for the shoppers. For example, retailers who generally open late or close early can coordinate their hours so that they are open uniformly. Also, right now a late night for a retailer in the downtown may be 7 p.m., but commuters from the train station are often still returning from work at that time, and so store hours could be lengthened gradually. All retailers could also agree to stay open late one night a month to 9 p.m.

• Bounceback cards. Give out a card that offers $10 off the customer’s next visit. Let’s say a store’s typical customer comes in once every five weeks and spends $100 a visit. But if with a bounceback card they come back in three weeks and spend $80, the store can make more money over time. But keep the window very narrow on a bounceback card. It should be possible to turn the cards off, such as by printing an expiration date on them. And give them out when business is down. People should not come to a store because of the bounceback card; they should just come back with the bounceback card.

• Cross-promotions. Everyone has to work together and share in the wealth. Every time a customer buys something, shop owners should close the sale, give them a bounceback card or another reason to return, and then give them a reason to visit another downtown store. An effective and inexpensive strategy is to have a simple bag stuffer that will drive people to other downtown stores. Each retailer should determine their own offer, and this way, businesses can also promote and announce upcoming events. Also, a retailer that regularly sponsors local community events will start to build top of mind (brand name) awareness with the public.

• Sweepstakes promotions. Getz recommended running a promotional offer that he guaranteed would increase foot traffic to downtown stores. He suggested putting sweepstakes boxes in all participating downtown retailers, in which the grand prize is a substantial item of value (a flat panel TV, for example). Each retailer would foot a portion of the sweepstakes. Customers can enter the contest more than once, by visiting and entering at multiple stores. If a typical customer currently visits 1.1 downtown stores, the sweepstakes can drive foot traffic to four, six, or even eight stores – but it is still up to the merchant to effect the sale. These sweepstakes can be run a few times a year as long as they are not overdone. Such a promotion can also allow merchants to obtain valid customer emails by informing entrants that prize-winners will be notified by email only.

Direct Mail and Internet Strategies

• Direct mail. Keep direct mail advertising really simple. These are usually 4.25” x 6” postcards. First class bulk rate postage is 24.5 cents per postcard, so direct mail is a more expensive way of reaching people. However, a brightly colored postcard will get through what Getz referred to as the “32 step rule” – the number of steps it is from a direct mail recipient’s mailbox to their trash can.

• Capture as many email addresses as possible. The most important thing about e-marketing is capturing email addresses. Because talk is cheap and email is free, it is important to be able to talk to people that way, Getz said. The trick to email is to collect all of the email addresses possible, so as to notify members of the public of special events and opportunities. But don’t abuse it. As a rule, limit email to one communication a month. For example, a store can determine in advance its specials for August and then send them out the last week of July. Email too often and a business runs the risk of the customer opting out of the mailing list.

Other General Strategies

• Business Improvement District (BID). There is currently no BID in Metuchen. In a BID, the merchants agree to pay an additional tax to fund improvements to the business district area. Getz recommended looking at the viability and feasibility of a BID or some vehicle that can fund activities in the Metuchen downtown. He said that he has been finding that businesses are more open to the idea if the town promises that dollars are being spent for the kinds of marketing programs discussed here. Getz said that a BID should not be looked at as just another tax – the question is not the cost but the value. If it is set up correctly, everyone can benefit, he said.

• Product bundling. A great way to increase sales revenues is to bundle products, if it is possible. For example, Nintendo does a great job of this, Getz said, by bundling up the Wii sports package. If a customer buys what is in the bundle individually, they would only end up buying half of the items that are in the package. But Wii is cheaper as part of a bundle than if the console were purchased by itself, and so there is more perceived value in the package, even if many of the bundled items remain unused in the box after purchase. Other types of merchandise where product bundling can occur include a clothing retailer which bundles up shirts with a particular type of slacks, and a coffee shop that gives its coffee away for free if a customer buys dessert. (The dessert may cost four dollars while the coffee is mainly water).

• Maintain solid customer service. Review the level and quality of customer service provided in each store. Getz said that 70 percent of shoppers will not return to a store if they have had a bad customer experience, and 50 percent will not come if a friend has had a bad experience. Women are even more aware of this than men, so in a business that deals primarily with women, customer service matters even more. If a customer does have a bad experience, reach out to them to win them back.

• Keep store shelves fully stocked. Empty shelves indicate a store is not buying the same level of inventory it used to in the past. Even if a store is cutting costs to increase profit, a store should still appear full with the shelves fully-stocked. Empty shelves and displays send the wrong message.

If Your Business is Doing Poorly

• Rent relief. It is not a pretty conversation or a pretty situation, but from a property owner’s perspective, 50 percent of something is always better than 100 percent of nothing. Rent relief does not mean no rent. It means ‘I will allow you to cut your rent in half’… It is again one of those sensitive topics that people want to avoid until it is too late.

• Store succession planning. But if a business is just not going to make it and the business-owner is at the point where rent relief is not going to help, then develop a plan on how the business dies. Getz said that the thought of shutting down has crossed the minds of most downtown businesses in the last few months. Succession planning means thinking about the value that is present in the company. With a store that has been in business for 40 years, there may be a whole generation of people who know to come to only that store – and when the economy is better they will continue to do that. A store that has been in business for many years may also have employees who want to take over the business. It is always cheaper and easier to find some way for a business to succeed going forward than to have a new person come in and buy the store and change it to something new. So reach out to the local Chamber of Commerce, other business people, and the local community to find out what kinds of succession opportunities are available.