Ep 2 - Extra Revenue from Retail

The retail arm of a Children’s Activity Business can be the Revenue Stream with the highest profit margins if done correctly!

In today’s Podcast you will learn about the 5 key pillars of a successful and profitable retail arm:

• Design
• Supply Lines
• Ordering
• Marketing
• Selling

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Show Transcription: 

Hello and welcome, thank you so much for joining me today. I am so excited to have a few minutes of your time to be able to talk about something that I am so excited about. I get really, really excited talking about the retail side of our businesses.

Now, if you're a children's activity business owner, you know the retail arm of your business should be a significant part of your income. It's a significant part of ours, and hopefully, if it's not already for you, maybe some tips and tricks that you'll learn throughout this podcast might motivate you to make sure that this is becoming a big revenue stream for you inside your business. Now, whether you have a compulsory uniform or not, it doesn't matter. It doesn't stop how much you can grow this retail arm of your business. So really, really be thinking about, you know, it is such a significant part of our revenue, it's something you need to be putting time

into focus into and a lot of energy into. And it can't just be an afterthought. It has to be a really big part of your business plan, excuse me, your business plan, but also a part of your branding as well.

So we have a captive audience with our students and families and you know, parents are busy. They are so, so busy. There's 4000 things that they have to do for their children running around to different activities, different after school, you know, commitments, everything that they've got to organize, for school, for all of their activities.

And they want a one stop shop and they're willing to pay a premium for it, you know, whatever we can do to make our clients journey easier and more accessible. They are really happy and willing to pay for that.

You know, it makes me so sad when I say business owners in our space, sending their students elsewhere to get their uniforms, their shoes, whatever they need, you know, to participate in their activities because that's something that you should be keeping for yourself, that your students and it should be your revenue.

So we've really got to make sure that we think about how we can make the purchase of the uniforms or any other retail, you know, items that they might be purchasing as frictionless as possible for our clients. And we're going to talk about that a little bit more later.

You know, at our dance studio, I wanted to kind of give you a bit of a brief overview of some of the things that we have and that we keep in stock for our clients. And as I said, I love this a little bit, a little bit too much.

My staff tend to laugh at me because we have so much stuff and I get so excited coming up with new ideas and bringing new things in. So for us, we have in our dance studio, we have branded preschool tattoos.

We have dolls that are our mascot for our preschoolers. We have, you know, tights, shorts, lots of different versions of shorts. We have singlets, we have t shirts, we have crop tops. We have a whole range of clothing, really.

We have unitards, we have different ballet skirts. We have a whole huge range of it. We keep all dance shoes in stock or pretty close to old shoes. We have hoodies, we have jackets, we have stockings, we have bows, we have scrunchies.

That's all I can think of off the top of my head for everyday items that we keep in stock. But we also do special drops and limited edition items as well in our business, things like water bottles. We've had commemorative T-shirts, you know, to commemorate special events.

We had our 20th year in business, so we did special commemorative T-shirts for that. We have custom Cheer Shoes that have our cheer logo on it as well. You know, custom makeup bags, portable chargers, slides, key rings, backpacks, sports bags, glitter bags.

The list goes on and on and on, and there's so many ideas that you can get. And you know, it'd be interesting to know what it looks like for you in your gym, in your gymnastics school, in your swim school.

It doesn't matter. There's so many ideas of merch that they can use not only inside your classes, but wearing to and from or just showing that they support your club, your team, your business. So one thing I really want to make sure that everybody remembers is that retail stores at an absolute minimum of 100% markup on all of their goods. Yes, 100%. That's a huge mark up. And it is important that you need to do that because there's so many things that go into purchasing retail items. You know, you have the time researching them. You have the ordering.

You have the credit card fees. You have the mistakes that are made. You have the freight. You have, you know, keeping items in stock, you know, and sometimes having to get rid of items that don't sell and taking on that risk.

You know, your staff's time packing, unpacking orders and selling those items as a huge range of things that go into that. So make sure that you are making 100% markup on your items as well. And if you're not able to do that at the moment, perhaps it's because your suppliers are too expensive and we're going to talk about that a little bit as well as we go on. So I really believe there are five key parts to having a successful retail in your business. 

So the first really important thing is the design, the design of the merchandise. It's so important that you are always up to date and on trend. Our parents and our students, especially if you work with teenagers, but even if not because most parents also care about what they're wearing and what their child is wearing as well.

So really making sure that you're always doing your research and you're not just, you know, doing with whatever you can get your hands on, and that's something that I see in a lot of businesses. You know, it's super easy just to get a, you know, 80’s style jack up jacket, excuse me, an 80’s style jacket with your logo on the back. But you know what? Your kids don't want to wear that. So really, making sure that you are constantly researching what's in fashion, whether that's in fashion from, you know, big gym wear kind of companies, but also what's in fashion for the kids as well and taking cues from the big retailers to say what new items they constantly have coming out. You know, I'm constantly looking at the Lorna Jane website, the Lululemon website, the Bloch website, you know, the Adidas website style trade, all of those kind of sportswear websites just to say what new things they have coming up and also checking on their Instagrams to make sure you sort of say what items they're sort of suggesting might be coming up in the new season as well. So really, making sure that you take the time and the energy to be looking into that and working out what the new fashions are, always we try to update our range every three to four years.

We try to do a full overhaul of it because I think any longer than that and everything is completely out of date. On top of that, we add most seasons and new special, you know, one off or limited edition item.

You know, the end of last year we had crop T-shirts in because that was a big fashion that was going on. You know, we're looking at bringing orders in for next winter because I'm already planning that or, you know, our version of Oodies..

And just having those items that are sort of on trend that are limited edition item. You know, it's super important, of course, in your design that you have a wide variety of options that's going to suit different shapes and sizes of your students, as well as different values that some parents might have.

We know that some parents don't like their children wearing too skimpy clothing, so make sure you're accommodating to both ends of that spectrum as well. And you know it's something you can do. You can design this yourself if you're super creative and you know exactly what you want.

You can design it yourself, or you can also have it designed by a designer. You know, there's great sites like Upwork that we've used in the past where you can find designers to commission you, that you can have works commissioned by and they can fully draw your items, give you all the specs for it as well.

That incorporates your logo, your design ideas, your style. You know, we found someone on Upwork previously that had done a lot of work for Lululemon, and they helped us design our new uniforms, which was so amazing to be able to have that the person that knows how to work with the fabrics, as well as what works for everyone's body shape as well. So that's a really great way to sort of, you know, dip your toe in the water if you're not really confident on designing things yourself. Awesome. So I think the next thing, once you've got the design right is really working on your supply lines.

This is the tough one. You know, there's two different versions or two different options you can have here. And one's onshore meaning you have it made in Australia. If you're an Australian like me or offshore, which is typically in a country like China, you know, there's pros and cons of both.

Of course, like with anything so onshore, you know, it's definitely less risky. You know, you can usually have much smaller minimum orders, which might be great if you've only got a limited cash flow. Quite often, they're going to help you with the design, and they're great if you're just starting out.

But, you know, there are some cons as well. They're definitely more expensive for you, which means that you make less profit and quite often, which is just absolutely blows my mind. They have a lot longer lead times as well, which is really hard.

If you need something quickly or you've left you ordering a little bit too late for the new season, which we're all guilty of doing. Sometimes, let's be honest, if you're having them produced offshore, there is the ability for way, way, way more profit because obviously you're going direct to the manufacturer because usually the onshore versions, you're just paying a a broker to then have it manufactured offshore. You have design freedom offshore, which sometimes, you know, in the Australian based companies, for example, you know, they'll only let you order from a a small range and you can just personalize or customize small parts of it.

But if you're going offshore, you know the sky's the limit. You can do whatever you like. You know, for our current uniform range, I wanted a purple leopard print because we know that leopard prints very on trend. And you know, that's so hard to find.

So what I did was, you know, I really worked hard on the fabric. I had the fabric printed myself overseas. I found a design of the fabric, you know, a picture of the design that I had made from someone on Upwork.

I then sent that to the fabric company. They printed the lycra. For me, that's then incorporated with black lycra into our designs as well. So, you know, there's just absolute freedom of choice if you're going overseas and once you build a good relationship with the supplier, they're your bestie for life.

You know, they if you're working quite closely with an overseas supplier, they will look after you, especially even if they move companies. Usually you stay with that one person and they'll look after you no matter where they go.

But you know what? It takes a much bigger investment of time. Dealing with overseas suppliers is is hard. There's obviously often a language barrier. And, you know, there's quite a lot of toing and froing to get your designs right as well as your orders, right?

And of course, there's a little bit more of a risk involved when he's setting up a supply line. But you know what? If it was easy, everyone would do it. And you know, it's not. It does require, excuse me, a little bit more time and effort, but it's worthwhile because the profit you can make is so much larger. I went on a great ordering. No, not ordering, sorry, like a buying trip to China a few years ago. Obviously, it was a big investment in money to go over there, but meeting the suppliers one to one and making some great contacts.

I didn't use all the people that I met. Most definitely. But it's definitely helped me along the way. You know, have those relationships which has allowed me to use these factories and then get their friends and get other people that they may know and be able to build this side of my business by having those contacts.

So if it's something you know that might be in your budget or might be something that you can work on, you know, you don't have to go over there, but you do have to spend some money on samples for sure.

And, you know, try a few different companies out and you've got to be willing to risk that as well. I might do a whole nother episode on sourcing on Alibaba because that's such a huge part of it. And it's a great way to make connection Is jumping on Alibaba. Finding suppliers? But also, I think it's important to know what to look for and what not to look for what should be alarm bells for you when you're trying to find a great new supplier?

But definitely jumping on Alibaba. If it's something you haven't done before and, you know, putting the feelers out and trying to find some supplier say who is easy to communicate with, who's easy to work with and then investing, you know, a couple of hundred a couple, a couple of thousand, perhaps dollars into getting some samples from a few different companies to see what you're happy with and which company works the best for you? I think it's so, so valuable. Awesome. So once we have our supply lines organized, there's a lot of work in that. Don't get me wrong, you know, it's something that's going to take time.

But once you've got it organized, it is so, so amazing and hopefully something that you can stick with for a long period of time, ten years, 20 years and keep using these same suppliers over and over again. Now then we move into the ordering, you know, the ordering.

It's hard because you have to spend money to make money. There's no way around it. You know, it can be hard carrying stock. But I think it's important to always carry the stock because quite often the parents and the students, they want to buy it now.

They don't want to place an order that they're not going to receive for ten weeks, twelve weeks. They want to be able to walk out of your business that very second wearing their brand new T-shirt, putting on their brand new shoes, putting their scrunchie in their hair, that very second, if they've got to order it for eight weeks time. You know what, they probably over by then. And they're not going to bother, I guess. And it takes a while, but you get into the rhythm of it and you start to learn when you need to start ordering and preparing and how much stock is the right amount of stock for your business to carry based on how many students you have and how often they're purchasing new items. So usually, you know you've got to work six months in advance. six months, you know, you're thinking about winter stock orders right in the middle of summer and you know, that can be hard.

But for me, my little tip is I set calendar reminders because otherwise sometimes I just completely forget. So, you know, we're looking at bringing Woodies in, you know, those big, huge comfy blanket hoodie. I don't know things that all the kids are obsessed with at the moment.

We're looking at bringing those in, and obviously I don't want that stock until next winter. I'm recording this now in August in Australia, so we're just finishing up our winter now. So, you know, I've done a little bit of research on what I'm going to get in a few different companies, but I've sent a reminder in my calendar for November to start working on that and get those samples ready so that I can have them ready in my shop by end of May. And I just find those reminders. They're key because otherwise I would completely forget to order.

So really think about that and making sure you're always thinking in advance of what you need to order for the next season and you're not making notes along the way. I think that's a big thing. Knowing what you ordered, always how much of it sold, checking through your reports, making sure you know how much is sold, how much is still sitting on hand at all times. Excuse me, but also knowing the breakdown of your students and their ages, their sizes. Perhaps if you know that because you know, there's no point ordering a whole heap of adult sizes if most of your students are under the age of nine.

So really, making sure that you're that you're researching what you're ordering and keeping track of it so that you can next time be better at it and have a better understanding of what you need to order for your business and how much stock you need to keep on hand.

So the next thing I want to talk about is marketing your merchandise. Even though you do have that captive client base, it's still super important that you're marketing to them and, you know, creating that FOMO that, you know, I need to have it now mentality around the items that you're bringing into your retail side.

You know, again, it's important that you take ideas and cues from big retailers, trendy Instagram stores and look at how they launch their products. And, you know, really thinking about how you can do that exactly the same in your business.

You know, with a new item, it's super important that you have a big hyped up product launch, you want to be, you know, teasing the items that are coming, you know, for quite a while before they come, you know, having really great professional pictures taken of them, not just the dodgy one on the mannequin or not just the one in the factory. Even worse, oh my gosh, please don't use a photo of an item that's in a factory with crap all around. It is a terrible, terrible way to get people excited about your products that you've got coming.

So making sure you use professional pics or even illustrations, we've had that before where we've not been able to get really good pictures of things because it was being sent from China. I hadn't had a copy of the I hadn't received sorry, I had a version of it that I could even take photos on a student or a child or a model. And the photos they were sending me from China, oh my gosh, they were horrendous. So, you know, we had illustrations made like really trendy, great, you know, fashion illustrations done. And that worked really well because that was something that I could release in the lead up to it.

And, you know, people could get excited about making sure you're teasing them all on socials and having a launch date and time. You know that these items are going to go live on your website or they're going to be available in your business from this date, making it super exciting and, you know, creating that fear of missing out so, so important in that businesses making sure you have a set up of a launch email sequence with what's coming and how they can get their hands on a countdown timer, you know, teasing photos, all of those things so, so important.

It's also great to have, you know, influencers within your business, whether they are students, perhaps or perhaps you know you use your staff as them. one of the best launchers we ever had for a uniform was actually during a lockdown.

You know, COVID life, we've been having way too many lockdowns. And what I actually did was I had on my staff to a fashion parade. In it, it was a bit tongue in cheek. They were being silly, but the kids loved it and they then see their role models, their teachers wearing these items around our studio.

And that works really, really well. So think about how you could have influences either have the items on before they're released to the public or as they release whichever one. And you know, students are great or teachers, just depending on what works for you.

Now, when we come to the final step, which is selling those products in our business, we need it to be quick and easy. We need to always, always, always in our business, reduce friction and make it as easy as possible for our clients.

Having stock on hand helps. As I've mentioned before, no one wants to wait eight weeks for anything. It just annoys clients. It annoys me if I have to wait eight weeks. Usually when you decide you want something, you want it right there and then.

So really trying to always have stock on hand, it also builds that FOMO. We have a huge amount of students that, you know, perhaps already have uniform, but they come in one day and their T-shirt was dirty. So they buy another one or they buy a different uniform piece because they want something to wear that very day. And if you didn't have it on stock in stock, you know that would be a real issue. Making sure your retail space is always looking on point is so, so important. Make sure that you're investing the money into having a really nice shopfront in your business.

Nice shelving or hanging systems. You can buy some great things from sites like shop for shops. There's a heap of websites you know that you can jump on and purchase and purchase proper, good quality retail items. You know, things like really good coat hangers, mannequins that look great, not just old, crappy ones, beautiful.

You know, if you decide to go for like a slap wall system or shelving or whatever it is or a peg wall system. They're all great items that you can use in a very small space. You know, we've got a huge, huge studio and we're lucky that we have a big reception.

However, being able to have that nice small space and it's all tight with a slack wall makes it really, really great way to sort of have everything on display if you want to have a look at. What our retail space looks like definitely should DM me on Instagram @raisethebarr and I will drop you a picture so you can sort of see what it looks like. Even places like Kmart have amazing items that you can use great baskets with chalkboard IDs. You know, they're like peg boards. 

They have those little. What are they called?

You know, the little boards with the letters, the letter boards that you could put prices on things or, you know, the new items coming up or special offers. All of those things are great to make it look really, really lovely and a nice, cheap price. Got a love Kmart for those things, you know, and making sure that not only are good in purse and store, but you have a really great online set up for your store as well.

There are some great options, Big Cartel or Shopify. They're really easy, easy, easy to use websites where you just drag and drop and, you know, drag and drop pictures put the prices in so, so easy to use and set up, and they look great as well.

But make sure once again that you're using great pictures with great lighting as well. You know, it doesn't always have to be a professional photo. I totally get that. We can't always have professional photos taken, but look at what you can do, you know, perhaps it's jumping on to Canva for and removing the background of an item, making sure that you have the best lighting possible. Making sure that the item is looking as great as it possibly can on the model as well is so, so important. And then lastly, making sure that the items are packaged really well that you're just like, if you want to go to a a beautiful boutique, you'd expect the items to come in a nice bag. You would expect, you know, it's part of the whole experience. And if you're charging a premium price for these products, the clients need to have a premium experience from everything, from the photos to the displays and to the presentation of the items and how they walk away with them.

So whether that's branded, you know, reusable bags, which is what we use at our business or just nice paper bags, you know, if you're sending them in the post, putting a nice little thank you card with it for purchasing the items.

All of those things help make the experience of buying the products in your business so much more valuable to the client, and it gives them that premium experience that we all want. Awesome. So hopefully I've given you some ideas of, you know, what you can do to really grow that retail side of your business.

I would love to see so many more businesses in our space have. That is such a big revenue stream because it's exciting. It's easy. And who doesn't love seeing their students walking around with their logos on the back?

That's something we didn't touch on. Not only is it great for your, you know, back pocket, but also it is great as a branding thing. Having students walk around with your items is so, so valuable because all the other, you know, people in the street when they go to Woolies afterwards, when they go to the cafe across

the road, they're seeing your business logo everywhere. And that can be invaluable. Hopefully, you've gotten some great ideas on the retail side of your business. I would love to hear from you if you have any questions whatsoever. As I said, drop me a message on Instagram.

My Instagram is @raisethebarr and I hope to see you next time on the podcast.