Retailer suffers after moving to avoid huge rent

Share

Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue.

The Toronto fabric and fashion store Peach Berserk is still running, 19 years strong – but owner Kingi Carpenter can't stop fighting rumours that it has shut down.

That's because, in May of last year, she closed its prominent retail store on Queen Street West. The shop was a landmark in the area, with its neon storefront showcasing electric-coloured dresses. But after nearly two decades, Ms. Carpenter needed a change.

She decided to forgo the nearly $10,000 in rent she paid, and all the insurance and utility costs, and moved the business into a rented home-based studio a little farther west. She still sells the same custom-made dresses and accessories in wild colours and hand-screened prints, just in an environment that's a little more personal – and cost-effective. She still has employees – three full-time and five part-time, with six fashion co-op students.

But the transition hasn't been so great for business. While she has the same disposable income as before, she has less work. Customers who pass by the former retail shop assume Peach Berserk is gone for good, and people offer her sympathy. "I guess you don't like retail," one person told her. "I heard it tanked," another said.

Today she pays about $3,000 a month in rent for her combination home and studio – and the atmosphere is a lot more relaxed. "If you're busy worrying about your rising bills, it takes away from your creativity," she says. "I get up in the morning, have a cup of coffee, work on my own terms, live a great lifestyle, spend more time with my kid and have really interesting fashion in Toronto."

There's no sign at her new home studio, but customers can find out about Peach Berserk on Google, Facebook and Twitter, and book appointments to find the custom clothing of their dreams. (About 25 per cent of her sales are conducted exclusively online.) Visitors to the studio are surrounded by dozens of paintings and dresses in every colour and pattern imaginable. She even once designed a wedding dress patterned with the husband-to-be's tattoos.

Ms. Carpenter doesn't believe she has taken a step back. To her, selling one-of-a-kind clothing lends itself to one-on-one interaction. "I've freed myself up, I love the change. But it goes against what the rest of the world thinks is success," she says.

First, Ms. Carpenter wants to demonstrate that her business is alive and well, and for customers to feel just as comfortable shopping in her home as they were in the retail location. Then she wants to prove it's viable, and boost Peach Berserk's sales to where they once were with a storefront. Sales revenue today is about 60 per cent of the $400,000 she used to ring up annually.

But she's not sure how to proceed. Better advertising online? A greater social media presence? Search engine optimization? An app that lets you design a dress, from the fit to the pattern to the style?

Ultimately, she wants to prove that a small, custom retailer can thrive without brick and mortar in 2013. "I could have something amazing if I could just crack the code," she says. "And if I can get sales numbers even close to where they used to be, I could actually not live on cat food in my retirement."

The challenge: How can a home-based, niche retail operation expand sales without a prominent storefront?

THE EXPERTS WEIGH IN

Karinna Nobbs, senior lecturer, fashion branding and retail strategy, London College of Fashion at Britain's University of the Arts London

A home-based niche brand can certainly expand sales without a permanent physical presence, but it means stepping up the PR and marketing activity. Fashion "e-tailers" generally tend to have much higher promotional budgets than brick and mortar stores, as they don't have the physical stores to remind and attract consumers to the brand.

Within this challenge, there are three key aspects that Ms. Carpenter could consider. The first is the perception that she has gone out of business. I would suggest that she create a social media campaign about how her business is moving from a retail to a "me-tail" model highlighting even more personal service, allowing them a unique insight into the creative design process in the studio and demonstrating how much added value this gives. Testimonials from customers would enhance its share-ability.

The second issue is that the business has been going for a long time. Therefore Ms. Carpenter should harness this strength and use this client database to write an inspiring newsletter/e-mail to customers, to tell them about the launch of the studio and to explain the benefits of this approach to customers. Lastly, Ms. Carpenter could also consider a PR event in the form of a pop-up store or studio event at key seasonal points in the year. This could act as a showcase for the range of products and services that Peach Berserk offers, in addition to providing an experience for customers and creating content for the Web and social media.

David Ian Gray, retail consultant and founder of DIG360 Consulting Ltd., Vancouver

It's important to examine Ms. Carpenter's goals from the perspective of an artist selling her wares, and not that of a standard entrepreneur, which is a different sort of person, driven to grow a business. By seeing the end goals from this perspective she can put together an appropriate strategy. Funding an app or bolstering her search-engine optimization can solve occasional customer problems but don't necessarily address her problems as a vendor. Instead, she needs to take a step back and deeply understand her recent customer base.

To rebuild Peach Berserk's base, she should ask a series of questions about her customers. To what degree can she migrate old customers back to her? Who will be willing to shop in a new location, a new environment? To what degree will she have to build up a new base? How long did the last base take to build? With her existing customer knowledge, Ms. Carpenter could do this faster than before, but she will run into roadblocks without becoming a savvy marketer.

To do that, she should assess her customers' traits, learn their behaviours and interests, and determine their lifetime value to the store, to figure out how to best invest in communicating to them. This would also help her design a path-to-purchase to make it more engaging and easy for people to buy her products, as defined by customer preference, and not just hers. She could do this on her own, or hire talent – a consultant, or even an enthusiastic business student – and let them help her achieve these goals.

Shereen de Rousseau, Vancouver-based jewellery designer without a proprietary storefront

The obvious first steps are a good social media presence and an outstanding website. My first step would be a blast of press releases announcing her new studio and all the advantages it will bring to clients – with an emphasis on retailing in a modern new way. This should be followed by a regular monthly press release, showcasing designs with the help of stylists.

Studio parties can be a great way to get people in and introduce them to the new space and new product. These can be for both existing and potential customers.

Another consideration might be to do a small production line for wholesale. Even if it's just accessories, it keeps the name out there. The way we buy and sell fashion is changing, and we all are trying figure out our path.

THREE THINGS THE COMPANY COULD DO NOW

Start a newsletter

With nearly 20 years of serving Toronto, Peach Berserk should reach out to its loyal fan base with a regular e-mail newsletter to keep previous customers aware of its continued existence.

Try a pop-up shop

Pop-up fashion shops are plentiful these days, and Ms. Carpenter already has a known brand at her fingertips. A pop-up would generate buzz, and perhaps media attention, to bring back customers and strong sales numbers.

Get some free help

Ms. Carpenter already has help from fashion students, but Toronto is home to three huge business schools. Somewhere at Rotman, Schulich or Rogers, there's a retail-savvy marketing MBA student looking to make his or her mark on a brand like Peach Berserk.

Facing a challenge? If your company could use expert help, please contact us at smallbusiness@globeandmail.com Join The Globe's Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT

Our free weekly small-business newsletter is now available. Every Friday a team of editors selects the top picks from our blog posts, features, multimedia and columnists, and delivers them to your inbox. If you have registered for The Globe's website, you can sign up here. Click on the Small Business Briefing checkbox and hit 'save changes.' If you need to register for the site, click here.