316 | The State of Independent Retail with Jen Palacio & Katie Wilson [Part 1]

Over the last few months, I’ve had a lot of private conversations with store owners about the state of independent retail. They’ve confided in me about a wide range of challenges that they are facing - individually as well as collectively.

Things like the economy, less foot traffic in their stores, staffing, and cash flow limitations - have forced them to rethink how they are running their businesses and also planning for the future.

Here at Proof to Product, we focus on teaching you how to sell wholesale and independent retailers make up the majority of our alumni community’s wholesale revenue. This is why it is important that we not only build strong relationships with these shop owners but that we also take time to listen to the challenges that they are facing.

Having these conversations and actively listening to the pain points that shop owners are having does three things:

It enables us to support our customers better
It informs our decisions around sales & marketing strategies for wholesale.
It enables us to understand the state of the industry and how the challenges that shop owners are facing will impact the businesses of product manufacturers who sell to independent retail.

Today’s episode is sponsored by our Unlock Buyer Secrets Interview series. To make a strong first impression with wholesale buyers, we need to do a few things really well…

We need to make it easy for stores to purchase from us
We need to have clear pricing and terms & conditions
We need to clearly communicate and add value at each touch point
We need to focus on building strong relationships with our customers.

And all of this becomes infinitely easier when we actively listen to our customers. This on-demand interview series will give you a competitive edge by providing an exclusive window into what buyers want and need from you. And, the best part, its only $27 bucks.

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The State of Retail is Unpredictable

Independent retail is a vibrant and diverse industry that faces unique challenges and uncertainties. The TLDR of this episode is that the state of retail is unpredictable right now. But, when are things not unpredictable?!?!

Over the next two episodes of Proof to Product, we’re taking you behind the scenes into a candid conversation with two shop owners who are giving us an inside look at the state of independent retail and the challenges that many shopkeepers are currently experiencing.

Our guests for the two-part podcast series are Katie Wilson of Crush & Touch and Jen Palacio of Tiny Turns Paperie. Katie owns an art supply store in Southern California and Jen owns a stationery & gifts shop in Massachusetts.

In today’s episode, we’re talking about their summer 2023 sales season, how they are preparing for the Q4 holiday season, how the current economic climate is affecting their businesses and what’s on the minds of shopkeepers right now.

External Factors Facing the State of Retail

One common theme both Jen & Katie are seeing is the impact of the current economic climate on independent retail. As of the timing of this interview, we have exited the COVID-19 pandemic in the past 12 months. But now we are in a nationwide recession that is causing both businesses and consumers to make changes in their spending habits.

Other uncertainties, like election years, also affect how consumers buy products. This is a domino effect facing the independent retailers and the manufacturers who are making those products.

Independent retailers find it stressful when they cannot rely on their expected balance, leading to constant reevaluation of their financial strategies.

text overlay: "If the holidays are like the summer this year, then that's really scary!' Jen Palacio"

Jen talked about how this year, specifically, the northeast, has seen a lot of rain. Almost every weekend, one or both days have had rain. This significantly affects the foot traffic coming in and out of her store. While locations with high traffic are advantageous, fluctuations in foot traffic can impact sales.

Katie Wilson talked about the writer's strike and now the actor’s strike in Los Angeles also affecting the buying patterns of her customers. The strikes in LA have affected many retailers, stripping away economic protections they typically benefit from.

These types of unforeseen events force retailers to reassess their initial plans constantly.

Ironically, even something as small as some zodiac signs performing better than others makes it difficult for independent retailers to know how much to buy.

Social Media’s Impact on the State of Retail

Katie and Jen reflect on the importance of social media, particularly Instagram, in their businesses. As with all things, social media can be both a blessing and a curse.

They mention that while Instagram drives a significant amount of traffic to their shops, it doesn't always result in high sales.

The purpose of a brick-and-mortar store is to come into a place with carefully selected items curated for the customer they are targeting. One item seen in a window display might bring a customer in but the customer can find other similar products.

When customers are served up an image of a product on social media, the inventory of that one specific item can deplete quickly. This makes inventory management hard to manage.

You can’t always rely on social media to sell your products. While Instagram might cause exposure to increase, once that product is sold out, customers are not as quick to find another item, leading to a loss in sales and stockists left scratching their heads trying to figure out what will sell out fast & what they need to stock more of.

text overlay: "The problem with retail is that December pays for much of the year. If it is good, you can give your employees raises & keep it well staffed. It's a lot harder to do that if you aren't making enough money.' Katie Wilson"

Building Strong Relationships with Customers and Manufacturers

One thing most independent retailers have in common is the value of building strong relationships with both customers coming into the store and the manufacturers they are buying from.

Shopkeepers are listening in to the conversations going on in their stores and taking those conversations into consideration when buying products to shelve.

For example, both Katie & Jen shared how they notice customers are more interested in buying one of a higher quality product than a bunch of lesser quality items.

text overlay: "If customers have a choice of items at similar price points, they'll buy the thing that seems like it'll last longer. It feels like they're still willing to spend if they think it's a decent value.' Jen Palacio"

They also mentioned a lot of buyer indecision when customers are in the store trying to decide what to purchase.

This is why Katie works hard to ensure that there are art products for students, for mid-level artists, and then a bespoke level of each item in her art store.

They also want to ensure they have quality relationships with the businesses they buy from.

Both Jen & Katie feel a connection with the creators they buy from, as they also had a product line before venturing into retail. They both know what it is like to create a product, pitch it to buyers, and have it stocked in stores.

However, the relationships built between manufacturers and retailers are a two-way street. Both parties must be working to communicate with each other and listen to the needs that each is expressing.

We talk more about communication between vendors and shop owners in episode 317.

Key Takeaways on the State of Retail

Jen & Katie shared many helpful insights about what independent retailers are facing right now. There are three that I want to make sure you leave with.

1. Creating Products for Different Types of Customers

We often discuss the importance of niching down your product on the Proof to Product podcast. Your business is not for everyone; you need to find your lane and stick to it.

However, Katie Wilson shared some insightful wisdom about having products at varying levels for each customer’s budget.

She mentioned how she carries products at different price points, catering to customers with various budgets. Recognizing that not everyone can afford expensive items, she aims to provide options that meet the needs of all customers.

As a manufacturer, you must create products that a retailer can buy at various price points.

text overlay: "My strategy is to try and make sure we have a basic student grade version of something, a middle-of-the-road, great solid option of something, and then a more bespoke high-end version of that something.' Katie Wilson"

2. Listen to Independent Retailers

Understanding the challenges faced by independent retailers is crucial in supporting their businesses.

Building strong relationships with store owners and listening to their concerns help provide insights into the state of the industry.

By having conversations with shop owners, you can better support them, make informed decisions about sales and marketing strategies, and plan for the future

3. Get Products to Your Buyers Quickly

Inventory management is key to success in independent retail. However, Katie Wilson expressed frustration with delays in receiving products from manufacturers.

She talked about how some orders placed at shows in February did not arrive till May. When thinking about holiday products, it is crucial that you, as a manufacturer, are getting your products to the retailers ASAP.

The State of Independent Retail

The state of independent retail is complex and with challenges and uncertainties.

Understanding the impact of the current economic climate, predicting and managing demand, and adapting to these external factors are crucial for independent retailers' success.

As the manufacturer, you need to prioritize having open conversations with store owners and industry professionals so you can better support their customers, make informed decisions, and help shape the future of independent retail.

Stay tuned for part two of this podcast series, where we delve deeper into the importance of communication between vendors and shop owners, ZIP code protection, and how retailers are using Faire.

Quick Links

Here is a quick recap of links to other helpful blogs and podcasts shared in this post.

If you have ever wanted to pick my brain, or get my eyes and ears on your business, Proof to Product LABS is the place to do it.

We have monthly group coaching calls and a wide range of On Demand training specifically for product-based business owners. We open up the doors a few times a year so be sure to sign up to learn more!

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MEET JEN & KATIE

Jen Palacio: Jen Palacio is a printmaker, designer and brick & mortar stationery shop owner. She owns Tiny Turns Paperie in Somerville, MA and has a letterpress studio in Charlestown, MA. In addition to the shop and studio, she teaches courses in the Sustainability Program at the Harvard Extension School and Strategy for Creative Business at Massachusetts College of Art.

Katie Wilson: Katie Wilson is an illustrator and shopkeeper living in Los Angeles, California. Her stationery line The Good Twin was founded in 2014, and is known for colorful hand-drawn illustrations and type. In 2018, Katie merged her love of art and cute stuff and opened Crush and Touch Art Supply with her partner Scotte. Katie is always on the hunt for the next great color palette and is usually accompanied by her pug, Stevie.

CONNECT WITH JEN & KATIE

JEN PALACIO: WEBSITE: Tiny Turns Paperie | INSTAGRAM: @tinyturnspaperie

KATIE WILSON: WEBSITE: Crush and Touch Art Supply | INSTAGRAM: @thegoodtwinco | INSTAGRAM: @crushandtouch

Connect with Katie Hunt

Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.

Website: prooftoproduct.com | Instagram: @prooftoproduct