Small Business Thrives During Economic Downturn With Innovative Marketing Efforts

Minority-Owned Kirkwood Knittery honored for success at merging utility with marketing creativity

Marketing Efforts, MO (prHWY.com) July 30, 2012 - (ST LOUIS, MISSOURI) - The current state of the economy is proving increasingly challenging for small businesses across the country. Kirkwood Knittery, in St. Louis, Missouri, has bucked the trend of many specialty shops facing a downturn and turned the negatives of the economy on its head. By thinking-out-of-the-box and modifying everything from the store's product line to its product layout, Kirkwood Knittery, co-owned by Brooke Nico and Robyn Schrager, is making gains when other small business are shutting their doors.
Recently awarded the 2012 Business Innovation Award from The National Needlearts Association (TNNA), Kirkwood Knittery's success is a case study of how creative marketing and innovative management decisions responsive to economic realities and customers' changing needs can build loyalty, as well as sales--even in a recession.
Since it's opening in ____, Kirkwood Knittery's brand as a high-end, fashion-forward boutique knit shop had been carefully and successfully cultivated. Unfortunately, as the economy took an unprecedented dive in 2009-2010, that same successful brand became a handicap. A high percentage of loyal customers faced discretionary budget adjustments as their portfolios' net worth plummeted. Many customers faced the challenges of unanticipated early retirement. Job loss and lower disposable income hit the average 40+ Kirkwood Knittery customer hard.

"Robyn and I didn't want to abandon the concept of our shop being a fashion-forward boutique, but we felt compelled to make changes to our brand so our shop could remain accessible for knitters and crocheters of all skill and income levels. We took some time to redefine our inventory choices, our customer communications, the promotional events we planned, and even some long-held store practices," said Brooke Nico.

"It was a leap of faith," added co-owner Robyn Schrager. "But we believed in our shop. We believed in our customers. And, the changes have paid off for all of us."

THE INVENTORY

Kirkwood Knittery was known as the go-to shop in St. Louis for interesting (aka pricey) yarns and textures, hand-dyes, and other exclusive fibers. Although the store always stocked the mid-priced staples, the store displays highlighted the more expensive and exotic offerings.

As St. Louis economic conditions continued to decline, co-owners Nico and Schrager made the strategic decision to lower the price point of the store's average purchase.

"We never sacrificed our standards of quality, but we began working with our vendors to find less expensive yarn with a high yardage, low cost ratio," explained Nico.

"When our customer base began shifting their project choices from indulgent accessories to more utilitarian projects like baby items, afghans, and charity projects, we took it as a cue that we needed to do some shifting of our inventory to accommodate them. We started looking for high-quality, but lower-priced options," said Schrager.

After identifying new inventory items to bring in, Nico and Schrager rearranged their store layout. Flying in the face of accepted retail merchandising practices, they now place much of their lower-priced inventory in the front of the store.

"As soon as a customer enters Kirkwood Knittery we want them to see they can find yarn for less than $5.00 per ball. The expensive, $40-$50 yarn is still there, it's just not front and center. We also redid our shop's project displays to show simpler projects that use yarn at all price points. Robyn and I designed new patterns that featured ways to incorporate a single `splurge skein' into a staple yarn. Everything we did was designed to stretch our customers' dollars."

The overall store layout was redesigned to include destination areas grounded by a large center table.

"We know a retail consultant would tell us we're crazy for giving up valuable retail space for a table that can fit ten or 12 people around it, but our goal is to encourage our community of knitters and crocheters to sit and stay," said Schrager. "The comfort and hospitality has encouraged positive word-of-mouth exposure that far outweighs any loss in our display space. We actually have a group that meets here for their weekly Mahjong game. Of course, they're also all working on their knitting projects while they play."

CUSTOMER COMMUNICATION

Nico and Schrager weren't subtle in responding to their customers' new financial challenges or in highlighting changes in their shop.

"We work hard to let our customers know we're on their side. We want our regulars and our drop-ins to know we understand that strains on their household budgets are part of life and we can help them pursue their hobby without breaking the bank," said Schrager

"We spent a lot of time training our sales team to ask `What's the budget on this project?' in their interactions with customers. It's a slight difference from the more typical question you hear in retail, `How much do you want to spend?' but it makes a world of difference," explained Nico.

"When we ask, `What's the budget?' we're being sensitive to our customers' needs. Plus, we're not putting our customers in the awkward position of being apologetic in their responses. We want everyone to know we're glad to have them in the shop regardless of how much they have to spend."

Nico added, "We've also been able to stretch our customers' dollars even further by encouraging them to bring in their stash, and working with them to find options to turn their idle yarn into new projects."

The co-owners agree that the most important change they made in their customer communications was in modifying their long-held teaching policies. Prior to 2011, the shop charged for all learning opportunities, from $5 for a help session to $30/hour for a private lesson.

"We didn't like hearing it, but casual surveying of our customers revealed they felt like we were nickel and diming them to death. Ouch. That was an eye opener and it really hurt," recalled Nico.

"One of the great strengths of Kirkwood Knittery is the incredible skill and unmatched talent of our staff. Everyone on our staff has different expertise, but all of us are passionate about fiber crafts. We pride ourselves on our collective abilities to teach and empower our customers, so beginning in June 2011 we stopped charging a fee to help people with their knitting or crocheting. Regardless of where they purchase their yarn, we're ready and willing to help. This is a huge paradigm shift in our services, but by asking for feedback and really listening to our customers' concerns we knew this was the right move. This one change alone has helped us expand our customer base, as well as eliminate the negative vibes we'd been sending out," said Nico.

Kirkwood Knittery's current `help' policy has just three customer-focused rules:

1. We'll help you with any problem you have for no fee.
2. We ask that you understand that as a retail store, our time together may be interrupted as we help shopping customers.
3. If you'd prefer to have one-on-one assistance, with no interruptions, we will happily schedule a private lesson at $30/hour.

Schrager says another key move was hiring a marketing consultant. "We tried to handle all of our customer communications and community outreach efforts ourselves, and we had some success. But the truth is our expertise is in working with yarn and design, and it was a drain on our staff. Hiring a consultant to help us with our marketing efforts has enabled Brooke and I to focus on what we're good at, but still get the word out in an effective and systematic manner. Now we have a marketing plan that we review monthly and update as new projects come up. We've strategized and have tactics to help us reach our goals."

Kirkwood Knittery also structured a Groupon deal that actually created new customers. The owners say they took the experiences other yarn shop owners across the country had with Groupon and purposely went a different direction.

"Yes, we zigged when they zagged," laughed Nico. "But it paid off. Basically, Robyn and I thought it would be counter-productive to do a deep discount on our products, so we decided to offer a service instead. We actually built a new market with our Groupon deal. Our deal offered a discount on Beginning Knit classes. We didn't know if it would work, but if it did we knew we'd add to our customer base--not just displace our regular sales with discounted prices."

Kirkwood Knittery's first foray into the Groupon world was an unmitigated success. The shop sold 250 beginning knit classes, a net gain in revenue of $2500 from almost 100% new customers. Additionally, most of the students purchased yarn and needles at the store, with an average sale of $13. The shop is currently running its second Groupon offer and anticipates total sales to 350 new students.

EVENTS

In previous years Kirkwood Knittery hosted sporadic events, such as trunk shows featuring their suppliers. In 2011 the co-owners set a goal of holding at least one customer-focused event at their shop each month.

"We've shifted the purpose of our events from increasing sales to bringing something new and interesting to our customers," explained Schrager. "The events we've held in the last eighteen months have averaged 20 to 30 customers each night. We've held several meet and greets with nationally-recognized members of the fiber community, including Kara Gott Warner, Editor of Creative Knitting magazine, and Ron and Theresa Miskin with Buffalo Wool Company. But, the most successful of our events have had nothing to do with knitting, crocheting, or yarn. By far our networking nights have been the most popular of all."

Kirkwood Knittery's networking nights resulted from casual conversations the co-owners kept hearing around the knitting table.

Nico remembers, "We noticed that our customers would often make connections while sitting at our table, and opportunities developed. We decided to create an evening to actually promote, encourage, and foster connections."

During the shop's popular networking nights, customers are encouraged to drop in, bring their resumes, small business brochures, recommendations (handyman, babysitter, etc.), and needs and network.

"We're explicit that the cash register is closed, and this evening is about our customers. We start with a casual happy hour so everyone has time to browse through the materials, and enjoy some refreshments. We then move to tables arranged throughout the store, with at least one staff member seated at each to help facilitate the conversation. Several times throughout the evening we encourage people to switch tables in order to expand their networks. We keep the materials (resumes, brochures, business cards) in the shop for 30 days after the event. We learned that several of our customers found employment through these events. By closing the register we foster the attitude that `we're on your side,'" explained Nico.

ALTERNATIVE PURCHASING OPTIONS

Co-owners Brooke Nico and Robyn Schrager say the key impact of the current economic situation is on their customers' available cash flow.

"Customers can come up with $20 extra to splurge, but not $120. With no changes on our end, that limited them to accessory projects. Obviously, that also limited the size of their purchases, as well," said Schrager.

"Brooke and I brainstormed about how we could help our customers access larger projects and still stay within their budgets. That brainstorming session was the genesis of our simple layaway program."

Again, Kirkwood Knittery kept the policy easy-to-understand:

1. We will hold your yarn for up to 90 days.
2. You will purchase at least 1 skein every 14 days.

With its existing 90-day return policy, the new layaway program had no negative impact on the shop's inventory, but a huge return in goodwill among its customers.

The shop also offers a gift registry for its customers. It keeps its customers' wish lists on file when family members come in for a birthday, anniversary, or holiday gift.

"Our registry serves our customers, but the real winners are the significant others. No more last minute Pajama Grams. Husbands come in and make a special purchase with confidence. They know they're going to be heroes," smiled Nico.
FINANCIAL IMPACT

In spite of the economic downturn felt significantly in St. Louis in the past 18 months, Kirkwood Knittery is thriving. The average number of sales per month has increased by 10% in the past 18 months. And, while average ticket sale amount has decreased, the shop's inventory costs have also decreased. Net profitability has remained the same from their high point before the recession hit. Additionally, the shop has added 100 subscribers to their mailing list, indicating an increase in loyal customers planning repeat visits.

"We colored outside the lines when we made our changes and it's paid off. We're confident we're building for the future," said co-owner Robyn Schrager. "From our store design to our changes in inventory, we broke a lot of the rules students learn in business school. The biggest takeaway for us has been the value of listening to our customers."

Partner Brooke Nico agrees, "Amazing, isn't it? Listening is free."


Media Contact:
314-822-7222
http://www.kirkwoodknittery.com/

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