LAS VEGAS—It's a cold world out there, and few businesspeople know that better these days than adult retailers; hence, AEE's first retailing panel of the new decade, "Retailing in Challenging Times: You Can Survive and Prosper."
Moderated by adult industry veteran Brian Gross, the panel featured brick-and-mortar retailers Phyllis Heppenstall (Peekay's), Mark Franks (Castle Superstores) and TLA's Eric Schut, whose company sells both in stores and online, and Kim Sedergran, veteran buyer for prominent distributor IVD.
The question on everyone's mind was how to cope with the current economic downturn, but according to Heppenstall and Franks, their chains have barely been affected, with Peekay's California stores up 15 percent from last year, and their Washington state stores up a whopping 36 percent—even with an uncommonly snowy holiday buying season. Franks didn't provide specific figures, but indicated that his 18-store chain had scored good profits as well, and that his company is about to open its newest outlet—in Wasilla, Alaska, home of a certain failed vice-presidential candidate.
For one thing, Sedergran noted, in choosing products to sell to her retailer clientele, she looks for newer items that seem in tune with the latest styles, that have a "fresh new look," although as Schut later added, "remerchandising" older products can also be successful; sometimes it's just a matter of coming up with a unique way to display them.
Franks described how he chooses products for his chain to sell: He first puts a small number of several items in his four best stores, then tracks how well each sells, using his state-of-the-art tracking software. He figures it only takes two weeks to find whether a new item is popular with his customer base, and he moves quickly to stock the good sellers in the rest of the stores in the chain, and just as quickly he "blows out the losers" by drastically marking them down.
All of the panelists agreed that there are few things more important than knowing their customer base, especially in terms of what new DVD titles to stock.
"Parodies seem to be the hot-button item today," Sedergran said, and several members of the audience heartily agreed, noting that "couples love them." One retailer explained, "If the female is not normally a porn watcher, a parody of an old TV show or movie that she can relate to makes her a lot more comfortable watching those characters having sex."
Franks, a former video producer, gave the most comprehensive list of requirements for a well-run retail outlet. Employees should be well-trained and knowledgeable about the store's products, but above all, they should be "passionate." Also important, however, is the store's ambiance: good lighting and flooring.
Heppenstall voiced agreement that employee training and knowledge are important, and said that after the current recession began, she took her store managers "back to basics": reorienting them to be more responsive to customer comments and complaints. After all, she said, it's not just a question of getting more customers through the door; it's also important to actually sell them something.
"Conversion is the second most important thing in retail," she said.
She also noted that in some Peekay stores, up to 80 percent of customers had never patronized the store before.
Franks also called upon DVD producers to reduce prices, opining that some manufacturers seem to be stuck in the "glory days" of a few years ago, when consumers had more disposable income. "Those days are gone," he declared. He also complained about producers who undercut retail store prices on the producer's own website—he feared that customers who priced DVDs on the web and found the retail stores prices to be higher might conclude that everything in the store was "overpriced"—and he objected to giving producers "free advertising" by selling their DVDs with the company's URL printed right on the packaging.
Heppenstall, on the other hand, said she didn't have a problem with producers, placing the onus for increasing sales on the stores themselves: "You need to know your customer and know what they're demanding."
She also noted that one of the reasons novelties seem to have weathered the recession in stores better than DVDs is that it's difficult for customers to get a good feel for the product from seeing just a picture of it—or worse, just the item's packaging—on a website.